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University of San Carlos College of Law

Labor Standards

Finals Case Digests

Contents
Contents .......................................................................................................................................................................................... 1 Philippine Bank of Communications vs NLRC (1986) G.R. L-66598 ....................................................................................... 3 Neri vs NLRC (1993) 224 SCRA 717 ............................................................................................................................................ 5 Filipinas Synthetic Fiber Corp., vs NLRC (1996) 257 SCRA 336 .............................................................................................. 6 Maraquinot vs NLRC (1998) 284 SCRA 539 ............................................................................................................................... 7 San Miguel vs Maerc Integrated Services (2003) G.R. 144627 .................................................................................................. 9 Manila Water Co., vs Pena (2004) G.R. 158255 ........................................................................................................................... 9 NHA vs Maceda Security Agency (2005) G.R. 163448 ........................................................................................................... 11 Abella vs PLDT (2005) G.R. 159469 ........................................................................................................................................... 11 San Miguel vs Aballa (2005) G.R. 149011 .................................................................................................................................. 13 Manila Electric Co., vs Benamira (2005) G.R. 145271 .............................................................................................................. 14 DOLE Philppines vs Esteva (2006) G.R. 161115 ....................................................................................................................... 15 San Miguel vs NLRC (2006) G.R. 147566 .................................................................................................................................. 19 Eparwa vs Liceo (2006) G.R. 150402 .......................................................................................................................................... 22 Escario vs NLRC (2000) G.R. 124055 ......................................................................................................................................... 24 Aboitiz vs Dimapatoi (2006) G.R. 148619.................................................................................................................................. 28 GSIS vs NLRC (2006) G.R. 157647 ............................................................................................................................................. 32 Republic vs Asiapro Cooperative (2007) G.R. 172101 ............................................................................................................. 33 Jaguar Security and Investigation Agency vs Sales (2008) G.R. 162420 ................................................................................ 38 Almeda et al., vs Asahi Glass (2008) G.R. 177785 .................................................................................................................... 39 Sasan, Sr et al, vs NLRC and EPCIB (2008) G.R. 176240 ......................................................................................................... 41 Purefoods Corp., vs NLRC et al., (2008) G.R. 172241 .............................................................................................................. 45 Maranaw Hotels and Resort vs CA (2009) G.R. 149660 .......................................................................................................... 48 Cola-Cola Bottlers Phils., vs Agito et al., (2009) G.R. 179546 ................................................................................................ 49 South Davao Development Co. vs Gamo (2009) G.R. 171814 ................................................................................................ 53 Jethro Intelligence & Security Corp., vs Secretary of DOLE (2009) G.R. 172537.................................................................. 55 Traveno et al., vs Bobongon Banana Growers Multi-purpose Coop et al., (2009) G.R. 164205 ......................................... 56 Aliviado vs Procter and Gamble Phils. Inc., et al (2010) G.R. 160506 .................................................................................... 56 DBP vs NLRC (1995) G.R. 108031 .............................................................................................................................................. 59 Batong Buhay Gold Mines vs Dela Serna (1999) G.R. 86963 .................................................................................................. 62 Barayoga vs Asset Privatization Trust (2005) G.R. 160073 ..................................................................................................... 65 Ma. Cecelia Timbal LlB 2 Rm 402

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Philippine Airlines vs Zamora (2007) G.R. 166996 .................................................................................................................. 69 Philippine Airlines vs Philippine Airlines Employees Association (2007) G.R. 142399 ..................................................... 70 Castillo vs Uniwide Warehouse Club (2010) G.R. 169725 ...................................................................................................... 71 Bank of the Philippine Islands vs NLRC (1989) G.R. 69746-47 .............................................................................................. 72 Traders Royal Bank Employees Union vs NLRC (1997) G.R. 120592 ................................................................................... 74 Brahm Industries vs NLRC (1997) G.R. 118853 ........................................................................................................................ 78 Heirs of Aniban vs NLRC (1997) G.R. 155034 .......................................................................................................................... 79 Sapio vs Undaloc Construcion et al., (2008) G.R. 155034 ........................................................................................................ 80 Atty. Ortiz vs San Miguel Corp., (2008) G.R. 151983-84 ......................................................................................................... 81 Masmud vs NLRC (2009) G.R. 183385 ...................................................................................................................................... 84 Bernardo vs. NLRC (1999) G.R. 122917 ..................................................................................................................................... 85 Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 .................................................................................... 89 Del Monte Phils vs Velasco (2007) G.R. 153447........................................................................................................................ 90 Ultra Villa Food Haus vs, Geniston (1999) G.R. 120473 .......................................................................................................... 91 Remington Industrial Sales Corp,. vs Castaneda (2007) G.R. 153477 .................................................................................... 93 Tolosa vs NLRC (2008) G.R. 149578 .......................................................................................................................................... 98 Phil Global Communications Inc vs de Vera (2005) G.R. 157214 ......................................................................................... 100 U-Bix Corp. vs Bandiola (2007) G.R. 157168 ........................................................................................................................... 101 Escasinas et al., vs Shangri-la Mactan Island Resort et al., (2009) G.R. 178827 .................................................................. 107 ISS Indochina Corp., vs Ferrer (2005) G.R. 156381................................................................................................................. 110 People vs Capt. Gasacao (2005) G.R. 168449 .......................................................................................................................... 111 Acua vs CA (2006) G.R. 159832 .............................................................................................................................................. 114 Asian International Manpower Services vs CA (2006) G.R. 169652 .................................................................................... 116 Sim vs. NLRC (2007) G.R. 157376 ............................................................................................................................................ 119 Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195 ................................................................................................... 122 Masangcay vs Trans-Global Maritime Agency Inc., (2008) G.R. 172800............................................................................. 123 Magsaysay Maritime Corp., et al., vs Velasquez, et al., (2008) G.R. 179802 ....................................................................... 124 Serrano vs Gallant Maritime Services et al., (2009) G.R. 167614 .......................................................................................... 125 People vs Domingo (2009) G.R. 181475 ................................................................................................................................... 127 Great Southern Maritime Services Corp vs Surigao (2009) G.R. 183646 .......................................................................... 128

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Philippine Bank of Communications vs NLRC (1986) G.R. L-66598

FACTS: Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide "Temporary Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. The contract period is described as being "from January 1976." The petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis. Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside other people also rendering services to the bank. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. On or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services "were no longer needed." Orpiada instituted a complaint in the Department of Labor against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in Presidential Decree No. 851. The Office of the Regional Director, Regional Office No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr. Orpiada to show the existence of an employer-employee relationship between the bank and himself. The Labor Arbiter Dogelio rendered a decision ordering the reinstatement of complainant to the same or equivalent position with full back wages and to pay the latter's 13th month pay for the year 1976. On 26 October 1977, the bank appealed the decision of the Labor Arbiter to the respondent NLRC. NLRC promulgated its decision affirming the award of the Labor Arbiter. ISSUES: 1. What is the appropriate characterization of the relationship between the bank and (CESI) 2. Whether or not that relationship is one of employer and job (independent) contractor or one of employer and "labor-only" contractor; HELD: Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. 442, as amended) provides as follows: ART. 106. Contractor or sub-contractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions in this Code. In the event that the contractor or sub-contractor 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 sub-contructor 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 The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provisions of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

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ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, part, nership association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. (Emphasis supplied) Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employeremployes relationship between himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them. A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or intermediary" is considered "merely as an agent of the employer. " The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an employeremployee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. " The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code. Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor. Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules Implementing the Labor Code provides as follows: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shag be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are to the principal business or operations of the c workers are habitually employed, (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him (c) For cases not file under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. (Emphasis supplied) In contrast, job contracting-contracting out a particular job to an independent contractor is defined by the Implementing Rules as follows:

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Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. (Emphasis supplied) The definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules. CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in different client companies for longer or shorter periods of time. There is, of course, nothing illegal about hiring persons to carry out "a specific project or undertaking the completion or termination of which was determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season" We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect Ricardo Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not necessary to determine here.

Neri vs NLRC (1993) 224 SCRA 717 FACTS: Petitioners instituted complaints against FEBTC and BCC to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. They contended that BCC in engaged in labor-only contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the principal business or operation of FEBTC. ISSUE: Whether or not BCC was engaged in labor-only contracting. HELD: It is well-settled that there is labor-only contracting where: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. This fact was both determined by the Labor Arbiter and the NLRC as BCC had a capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in labor-only contracting. Ma. Cecelia Timbal LlB 2 Rm 402

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While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or" instead of and. Having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank. On the other hand, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.

Filipinas Synthetic Fiber Corp., vs NLRC (1996) 257 SCRA 336 FACTS: Filipinas Synthetic Fiber Corporation (FILSYN), a domestic corporation engaged in the manufacture of polyester fiber, contracted with De Lima Trading and General Services (DE LIMA) for the performance of specific janitorial services at the former's plant in Pursuant to the agreement Felipe Loterte, was deployed at FILSYN to take care of the plants and maintain general cleanliness around the premises. Loterte sued FILSYN and DE LIMA for illegal dismissal, underpayment of wages, non-payment of legal holiday pay, service incentive leave pay and 13th month pay alleging that he was first assigned to perform janitorial work at FILSYN in 1981 by the La Saga General Services; that the La Saga was changed to DE LIMA on August 1991; that when a movement to demand increased wages and 13th month pay arose among the workers, he was accused of having posted in the bulletin board at FILSYN an article attributing to management a secret understanding to block the demand; and, for denying responsibility, his gate pass was unceremoniously cancelled was subsequently dismissed. ISSUE: Whether or not De Lima is an independent job contractor. HELD: Private respondent DE LIMA is an independent job contractor. Under the Labor Code, two (2) elements must exist for a finding of labor-only contracting: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and (b) the workers recruited and placed by such persons are performing activities directly related to the principal business of such employer. These two (2) elements do not exist in the instant case. As pointed out by petitioner, private respondent DE LIMA is a going concern duly registered with the Securities and Exchange Commission with substantial capitalization of P1,600,000.00, P400,000.00 of which is actually subscribed. 13 Hence, it cannot be considered as engaged in labor-only contracting being a highly capitalized venture. 14 Moreover, while the janitorial services performed by Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA may be considered directly related to the principal business of FILSYN which is the manufacture of polyester fiber, nevertheless, they are not necessary in its operation. On the contrary, they are merely incidental thereto, as opposed to being integral, without which production and

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company sales will not suffer. Judicial notice has already been taken of the general practice in private as well as in government institutions and industries of hiring janitorial services on an independent contractor basis. Consequently, DE LIMA being an independent job contractor, no direct employer-employee relationship exists between petitioner FILSYN and private respondent Felipe Loterte. With respect to its liability, however, petitioner cannot totally exculpate itself from the fact that respondent DE LIMA is an independent job contractor. Notwithstanding the lack of a direct employer-employee relationship between FILSYN and Felipe Loterte, theformer is still jointly and severally liable with respondent DE LIMA for Loterte's monetary claims under Art. 109 of the Labor Code explicitly provides every employer or indirect employer shall be Decision 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.

Maraquinot vs NLRC (1998) 284 SCRA 539 FACTS: Petitioner Alejandro Maraguinot, Jr. maintains that private respondents employed him as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00. He was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00. Petitioner Paulino Enero, on his part, claims that private respondents employed him in as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 then to P475.00. Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign. Petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in then refused to take him back when he reported for work. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal. On the other hand, private respondents assert that they contract persons called "producers" also referred to as "associate producers" 8 to "produce" or make movies for private respondents; and contend that petitioners are project employees of the association producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents. ISSUE: WON an employer-employee relationship existed between petitioners and private respondents or any one of private respondents. HELD: Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers Ma. Cecelia Timbal LlB 2 Rm 402

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must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents' evidence reveals that the moviemaking equipment are supplied to the producers and owned by VIVA. These include generators, cables and wooden platforms, cameras and "shooting equipment;" in fact, VIVA likewise owns the trucks used to transport the equipment. It is thus clear that the associate producer merely leases the equipment from VIVA. If private respondents insist that the associate producers are labor contractors, then these producers can only be "labor-only" contractors. As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an "available group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their Memorandum, private respondents declared that the associate producer "hires the services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed that the associate producers did not supply the workers required by the movie project. The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. The employer-employee relationship between petitioners and VIVA can further be established by the "control test." These four elements are present here. VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film. It may not be validly argued then that petitioners are actually subject to the movie director's control, and not VIVA's direction. The director merely instructs petitioners on how to better comply with VIVA's requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the employer. Moreover, appointment slips 28 issued to all crew members state: During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management. The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top Management" of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners. Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment

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slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA.

San Miguel vs Maerc Integrated Services (2003) G.R. 144627 FACTS: In a decision by the court, it Decision petitioner jointly and severally liable with MAERC for the payment of separation benefits and wage differential of 291 complainants. Petitioner reiterated that no employer- employee relationship exists between it and the complainants. And that MAERC is an independent contractor hence petitioner should not be Decision solidarily liable with it. It disputes this courts finding that MAERC solely engaged the services of complainants and exercised control over the complainants conduct; that no intervention or influence could have been extended by it in the selection or hiring of complainants or the majority of them had worked to the petitioner before it signed a contract with MAERC. ISSUE: WON employer- employee relationship exists between the parties. HELD: Petitioners contention must be rejected. While the continuity of service rendered by the workers to petitioner by itself does not signify an employer- employee relationship, it was Decision to be so considering the other circumstances present. More so, since the workers continued to work for petitioner without break from their former employer and then as employees of MAERC even before the latter was incorporated. The record adequately supports the fact that MAERC admitted recruiting workers for petitioner before its incorporation. Most importantly, petitioner refutes this Courts conclusion that petitioner exercised control over the workplace. It stresses that checkers assigned to the workplace did not stay there continuously to merit the conclusion that they maintained constant presence as Decision by the court. We disagree. While petitioners checkers may not have stayed the full eight hours in the workplace because they had to leave for their office to make their reports, their attendance need not be continuous to be considered constant and therefore an indication of control. We find in fact that they maintained sufficient presence at the workplace to be able to pinpoint the workers whose performance was not at par and to report who they are.

Manila Water Co., vs Pena (2004) G.R. 158255 FACTS: Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila. Under the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list was terminated. Private respondents, being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged their services without written contract for three months. Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the Balara Branch. Subsequently, most of the 121 collectors Ma. Cecelia Timbal LlB 2 Rm 402

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were asked by the petitioner to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents remained with ACGI. Private respondents filed a complaint for illegal dismissal and money claims against petitioner, contending that they were petitioners employees as all the methods and procedures of their collections were controlled by the latter. Petitioner on the other hand asserts that private respondents were employees of ACGI, an independent contractor. It maintained that it had no control and supervision over private respondents manner of performing their work except as to the results. Thus, petitioner did not have an employer-employee relationship with the private respondents, but only a service contractor-client relationship with ACGI. ISSUE: Whether or not ACGI is an independent contractor; HELD: ACGI is an independent contractor but a labor- only contractor. First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials, to qualify as an independent contractor. While it has an authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered substantial capitalization. The 121 collectors subscribed to four shares each and paid only the amount of P625.00 in order to comply with the incorporation requirements. Further, private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the corporate address of ACGI was the residence of its president, Mr. Herminio D. Pea. Moreover, in dealing with the consumers, private respondents used the receipts and identification cards issued by petitioner. Second, the work of the private respondents was directly related to the principal business or operation of the petitioner. Being in the business of providing water to the consumers in the East Zone, the collection of the charges therefore by private respondents for the petitioner can only be categorized as clearly related to, and in the pursuit of the latters business. Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, petitioner. Prior to private respondents alleged employment with ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner and method of performing their tasks. This form of control and supervision never changed although they were already under the seeming employ of ACGI. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors; it required private respondents to report daily and to remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform his daily collection, he must notify petitioner or the branch office in the morning of the day that he will be absent; and although it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated by petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents. These are indications that ACGI was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that ACGI was not an independent contractor since it did not carry a distinct business free from the control and supervision of petitioner. Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such, is considered merely an agent of the petitioner. In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Since ACGI is only a labor-only contractor, the workers it supplied should be considered as employees of the petitioner.

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NHA vs Maceda Security Agency (2005) G.R. 163448 FACTS: On September 17, 1996, respondent MASADA Security Agency entered into a 1-year contract to provide security services to the various offices and installations of NFA. Upon expiration of said contract, the parties extended the effectivity thereof on a monthly basis under same terms. Subsequently, the RTWPB issued several wage orders increasing the daily wage rate. Accordingly, respondent requested NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well as increases in their overtime pay, holiday pay and rest day pay. It also claimed SSS and Pag- ibig Premiums. NFA however granted only with respect to the increase in the daily wage by multiplying the amount of the mandated increase by 30 days and denied the others. Respondent now filed a case with the RTC for recovery of sum of money against NFA, seeking reimbursement for the other wage- related benefits. NFA however denied that respondent paid the security guards their wage related benefits and that respondent cannot demand an adjustment on said- related benefits because it is bound by their contract expressly limiting NFAs obligation to pay onlY the increment in their daily wage. ISSUES: (1) (2) Whether or not respondent is entitled to recover from NFA the wage related benefits of the security guards; Whether or not respondent the liability of the principals in service contracts under Section 6 of RA 6727 and

the wage orders issued by the RTWPB is limited only to the increment in the minimum wage; HELD: Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. RA 6727 Section 6 however expressly lodged said obligation to the principals or indirect employers in construction projects and estalblishments providing security, janitorial and similar services , the prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the service contractors and the contract shall be deemed amended accordingly. The term wage in RA 6727 pertained to no other than the statutory minimum which is defined as the lowest wage rate fixed by law other than an employer can pay his worker. The presumption is that lawmakers are aware that wage means the statutory minimum wage. If their intention was to extend the obligation of the principals in service contracts to the payment of the increment in the other benefits and remuneration of workers, it would be expressly specified. At any rate, however, the interest of the employees will not be adversely affected if the obligation of the principals under the subject provision will be limited to the increase in the statutory minimum wage. This is so because all remuneration and benefits other than the increased statutory minimum wage should be shouldered and paid by the employer or service contractor to the workers concerned. Having discharged its obligation to the respondent, NFA no longer has the cause of action. The latters complaint for collection of remuneration and benefits other than the increased minimum wage rate should therefore be dismissed.

Abella vs PLDT (2005) G.R. 159469 Facts:

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Respondent Peoples Security Incorporated entered into an agreement with the PLDT to provide the latter with such number of qualified uniformed and properly armed security guards for the purpose of guarding and protecting PLDTs installations and properties from theft, pilferage, intentional damage, trespass or other unlawful acts. Under the agreement, it was expressly provided that there shall be no employer-employee relationship between the PLDT and the security guards, which may be supplied to it by PSI, and that the latter shall have the entire charge, control and supervision over the work and services of the supplied security guards. It was likewise stipulated therein that PSI shall also have the exclusive authority to select, engage, and discharge its security guards, with full control over their wages, salaries or compensation. Consequently, respondent PSI deployed security guards to the PLDT. The sixty-five (65) security guards supplied by respondent PSI filed a Complaint for regularization against the PLDT alleging that petitioner security guards have been employed by the company through the years and that PSI acted as the middleman in the payment of the minimum pay to the security guards, but no premium for work rendered beyond eight hours was paid to them nor were they paid their 13th month pay. In sum, the Complaint states that inasmuch as the complainants are under the direct control and supervision of PLDT. Hence they should be considered as regular employees by the latter. Issue: WON an employer- employee relationship exists between petitioners and respondent PLDT. Held: We considered the following factors in considering the existence of an employer-employee relationship: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employees conduct. Testimonies during the trial reveal that interviews and evaluation were conducted by PLDT to ensure that the standards it set are met by the security guards. In fact, PLDT rarely failed to accept security guards referred to by PSI but on account of height deficiency. The referral is nothing but for possible assignment in a designated client which has the inherent prerogative to accept and reject the assignee for justifiable grounds or even arbitrarily. We are thus convinced that the employer-employee relationship is deemed perfected even before the posting of the complainants with the PLDT, as assignment only comes after employment. PSI is a legitimate job contractor pursuant to Section 8, Rule VII, Book II of the Omnibus Rules Implementing the Labor Code. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. It has substantial capital and investment in the form of guns, ammunitions, communication equipments, vehicles, office equipments like computer, typewriters, photocopying machines, etc., and above all, it is servicing clients other than PLDT like PCIBank, Crown Triumph, and Philippine Cable, among others. Here, the security guards which PSI had assigned to PLDT are already the formers employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to the security agreement, then the rejected or terminated guard may still be assigned to other clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996 but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10 May 1996. Therefore, the evidence as it stands is at odds with petitioners assertion that PSI is an in-house agency of PLDT so as to call for a piercing of veil of corporate identity It is PSI that determined and paid the petitioners wages, salaries, and compensation. As elucidated by the Labor Arbiter, petitioners witness testified that his wages were collected and withdrawn at the office of PSI and PLDT pays PSI for the security services on a lump-sum basis and that the wages of complainants are only a portion of the total sum. The signature of the PLDT supervisor in the Daily Time Records does not ipso facto make PLDT the employer of complainants inasmuch as the Labor Arbiter had found that the record is replete with evidence showing that some of the Daily Time Records do not bear the signature of a PLDT supervisor yet no complaint was lodged for nonpayment of the guards wages evidencing that the signature of the PLDTs supervisor is not a condition Ma. Cecelia Timbal LlB 2 Rm 402

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precedent for the payment of wages of the guards. Notably, it was not disputed that complainants enjoy the benefits and incentives of employees of PSI and that they are reported as employees of PSI with the SSS. Lastly, petitioners capitalize on the delinquency reports prepared by PLDT personnel against some of the security guards as well as certificates of participation in civil disturbance course, certificates of attendance in first aid training, certificate of completion in fire brigade training seminar and certificate of completion on restricted land mobile radio telephone operation to show that the petitioners are under the direct control and supervision of PLDT and that the latter has, in fact, the power to dismiss them. The Labor Arbiter found from the evidence that the delinquency reports were nothing but reminders of the infractions committed by the petitioners while on duty which serve as basis for PLDT to recommend the termination of the concerned security guard from PLDT. As already adverted to earlier, termination of services from PLDT did not ipso facto mean dismissal from PSI inasmuch as some of those pulled out from PLDT were merely detailed at the other clients of PSI as in the case of Jonathan Daguno, who was merely transferred to PCIBank Makati.

San Miguel vs Aballa (2005) G.R. 149011 Facts: Petitioner San Miguel Corporation entered into a one-year contract with the Sunflower Multi-Purpose Cooperative. Sunflower undertook and agreed to perform and provide the company on a non exclusive basis for a period of one year the following: Messengerial, Janitorial, Shrimp harvesting and Sanitation. Pursuant to the contract, Sunflower engaged private respondents to render services at SMCs Bacolod Shrimp Processing Plant. The contract was renewed and private respondentd continued to perform their tasks. Later, private respondents filed a complaint praying to be declared as regular employees of SMC, with claims of recovery of all benefits and privileges. Issue: Whether or not Sunflower is engaged in labor only contracting. Held: The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work. In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees. In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The following would show that sunflower is engaged in labor only contracting: What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. It is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC.

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Sunflower, during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC. And from the job description provided by SMC itself, the work assigned to private respondents was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that they are considered directly related to the principal business of the employer has been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. Therefore since Sunflower is labor only contracting, there is the existence of an employer- employee relationship between SMC and private respondents.

Manila Electric Co., vs Benamira (2005) G.R. 145271 Facts: The individual respondents are licensed security guards formerly employed by Peoples Security, Inc. and deployed as such at MERALCOs head office. The security service agreement between PSI and MERALCO was terminated. Thereafter, 56 of PSIs security guards, including herein eight individual respondents, filed a complaint for unpaid monetary benefits against PSI and MERALCO. Meanwhile, the security service agreement between respondent Armed Security & Detective Agency, Inc., (ASDAI) and MERALCO took effect. Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCOs head office. Later, the security service agreement between respondent Advance Forces Security & Investigation Services, Inc. (AFSISI) and MERALCO took effect, terminating the previous security service agreement with ASDAI. The individual respondents amended their complaint to implead AFSISI as party respondent.

Issue: Whether or not the individual respondents are employees of MERALCO. Held: No. In this case, the terms and conditions embodied in the security service agreement between MERALCO and ASDAI expressly recognized ASDAI as the employer of individual respondents. Under the security service agreement, it was ASDAI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to MERALCO according to the number agreed upon; (c) provided the uniform, firearms and ammunition, nightsticks, flashlights, raincoats and other paraphernalia of the security guards; (d) paid them salaries or wages; and, (e) disciplined and supervised them or principally controlled their conduct. The agreement even explicitly provided that *n+othing herein contained shall be understood to make the security guards under this Agreement, employees of the COMPANY, it being clearly understood that such security guards shall be considered as they are, employees of the AGENCY alone. Clearly, the individual respondents are the employees of ASDAI. Neither is the stipulation that the agency cannot pull out any security guard from MERALCO without its consent an indication of control. It is simply a security clause designed to prevent the agency from unilaterally removing its security guards from their assigned posts at MERALCOs premises to the latters detriment.

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The clause that MERALCO has the right at all times to inspect the guards of the agency detailed in its premises is likewise not indicative of control as it is not a unilateral right. The agreement provides that the agency is principally mandated to conduct inspections, without prejudice to MERALCOs right to conduct its own inspections. Moreover, ASDAI and AFSISI are not labor-only contractors. There is labor only contract when the person acting as contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. On the other hand, job (independent) contracting is present if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job contracting. The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCOs principal business, which is the distribution of electricity. Furthermore, the fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear indication that the individual respondents acknowledge that ASDAI is their employer. The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it, MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code.

DOLE Philppines vs Esteva (2006) G.R. 161115 Facts: Petitioner is a corporation duly organized and existing in accordance with Philippine laws, engaged principally in the production and processing of pineapple for the export market. Its plantation is located in Polomolok, South Cotabato. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines, and dulyregistered with the Cooperative Development Authority (CDA) on 6 January 1993. Members of CAMPCO live in communities surrounding petitioner's plantation and are relatives of petitioner's employees. On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service Contract referred to petitioner as "the Company," while CAMPCO was "the Contractor." Pursuant to the foregoing Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner Ma. Cecelia Timbal LlB 2 Rm 402

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at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. The Task Force submitted a report on 3 June 1993 identifying six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. The DOLE Regional Office No. XI held a conference on 18 August 1993 wherein the representatives of the cooperatives named by the Task Force were given the opportunity to explain the nature of their activities in relation to petitioner. On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an Order, directing the cooperatives to cease and desist from engaging in labor-only contracting. On 15 September 1994, DOLE Undersecretary Cresencio B. Trajano, by the authority of the DOLE Secretary, issued an Order dismissing the appeal of the Cooperatives. Respondents started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner, others were put on "stay home status" on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint, on 19 December 1996, with the National Labor Relations Commission (NLRC), for illegal dismissal, regularization, wage differentials, damages and attorney's fees. Respondents thus argued that they should be considered regular employees of petitioner given that: (1) they were performing jobs that were usually necessary and desirable in the usual business of petitioner; (2) petitioner exercised control over respondents, not only as to the results, but also as to the manner by which they performed their assigned tasks; and (3) CAMPCO, a labor-only contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of tenure and those placed on "stay home status" for more than six months had been constructively and illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and attorney's fees. Petitioner, in its Position Paper filed before the NLRC, denied that respondents were its employees. Petitioner explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers. The Labor Arbiter who heard the case, rendered his Decision 18 on 24 June 1994 declaring that these workers fell squarely within the concept of seasonal workers as envisaged by Article 280 of the Labor Code, as amended, who were hired by petitioner in good faith and in consonance with sound business practice; and consequently, dismissing the complaint against petitioner. The NLRC, in its Resolution, 19 dated 14 March 1995, affirmed in toto the Labor Arbiter's Decision and further found that the workers were validly and legally engaged by petitioner for "term employment," wherein the parties agreed to a fixed period of employment, knowingly and voluntarily, without any force, duress or improper pressure being brought to bear upon the employees and absent any other circumstance vitiating their consent. The said NLRC Resolution became final and executory on 18 June 1996. Despite the favorable ruling of both the Labor Arbiter and the NLRC, petitioner decided to discontinue such employment arrangement. Yet, the problem of petitioner as to shortage of workforce due to the peaks in operation, work backlogs, absenteeism, and excessive leaves, persisted.

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Petitioner then found a solution in the engagement of cooperatives such as CAMPCO to provide the necessary additional services. Petitioner contended that respondents were owners-members of CAMPCO; that CAMPCO was a duly-organized and registered cooperative which had already grown into a multi-million enterprise; that CAMPCO was engaged in legitimate job-contracting with its own owners-members rendering the contract work; that under the express terms and conditions of the Service Contract executed between petitioner (the principal) and CAMPCO (the contractor), the latter shall undertake the contract work on its own account, under its own responsibility, and according to its own manner and method free from the control and direction of the petitioner in all matters connected with the performance of the work, except as to the result thereof; and since CAMPCO held itself out to petitioner as a legitimate job contractor, respondents, as owners-members of CAMPCO, were estopped from denying or refuting the same. Petitioner further averred that Department Order No. 10, amending the rules implementing Books III and VI of the Labor Code, as amended, promulgated by the DOLE on 30 May 1997, explicitly recognized the arrangement between petitioner and CAMPCO as permissible contracting and subcontracting. The LA and the NLRC decided the case in favor of the Petitioner Company and against the complaint of the private respondents (employees). On appeal by certiorari, the CA reversed the rulings of the LA and NLRC. Thus, the petitioner Company appealed to the SC for Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure, questioning the decision of the Court of Appeals concerning the herein assailed issues.

Issues: 1. 2. Whether or not department order no. 10, series of 1997 is the applicable regulation in this case. Whether or not there should be a retroactive application to department order no. 3, series of 2001. Whether or not its retroactive application violated the constitutional provision against impairment of contracts and deprived petitioner of the due process of the law. Held: The second assignment of error delves into the significance and application to the case at bar of the two department orders issued by DOLE. Department Order No. 10, series of 1997, amended the implementing rules of Books III and VI of the Labor Code, as amended. Under this particular DOLE department order, the arrangement between petitioner and CAMPCO would qualify as permissible contracting. Department Order No. 3, series of 2001, revoked Department Order No. 10, series of 1997, and reiterated the prohibition on labor-only contracting. Attention is called to the fact that the acts complained of by the respondents occurred well before the issuance of the two DOLE department orders in 1997 and 2001. The Service Contract between DOLE and CAMPCO was executed on 17 August 1993. Respondents started working for petitioner sometime in 1993 and 1994. While some of them continued to work for petitioner, at least until the filing of the Complaint, others were put on "stay home status" at various times in 1994, 1995, and 1996. Respondents filed their Complaint with the NLRC on 19 December 1996. A basic rule observed in this jurisdiction is that no statute, decree, ordinance, rule or regulation shall be given retrospective effect unless explicitly stated. Since there is no provision at all in the DOLE department orders that expressly allowed their retroactive application, then the general rule should be followed, and the said orders should be applied only prospectively.

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Which now brings this Court to the question as to what was the prevailing rule on labor-only contracting from 1993 to 1996, the period when the occurrences subject of the Complaint before the NLRC took place. Article 106 of the Labor Code, as amended, permits legitimate job contracting, but prohibits labor-only contracting. The said provision reads ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person

for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. To implement the foregoing provision of the Labor Code, as amended, Sections 8 and 9, Rule VIII, Book III of the implementing rules, in force since 1976 and prior to their amendment by DOLE Department Order No. 10, series of 1997, provided as follows Sec. 8. (1) Job contracting. There is job contracting permissible under the Code if the following conditions are met; The contractor carries on an independent business and undertakes the contract work on his own account

under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work

premises, and other materials which are necessary in the conduct of his business. Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be

deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises

and other materials; and (2) The workers recruited and placed by such persons are performing activities which are directly related to the

principal business or operations of the employer in which workers are habitually employed.

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(b)

Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be

considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders

whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. Since these statutory and regulatory provisions were the ones in force during the years in question, then it was in consideration of the same that DOLE Regional Director Parel and DOLE Undersecretary Trajano issued their Orders on 19 September 1993 and 15 September 1994, respectively, both finding that CAMPCO was engaged in labor-only contracting. Petitioner, in its third assignment of error, questions the weight that the Court of Appeals gave these orders in its Decision, dated 20 May 2002, and Amended Decision, dated 27 November 2003.

San Miguel vs NLRC (2006) G.R. 147566 Facts: On 16 October 1990, Rafael M. Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center herein referred to as PHILSSEC to compel the said respondents to recognize him as a regular employee. He amended the complaint on 12 November 1990 to include the charge of illegal dismissal because his services were terminated on 31 October 1990. The complainant's employment record indicates that he rendered service with Lipercon Services from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division, then from July 1983 to April 1985 with Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. The complainant considered himself as an employee of SMCMagnolia. Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors and any one of which had never been his employer. His dismissal, according to him, was in retaliation for his filing of the complaint for regularization in service. His dismissal was illegal there being no just cause for the action. He was not accorded due process neither was his dismissal reported to the Department of Labor and Employment. PHILSSEC disclaimed liability. As an entity catering (sic) computer systems and program for business enterprises, it has contracted with SMC-Magnolia to computerize the latter's manual accounting reporting systems of its provincial sales. PHILSSEC then conducted a three phase analysis of SMC-Magnolia set up: first the computer needs of the firm was (sic) determined; then, the development of computer systems or program suitable; and, finally, set up the systems and train the employees to operate the same. In all these phases, PHILSSEC uses its computer system and technology and provided the necessary manpower to compliment the transfer of the technology to SMC-Magnolia. Complainant Maliksi was one of those employed by PHILSSEC whose principal function was the manual control of data needed during the computerization. Like all assigned to the project, the complainant's work was controlled by PHILSSEC supervisors, his salary paid by the agency and he reported directly to PHILSSEC. The computerization project was completed on 31 October 1990, and so, the complainant was terminated on the said date.

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SMC, on the other hand, submitted its position. In the contract SMC entered with PHILSSEC, the latter undertook to set up the computerization of the provincial sales reporting system of Magnolia Division. To carry out the task, PHILSSEC utilized 3 computer programmers and the rest were data encoders. The complainant being one of the compliments (sic) performed the following functions. SMC likewise contends that PHILSSEC exercised exclusive managerial prerogative over the complainant as to hiring, payment of salary, dismissal and most importantly, the control over his work. SMC was interested only in the result of the work specified in the contract but not as to the means and methods of accomplishing the same. Moreover, PHILSSEC has substantial capital of its own. It has an IBM system, 3 computers, 17 IBM or IBM-compatible computers; it has a building where the computer training center and main office are located. What it markets to clients are computer programs and training systems on computer technology and not the usual labor or manpower supply to establishment concerns. Moreover, what PHILSSEC set up employing the complainant, among others, has no relation to the principal business of SMC, which is food and beverage. It was a single relationship between the people utilized by PHILSSEC and SMC. . . Issue: Whether or not private respondent Maliksi is an employee of SMC? Held: Yes. SMC concedes that Maliksi, before his employment with PHILSSEC, worked in SMC from November 1988 to April 1990, but as employee of Skillpower 7 and that he was previously assigned to SMC between 1981 up to February 1985, "for periods spread apart." The Labor Arbiter found, as earlier stated, that Maliksi rendered service with Lipercon from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division; from July 1983 to April 1985 with Skillpower as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. In all, it appears that, while under the employ of either Lipercon or Skillpower, Maliksi has undisputedly rendered service with SMC for at least three years and seven months. The Court takes judicial notice of the fact that Lipercon and Skillpower were declared to be labor-only contractors, providing as they do manpower services to the public for a fee. The existence of an employer-employee relationship is factual and we give due deference to the factual findings of both the NLRC and the CA that an employer-employee relationship existed between SMC (or its subsidiaries) and Maliksi. Indeed, having served SMC for an aggregate period of more than three (3) years through employment contracts with these two labor contractors, Maliksi should be considered as SMC's regular employee. The hard fact is that he was hired and re-hired by SMC to perform administrative and clerical work that was necessary to SMC's business on a daily basis. It is worth noting that, except for the computerization project of PHILSSEC, petitioner did not make any insinuation at all that the services of Maliksi with SMC was project-related such that an employment contract with Lipercon and Skillpower was necessary. We find respondent Maliksi to be similarly situated with those of the complainants in Madriaga. Indeed, Lipercon and Skillpower have figured in not just a few of our decisions, so much so that we are inclined to believe that these two were involved in labor-only contracting with respect to Maliksi. We hold that the finding of the NLRC and the CA as to SMC's resorting to labor-only contracting is entitled to consideration in its full weight. With respect to PHILSSEC, there was no need for Maliksi to be employed under the former's computerization program to be considered a regular employee of SMC at the time. Moreover, SMC itself admits that Maliksi's work under the computerization program did "not require the operation of a computer system, such as the software program being developed by PHILSSEC." Given this admission, we are simply at a loss to understand why Maliksi Ma. Cecelia Timbal LlB 2 Rm 402

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should be included in the computerization project as a project employee. Not being a computer expert, Maliksi's inclusion in the project was uncalled for. To our mind, his placement in the project was for the purpose of circumventing labor laws. The evidence shows that immediately before he entered the PHILSSEC project in October 1989, Maliksi was fresh out of his employment with SMC (through Skillpower) as acting clerk assigned to SMCMagnolia Finance (from October 1988 to 1989). Maliksi's work under the PHILSSEC project was mainly administrative in nature and necessary to the development of SMC's business. These were: a. b. c. d. e. posting manually the daily account balances in the work set; fitting the daily totals into the monthly totals; comparing the manual totals with the computer generated totals; locating the differences between the totals; and, adjusting and correcting errors.

Simply put, the data gathered by SMC on a daily basis through Maliksi's work would be submitted for analysis and evaluation, thereby allowing SMC to make the necessary business decisions that would enable it to market its products better, or monitor its sales and collection with efficiency. Without the data gatherer or encoder, no analysis could occur. SMC would then, for the most part, be kept in the dark. As to the petitioner's second assigned error, we hold that there is no need to resolve the present case under the principle that all doubts should be resolved in favor of the workingman. The perceived doubt does not obtain in the first place. We understand Maliksi's desperation in making his point clear to SMC, which unduly refuses to acknowledge his status as a regular employee. Instead, he was juggled from one employment contract to another in a continuous bid to circumvent labor laws. The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer. Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, the policy, agreement or practice should be struck down as contrary to public policy, morals, good customs or public order. In point of law, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall be liable for the damage. Ways and means contrived by employers to countermand labor laws granting regular employment status to their workers are numerous and long. For instance, they toss the poor workers from one job contractor to another, make them go through endless applications, lining up, paperwork, documentation, and physical examinations; make them sign five- or ten-month-only job contracts, yet re-hire them after brief "rest periods," but not after requiring them to go through the whole application and selection process once again; prepare and have them sign waivers, quitclaims, and the like; refuse to issue them identification cards, receipts or any other concrete proof of employment or documentary proof of payment of their salaries; fail to enroll them for entitlement to social security and other benefits; give them positions, titles or designations that connote short-term employment. Others are more creative: they set up "distributors" or "dealers" which are, in reality, shell or dummy companies. In this manner, the mother company avoids the employer-employee relations, and is thus shielded from liability from employee claims in case of illegal dismissal, closure, unfair labor practices and the like. In those instances, the poor Ma. Cecelia Timbal LlB 2 Rm 402

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employees, finding the shell or dummy company to be without assets, often end up confused and without recourse as to whom to run after. They sue the mother company which conveniently sets up the defense of absence of employer-employee relations. In San Miguel Corporation v. MAERC Integrated Services, Inc., we took note of the practice of hiring employees through labor contractors that catered exclusively to the employment needs of SMC or its divisions or other specific business interests, such that after the specific SMC business or division ceases to do business, the labor contractor likewise ceases its operations. The contrivances may be many and the schemes ingenious and imaginative. But this Court will not hesitate to put pen to a line and defend the worker's right to be secure in his (or her) proprietary right to regular employment and his right to a secure employment, viz, one that is free from fear and doubt, that anytime he could be removed, retrenched, his contract not renewed or he might not be re-hired. The ramifications may seem trivial, but we cannot allow the ordinary Filipino worker's right to tenurial security to be put in jeopardy by recurrent but abhorrent practices that threaten the very lives of those that depend on him. Considering, however, the supervening event that SMC's Magnolia Division has been acquired by another entity, it appears that private respondent's reinstatement is no longer feasible. Instead, he should be awarded separation pay as an alternative. Likewise, owing to petitioner's bad faith, it should be held liable to pay damages for causing undue injury and inconvenience to the private respondent in its contractual hiring-firing-rehiring scheme.

Eparwa vs Liceo (2006) G.R. 150402 Facts: On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security Services. On 21 December 1998, 11 security guards ("security guards") whom Eparwa assigned to LDCU from 1 December 1997 to 30 November 1998 filed a complaint before the National Labor Relations Commission's (NLRC) Regional Arbitration Branch No. 10 in Cagayan de Oro City. Docketed as NLRC-RABX Case No. 10-01-00102-99, 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. LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards. In its decision dated 18 August 1999, the Labor Arbiter found that the security guards are entitled to wage differentials and premium for holiday and rest day work. The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code. LDCU filed an appeal before the NLRC. LDCU agreed with the Labor Arbiter's decision on the security guards' entitlement to salary differential but challenged the propriety of the amount of the award. LDCU alleged that security guards not similarly situated were granted uniform monetary awards and that the decision did not include the basis of the computation of the amount of the award. Eparwa also filed an appeal before the NLRC. For its part, Eparwa questioned its liability for the security guards' claims and the awarded cross-claim amounts. The Fifth Division of the NLRC resolved Eparwa and LDCU's separate appeals in its Resolution 7 dated 19 January 2000. The NLRC found that the security guards are entitled to wage differentials and premium for holiday and rest day work. Although the NLRC held Eparwa and LDCU solidarily liable for the wage differentials and premium for holiday and rest day work, the NLRC did not require Eparwa to reimburse LDCU for its payments to the security Ma. Cecelia Timbal LlB 2 Rm 402

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guards. The NLRC also ordered the recomputation of the monetary awards according to the dates actually worked by each security guard. Eparwa and LDCU again filed separate motions for partial reconsideration of the 19 January 2000 NLRC Resolution. LDCU questioned the NLRC's deletion of LDCU's entitlement to reimbursement by Eparwa. Eparwa, on the other hand, prayed that LDCU be made to reimburse Eparwa for whatever amount it may pay to the security guards. Issue: Is LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay? Held: 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 relationship. 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. Eparwa and LDCU's Solidary Liability and LDCU's Ultimate Liability Articles 106, 107 and 109 of the Labor Code read: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of the employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

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Article 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. Article 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. This Court's ruling in Eagle Security Agency, Inc. v. NLRC squarely applies to the present case. In Eagle, we ruled that: 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 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]. In the case at bar, it is beyond dispute that the security guards are the employees of EAGLE [See Article VII Sec. 2 of the Contract for Security Services; G.R. No. 81447, Rollo, p. 34]. That they were assigned to guard the premises of PTSI pursuant to the latter's contract with EAGLE and that neither of these two entities paid their wage and allowance increases under the subject wage orders are also admitted [See Labor Arbiter's Decision, p. 2; G.R. No. 81447, Rollo, p. 75]. Thus, the application of the aforecited provisions of the Labor Code on joint and several liability of the principal and contractor is appropriate [See Del Rosario & Sons Logging Enterprises, Inc. v. NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669].

Escario vs NLRC (2000) G.R. 124055 Facts: Petitioners allege that they were employed by CMC as merchandisers. Among the tasks assigned to them were the withdrawing of stocks from the warehouse, the fixing of prices, price-tagging, displaying of merchandise, and the inventory of stocks. These were done under the control, management and supervision of CMC. The materials and equipment necessary in the performance of their job, such as price markers, gun taggers, toys, pentel pen, streamers and posters were provided by CMC. 'Their salaries were being paid by CMC. According to petitioners, the hiring, control and supervision of the workers and the payment of salaries, were all coursed by CMC through its agent D.L. Admark in order for CMC to avoid its liability under the law. CMC, on the other hand, denied the existence of an employer-employee relationship between petitioner, and itself. Rather, CMC contended that it is D.L. Admark who is the employer of the petitioners. While CMC is engaged in the manufacturing of food products and distribution of such to wholesalers and retailers, it is not allowed by law to engage in retail or direct sales to end consumers. It, however, hired independent job contractors such as D.L. Admark, to provide the necessary promotional activities for its product lines.

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For its part, D.L. Admark asserted that it is the employer of the petitioners. Its primary purpose is to carry on the business of advertising, promotion and publicity, the sales and merchandising of goods and services and conduct survey and opinion polls. As an independent contractor it serves several clients among which include Purefoods, Corona Supply, Splash Cosmetics and herein respondent California Marketing. On 7 February 1992, petitioners filed a case against CMC before the Labor Arbiter for the regularization of their employment status. On 29 July 1994, the Labor Arbiter rendered a decision finding that petitioners are the employees of CMC as they were engaged in activities that are necessary and desirable in the usual business or trade of CMC. In justifying its ruling, the Labor Arbiter cited the case of Tabas vs. CMC which, likewise, involved private respondent CMC. In the Tabas case, this Court ruled that therein petitioner merchandisers were employees of CMC, to wit: There is no doubt that in the case at bar, Livi performs "manpower services," meaning to say, it contracts out labor in favor of clients. We hold that it is one not withstanding its vehement claims to the contrary, and notwithstanding the provision of the contract that it is "an independent contractor." The nature of one's business is not determined by selfserving appellations one attaches thereto but by the tests provided by statute and prevailing case law. The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter's own business. In this connection, we do not agree that the petitioner has been made to perform activities "which are not directly related to the general business of manufacturing," California's purported "principal operation activity. The petitioners had been charged with merchandising promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occasional price tagging," an activity that is doubtless, an integral part of the manufacturing business. It is not, then, as if Livi had served as its (California's) promotions or sales arm or agent, or otherwise rendered a piece of work it (California) could not itself have done; Livi as a placement agency, had simply supplied it with manpower necessary to carry out its (California's) merchandising activities, using its (California's) premises and equipment. On appeal, the NLRC set aside the decision of the Labor Arbiter. It ruled that no employer-employee relationship existed between the petitioners and CMC. It, likewise, held that D.L. Admark is a legitimate independent contractor, hence, the employer of the petitioners. Finding no valid grounds existed for the dismissal of the petitioners by D.L. Admark, it ordered their reinstatement. Petitioners are of the position that D.L. Admark is a labor-only contractor and cites this Court's ruling in the case of Tabas, Issue: Whether petitioners are employees of CMC or D.L. Admark. Held: We cannot sustain the contention of the petitioner. In resolving this, it is necessary to determine whether D.L. Admark is a labor-only contractor or an independent contractor.Petitioners' reliance on the Tabas case is misplaced. In said case, we ruled that therein contractor Livi Manpower Services was a mere placement agency and had simply supplied herein petitioner with the manpower necessary to carry out the company's merchandising activity. We, however, further stated that: It would have been different, we believe, had Livi been discretely a promotions firm, and that California had hired it to perform the latter's merchandising activities. For then, Livi would have been truly the employer of its employees and California its client. In other words, CMC can validly farm out its merchandising activities to a legitimate independent contractor. There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

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(a)

The person supplying workers to an employer does not have substantial capital or investment in the form of

tools, equipment, machineries, work premises, among others; and (b) The workers recruited and placed by such person are performing activities which are directly related to the

principal business of the employer. In contrast, there is permissible job contracting when a principal agrees to put out or farm out with a contractor or a subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job or work or service is to be performed or completed within or outside the premises of the principal. In this arrangement, the following conditions must concur: (a) The contractor carries on a distinct and independent business and undertakes the contract work on his

account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; and (b) The contractor has substantial capital or investment in the form of tools, equipment, machineries (sic), work

premises, and other materials which are necessary in the conduct of his business. In the recent case of Alexander Vinoya vs. NLRC, et al., this Court ruled that in order to be considered an independent contractor it is not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises. In addition, the following factors need be considered: (a) whether the contractor is carrying on an independent business; (b) the nature and extent of the work; (c) the skill required; (d) the term and duration of the relationship; (e) the right to assign the performance of specified pieces of work; (f) the control and supervision of the workers; (g) the power of the employer with respect to the hiring, firing and payment of workers of the contractor; (h) the control of the premises; (i) the duty to supply premises, tools, appliances, materials, and labor; and (j) the mode, manner and terms of payment. Based on the foregoing criterion, we find that D.L. Admark is a legitimate independent contractor. Among the circumstances that tend to establish the status of D.L. Admark as a legitimate job contractor are: 1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising,

marketing and merchandising activities. 2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the supply of

sales promoting merchandising services rather than one of manpower placement. 3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions,

marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by its magazine the "Phenomenon." 4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6

million and is therefore a highly capitalized venture. It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied. Moreover, by applying the four-fold test used in determining employer-employee relationship, the status of D.L. Admark as the true employer of petitioners is further established. The elements of this test are (1) the selection and Ma. Cecelia Timbal LlB 2 Rm 402

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engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. As regards the first element, petitioners themselves admitted that they were selected and hired by D.L. Admark. As to the second element, the NLRC noted that D.L. Admark was able to present in evidence the payroll of petitioners, sample SSS contribution forms filed and submitted by DL Admark to the SSS, and the application for employment by R. de los Reyes, all tending to show that D.L. Admark was paying for the petitioners' salaries. In contrast, petitioners did not submit an iota of evidence that it was CMC who paid for their salaries. The fact that the agreement between CMC and D.L. Admark contains the billing rate and cost breakdown of payment for core merchandisers and coordinators does not in any way establish that it was CMC who was paying for their salaries. As correctly pointed out by both CMC 16 and the Office of the Solicitor General, such cost breakdown is a standard content of service contracts designed to insure that under the contract, employees of the job contractor will receive benefits mandated by law. Neither did the petitioners prove the existence of the third element. Again petitioners admitted that it was D.L. Admark who terminated their employment. To prove the fourth and most important element of control, petitioners presented the memoranda of CMC's sales and promotions manager. The Labor Arbiter found that these memos "indubitably show that the complainants were under the supervision and control of the CMC people." However, as correctly pointed out by the NLRC, a careful scrutiny of the documents adverted to, will reveal that nothing therein would remotely suggest that CMC was supervising and controlling the work of the petitioners: The memorandums were addressed to the store or grocery owners telling them about the forthcoming sales promotions of CMC products. While in one of the memorandums a statement is made that "our merchandisers and demonstrators will be assigned to pack the premium with your stocks in the shelves . . ., yet it does not necessarily mean to refer to the complainants, as they claim, since CMC has also regular merchandisers and demonstrators. It would be different if in the memorandums were sent or given to the complainants and their duties or roles in the said sales campaign are therein defined. It is also noted that in one of the memorandums it was addressed to: "All regular merchandisers/demonstrators." . . . we are not convinced that the documents sufficiently prove employer-employee relationship between complainants and respondents CMC. The Office of the Solicitor General, likewise notes that the documents fail to show anything that would remotely suggest control and supervision exercised by CMC over petitioners on the matter on how they should perform their work. The memoranda were addressed either to the store owners or "regular" merchandisers and demonstrators of CMC. Thus, petitioners, who filed a complaint for regularization against respondent CMC, thereby, conceding that they are not regular employees of the latter, cannot validly claim to be the ones referred to in said memos. Having proven the existence of an employer-employee relationship between D.L. Admark and petitioners, it is no longer relevant to determine whether the activities performed by the latter are necessary or desirable to the usual business or trade of CMC. On the issue of illegal dismissal, we agree with the findings of the NLRC that D.L. Admark "admits having dismissed the petitioners for allegedly disowning and rejecting them as their employer." Undoubtedly, the reason given is not just cause to terminate petitioners. D.L. Admark's belated claim that the petitioners were not terminated but simply did not report to work is not supported by the evidence on record. Moreover, there is no showing that due process was afforded the petitioners.

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Aboitiz vs Dimapatoi (2006) G.R. 148619 Facts: Petitioner Aboitiz Haulers, Inc. is a domestic corporation principally engaged in the nationwide and overseas forwarding and distribution of cargoes. Private respondents Monaorai Dimapatoi, Cecilia Agawin, Raul Mamate, Emmanuel Guerrero and Gemeniano Bigaw worked as checkers in the Mega Warehouse, which is owned by the petitioner, located at the Tabacalera Compound, United Nations Avenue, Manila. Respondents maintain that during their employment with the petitioner, they were not paid their regular holiday pay, night shift differential, 5-day service incentive leave, and overtime premium. They also averred that illegal deductions were being made on their wages, particularly the contributions for a Mutual Assistance Fund, a Cash Bond, and claims for damaged and misrouted cargoes incurred by petitioner. On 17 May 1996, respondent Raul Mamate filed a complaint before the Department of Labor and Employment (DOLE) for nonpayment of wages and other benefits, as well as illegal deductions. The other respondents filed their own complaints. Since the claims of the respondents exceeded Five Thousand Pesos (P5,000.00), the case was referred to the NLRC. Thereafter, respondents filed their complaint for illegal dismissal and other money claims before the Arbitration Branch of the NLRC. Petitioner claims that respondents are not its employees, rather they are the employees of Grigio Security Agency and General Services (Grigio), a manpower agency that supplies security guards, checkers and stuffers. It allegedly entered into a Written Contract of Service with Grigio on 1 March 1994. By virtue of the aforementioned Written Contract of Service, Grigio supplied petitioner with security guards, checkers and stuffers for petitioner's Mega Warehouse. The respondents were among the checkers that were assigned to the petitioner's warehouse. Petitioner emphasizes that Grigio retained control over the respondents by providing their own supervisors to oversee Grigio's personnel, as well as time cards to monitor the attendance of its personnel. Petitioner also alleges that on 9 May 1996, the respondents left the warehouse and did not report to work thereafter. As a result of the respondents' sudden abandonment of their work, there was no orderly and proper turnover of papers and other company property in connection with the termination of the Written Contract for Services. Respondents, on the other hand, claim that most of them worked as checkers in petitioner's warehouse even before 1 March 1994. Issue: Whether or not Grigio is a "labor-only" contractor. Held: Grigio is a "labor-only" contractor. The first issue that needs to be resolved is whether Grigio is a "labor-only" contractor, which is tantamount to a finding that the petitioner is the employer of the respondents. Article 106 of the Labor Code 24 explains the relations which may arise between an employer, a contractor and the contractor's employees thus: ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person

for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by him. Ma. Cecelia Timbal LlB 2 Rm 402

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The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. The first two paragraphs of Art. 106 set the general rule that a principal is permitted by law to engage the services of a contractor for the performance of a particular job, but the principal, nevertheless, becomes solidarily liable with the contractor for the wages of the contractor's employees. The third paragraph of Art. 106, however, empowers the Secretary of Labor to make distinctions between permissible job contracting and "labor-only" contracting, which is a prohibited act further defined under the last paragraph. A finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the "labor-only" contractor is considered as a mere agent of the principal, the real employer. Section 7 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, reiterates the rules in determining the existence of employer-employee relationship between employer, contractor or subcontractor, and the contractor's or subcontractor's employee. Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be

considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a competent authority: a. b. where there is a labor-only contracting; or where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.

In determining whether or not a "labor-only" contracting exists, Art. 106 of the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides the following criteria: (1) where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; (2) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer; and (3) the contractor does not exercise the right to control the performance of the work of the contractual employee. In order that one is considered by law as a "labor-only" contractor, all three aforementioned criteria need not be present. If the contractor enters into an arrangement characterized by any one of the criteria provided, this would be a clear case of "labor-only contracting." The clear phrasing of Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, support this interpretation. Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited.

For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely

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recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are is present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job,

work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) the contractor does not exercise the right to control over the performance of the work of the contractual

employee. The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. The allegation of the petitioner that Grigio is an independent job contractor, and, therefore, this case is one of permissible job contracting, is without basis. In this case, the respondents' work, as warehouse checkers, is directly related to the principal business of the petitioner. Petitioner also exercises the right to control and determines not only the end to be achieved, but also the manner and means to be used in reaching that end. Lastly, petitioner failed to sufficiently prove that Grigio had "substantial capital or investment." The respondents, as checkers, were employed to check and inspect these cargoes, a task which is clearly necessary for the petitioner's business of forwarding and distributing of cargoes. The petitioner did not dispute the fact that the respondents were hired as checkers as early as 1992. The fact that they were employed before the Written Contract of Services took effect on 24 February 1994, and continued with their jobs until 1996, after the said contract had already expired on 24 February 1995, 29 indicates that the respondents' work was indeed necessary for the petitioner's business. In a similar case, Guarin v. National Labor Relations Commission, the workers' contracts were repeatedly renewed to perform services necessary for the employer's business. Thus, the Court described the arrangement as "labor-only" contracting: The jobs assigned to the petitioners as mechanics, janitors, gardeners, firemen and grasscutters were directly related to the business of Novelty as a garment manufacturer. In the case of Philippine Bank of Communications vs. NLRC, 146 SCRA 347, we ruled that the work of a messenger is directly related to a bank's operations. In its Comment, Novelty contends that the services which are directly related to manufacturing garments are sewing, textile cutting, designs, dying, quality control, personnel, administration, accounting, finance, customs, delivery and similar other activities; and that allegedly, "it is only by stretching the imagination that one may conclude that the services of janitors, janitresses, firemen, grasscutters, mechanics and helpers are directly related to the business of manufacturing garments" (p. 78, Rollo). Not so, for the work of gardeners in maintaining clean and well-kept grounds around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires, are directly related to the daily operations of a garment factory. That fact is confirmed by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986, a period of three (3) years.

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As Lipercon was a "labor-only" contractor, the workers it supplied Novelty became regular employees of the latter.Where the employees are tasked to undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered as a "labor-only" contractor and such employees are considered as regular employees of the employer. In addition, Grigio did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal. The work activities, work shifts, and schedules of the respondents, including the time allowed for "recess" were set under the Written Contract of Services. This clearly indicates that these matters, which consist of the means and methods by which the work is to be accomplished, were not within the absolute control of Grigio. By stipulating these matters in a contract, Grigio is constrained to follow these provisions and would no longer be able to exercise the freedom to alter these work shifts and schedules at its own convenience. Such being the case, Grigio cannot be considered as an independent job contractor. Petitioner's allegation that Grigio retained control over the respondents by providing supervisors to monitor the performance of the respondents cannot be given much weight. Instead of exercising their own discretion or referring the matter to the officers of Grigio, Grigio's supervisors were obligated to refer to petitioner's supervisors any discrepancy in the performance of the respondents with their specified duties. The Written Contract of Services provided that: 5.c. That the GRIGIO personnel, particularly the supervisors, shall perform the following:

The Supervisor for the warehouse operation shall monitor the performance and productivity of all the checkers, jacklifters, stuffers/strippers, forklift operators, drivers, and helpers. He shall coordinate with AHI's supervisors regarding the operations at the Warehouse to ensure safety at the place of work. He shall see to it that the cargoes are not overlanded, shortlanded, delivered at a wrong destination, or misdelivered to consignee's port of destination. Any discrepancy shall be reported immediately to AHI's Logistic Manager, Mr. Andy Valeroso. The control exercised by petitioner's supervisors over the performance of respondents was to such extent that petitioner's Warehouse Supervisor, Roger Borromeo, confidently gave an evaluation of the performance of respondent Monaorai Dimapatoi, who likewise felt obliged to obtain such Certification from Borromeo. Petitioner's control over the respondents is evident. And it is this right to control the employee, not only as to the result of the work to be done, but also as to the means and methods by which the same is to be accomplished, that constitutes the most important index of the existence of the employer-employee relationship. Lastly, the law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting. In this case, neither Grigio nor the petitioner was able to present any proof that Grigio had substantial capital. There was no evidence pertaining to its capitalization nor its investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. Grigio was merely expected to supply petitioner with manpower to carry out work necessary for its business, to be carried out in the manner which petitioner provided in the contract. Thus, Grigio is obviously a "labor-only" contractor since it did not have substantial capital or investment which relates to the service performed; the respondents performed activities which were directly related to the main business of the petitioner; and Grigio did not exercise control over the performance of the work of the respondents. Consequently, the petitioner is considered as the employer of the respondents.

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In prohibiting "labor-only" contracting and creating an employer-employee relationship between the principal and the supposed contractor's employees, the law intends to prevent employers from circumventing labor laws intended to protect employees. In the case of Aurora Land Projects Corp. v. National Labor Relations Commission, this Court pronounced: The question as to whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. In light of this observation, it behooves this Court to be ever vigilant in checking the unscrupulous efforts of some of our entrepreneurs, primarily aimed at maximizing their return on investments at the expense of the lowly workingman.

GSIS vs NLRC (2006) G.R. 157647 Facts: Tomas Lanting, doing business under the name and style of Lanting Security and Watchman Agency (LSWA) entered into a Security Service Contract to provide security guards to the properties of the Government Service Insurance System (GSIS) at the contract rate of P3,000.00 per guard per month. During the effectivity of the contract, LSWA requested the GSIS for an upward adjustment of the contract rate in view of Section 7 of Wage Order No. 1 and Section 3 of Wage Order No. 2, which were issued by the Regional Tripartite Wages and Productivity Board-NCR pursuant to Republic Act No. 6727, otherwise known as the Wage Rationalization Act. Acting on the request of LSWA, the GSIS, through its Board of Trustees and under Board Resolution No. 207, dated May 24, 1991, approved the upward adjustments of the contract price from P3,000.00 to P3,716.07 per guard, per month effective November 1, 1990 to January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991. LSWA assigned security guards Daniel Fanila, Hector Moreno, Isauro Ferrer, Rubin Wilfredo, Jesus Delima Jr., Maria Legaspi, Santiago Noto Jr., and Virgilio Soriano (hereafter complainants) to guard one of GSIS's properties. On March 15, 1993, GSIS terminated the Security Service Contract with LSWA. All the complainants, except Virgilio Soriano, were absorbed by the incoming security agency. On March 7, 1994, complainants filed separate complaints against LSWA for underpayment of wages and non-payment of labor standard benefits from March 1991 to March 15, 1993. Virgilio Soriano also complained of illegal dismissal. In its Position Paper, LSWA alleged that complainants were estopped from claiming that they were underpaid because they were informed that the pay and benefits given to them were based on the contract rate of P103.00 per eight hours of work or about P3,100.00 per month. Issue: Whether GSIS is solidarily liable for payment of complainants-respondnents' salary differentials. Held: Yes. Articles 106 and 107 of the Labor Code provide: ART. 106. Contractor or subcontractor. Whenever an employer enters into contract with another person for

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In the event that the contractor or subcontractor fails to pay the wage 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. 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. In this case, the GSIS cannot evade liability by claiming that it had fully paid complainants' salaries by incorporating in the Security Service Contract the salary rate increases mandated by Wage Order Nos. 1 and 2 by increasing the contract price from P3,000.00 to P3,176.07 per guard per month effective November 1, 1990 to January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991. In Rosewood Processing, Inc. v. National Labor Relations Commission, 25 the Court explained the rationale for the joint and several liability of the employer, thus: The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractor's employees. This liability facilitates, if not guarantees, payment of the workers' compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution. This is not unduly burdensome to the employer. Should the indirect employer be constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor. Thus, the Court does not agree with the GSIS's claim that a double burden would be imposed upon the latter because it would be paying twice for complainants' services. Such fears are unfounded. Under Article 1217 of the Civil Code, if the GSIS should pay the money claims of complainants, it has the right to recover from LSWA whatever amount it has paid in accordance with the terms of the service contract between the LSWA and the GSIS. Joint and solidary liability is simply meant to assure aggrieved workers of immediate and sufficient payment of what is due them. This is in line with the policy of the State to protect and alleviate the plight of the working class.

Republic vs Asiapro Cooperative (2007) G.R. 172101 Facts: Respondent Asiapro, as a cooperative, is composed of owners-members.Under its by-laws, owners-members are of two categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and (2) associate member, who has no right to vote and be voted upon and shall be entitled only to such rights and privileges provided in its by-laws, Its primary objectives are to provide savings and credit facilities and to develop other livelihood services for its owners-members.In the discharge of the aforesaid primary objectives, respondent cooperative entered into several Service Contracts with Stanfilco - a division of DOLE Philippines, Inc. and a company based in Bukidnon.The owners-members do not receive compensation or wages from the respondent cooperative.Instead, they receive a share in the service surplus which the respondent cooperative earns from different areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco. The owners-

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members get their income from the service surplus generated by the quality and amount of services they rendered, which is determined by the Board of Directors of the respondent cooperative. In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent cooperative, who were assigned to Stanfilco requested the services of the latter to register them with petitioner SSS as self-employed and to remit their contributions as such. Also, to comply with Section 19-A of Republic Act No. 1161, as amended by Republic Act No. 8282, the SSS contributions of the said owners-members were equal to the share of both the employer and the employee. On 26 September 2002, however, petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie A. Jara, sent a letter to the respondent cooperative, addressed to its Chief Executive Officer (CEO) and General Manager Leo G. Parma, informing the latter that based on the Service Contracts it executed with Stanfilco, respondent cooperative is actually a manpower contractor supplying employees to Stanfilco and for that reason, it is an employer of its owners-members working with Stanfilco.Thus, respondent cooperative should register itself with petitioner SSS as an employer and make the corresponding report and remittance of premium contributions in accordance with the Social Security Law of 1997.On 9 October 2002, respondent cooperative, through its counsel, sent a reply to petitioner SSSs letter asserting that it is not an employer because its owners-members are the cooperative itself; hence, it cannot be its own employer.Again, on 21 October 2002 petitioner SSS sent a letter to respondent cooperative ordering the latter to register as an employer and report its owners-members as employees for compulsory coverage with the petitioner SSS.Respondent cooperative continuously ignored the demand of petitioner SSS. Accordingly, petitioner SSS, on 12 June 2003, filed a Petition before petitioner SSC against the respondent cooperative and Stanfilco praying that the respondent cooperative or, in the alternative, Stanfilco be directed to register as an employer and to report respondent cooperatives owners-members as covered employees under the compulsory coverage of SSS and to remit the necessary contributions in accordance with the Social Security Law of 1997.The same was docketed as SSC Case No. 6-15507-03. Respondent cooperative filed its Answer with Motion to Dismiss alleging that no employer-employee relationship exists between it and its owners-members, thus, petitioner SSC has no jurisdiction over the respondent cooperative.Stanfilco, on the other hand, filed an Answer with Cross-claim against the respondent cooperative. Issue: Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS against the respondent cooperative. Held: Petitioner SSCs jurisdiction is clearly stated in Section 5 of Republic Act No. 8282 as well as in Section 1, Rule III of the 1997 SSS Revised Rules of Procedure. Section 5 of Republic Act No. 8282 provides: SEC. 5. Settlement of Disputes. (a) Any dispute arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by the Commission, x x x.(Emphasis supplied.) Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states: Section 1.Jurisdiction. Any dispute arising under the Social Security Act with respect to coverage, entitlement of benefits, collection and settlement of contributions and penalties thereon, or any other matter related thereto, shall

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be cognizable by the Commission after the SSS through its President, Manager or Officer-in-charge of the Department/Branch/Representative Office concerned had first taken action thereon in writing.(Emphasis supplied.) It is clear then from the aforesaid provisions that any issue regarding the compulsory coverage of the SSS is well within the exclusive domain of the petitioner SSC.It is important to note, though, that the mandatory coverage under the SSS Law is premised on the existence of an employer-employee relationship except in cases of compulsory coverage of the self-employed. It is axiomatic that the allegations in the complaint, not the defenses set up in the Answer or in the Motion to Dismiss, determine which court has jurisdiction over an action; otherwise, the question of jurisdiction would depend almost entirely upon the defendant. Moreover, it is well-settled that once jurisdiction is acquired by the court, it remains with it until the full termination of the case. The said principle may be applied even to quasi-judicial bodies. In this case, the petition-complaint filed by the petitioner SSS before the petitioner SSC against the respondent cooperative and Stanfilco alleges that the owners-members of the respondent cooperative are subject to the compulsory coverage of the SSS because they are employees of the respondent cooperative.Consequently, the respondent cooperative being the employer of its owners-members must register as employer and report its ownersmembers as covered members of the SSS and remit the necessary premium contributions in accordance with the Social Security Law of 1997. Accordingly, based on the aforesaid allegations in the petition-complaint filed before the petitioner SSC, the case clearly falls within its jurisdiction.Although the Answer with Motion to Dismiss filed by the respondent cooperative challenged the jurisdiction of the petitioner SSC on the alleged lack of employer-employee relationship between itself and its owners-members, the same is not enough to deprive the petitioner SSC of its jurisdiction over the petition-complaint filed before it.Thus, the petitioner SSC cannot be faulted for initially assuming jurisdiction over the petition-complaint of the petitioner SSS. Nonetheless, since the existence of an employer-employee relationship between the respondent cooperative and its owners-members was put in issue and considering that the compulsory coverage of the SSS Law is predicated on the existence of such relationship, it behooves the petitioner SSC to determine if there is really an employer-employee relationship that exists between the respondent cooperative and its owners-members. The question on the existence of an employer-employee relationship is not within the exclusive jurisdiction of the National Labor Relations Commission (NLRC).Article 217 of the Labor Code enumerating the jurisdiction of the Labor Arbiters and the NLRC provides that: ART. 217.JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. - (a) x x 6.Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include issues on the coverage thereof, because claims are undeniably rooted in the coverage by the system.Hence, the question on the existence of an employer-employee relationship for the purpose of determining the coverage of the Social Security System is explicitly excluded from the jurisdiction of the NLRC and falls

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within the jurisdiction of the SSC which is primarily charged with the duty of settling disputes arising under the Social Security Law of 1997. On the basis thereof, considering that the petition-complaint of the petitioner SSS involved the issue of compulsory coverage of the owners-members of the respondent cooperative, this Court agrees with the petitioner SSC when it declared in its Order dated 17 February 2004 that as an incident to the issue of compulsory coverage, it may inquire into the presence or absence of an employer-employee relationship without need of waiting for a prior pronouncement or submitting the issue to the NLRC for prior determination.Since both the petitioner SSC and the NLRC are independent bodies and their jurisdiction are well-defined by the separate statutes creating them, petitioner SSC has the authority to inquire into the relationship existing between the worker and the person or entity to whom he renders service to determine if the employment, indeed, is one that is excepted by the Social Security Law of 1997 from compulsory coverage. In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of dismissal; and (4) the power to control the workers conduct, with the latter assuming primacy in the overall consideration. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish. The power of control refers to the existence of the power and not necessarily to the actual exercise thereof.It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the employer has the right to wield that power. All the aforesaid elements are present in this case. First.It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive discretion in the selection and engagement of the owners-members as well as its team leaders who will be assigned at Stanfilco. Second.Wages are defined as remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered. In this case, the weekly stipends or the so-called shares in the service surplus given by the respondent cooperative to its ownersmembers were in reality wages, as the same were equivalent to an amount not lower than that prescribed by existing labor laws, rules and regulations, including the wage order applicable to the area and industry; or the same shall not be lower than the prevailing rates of wages. It cannot be doubted then that those stipends or shares in the service surplus are indeed wages, because these are given to the owners-members as compensation in rendering services to respondent cooperatives client, Stanfilco.Third.It is also stated in the above-mentioned Service Contracts that it is the respondent cooperative which has the power to investigate, discipline and remove the owners-members and its team leaders who were rendering services at Stanfilco. Fourth.As earlier opined, of the four elements of the employer-employee relationship, the control test is the most important.In the case at bar, it is the respondent cooperative which has the sole control over the manner and means of performing the services under the Service Contracts with Stanfilco as well as the means and methods of work. Also, the respondent cooperative is solely and entirely responsible for its owners-members, team leaders and other representatives at Stanfilco. All these clearly prove that, indeed, there is an employer-employee relationship between the respondent cooperative and its ownersmembers. It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide that there shall be no employer-employee relationship between the respondent cooperative and its owners-members. This Court, however, cannot give the said provision force and effect. Ma. Cecelia Timbal LlB 2 Rm 402

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As previously pointed out by this Court, an employee-employer relationship actually exists between the respondent cooperative and its owners-members.The four elements in the four-fold test for the existence of an employment relationship have been complied with.The respondent cooperative must not be allowed to deny its employment relationship with its owners-members by invoking the questionable Service Contracts provision, when in actuality, it does exist.The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract, when the terms and surrounding circumstances show otherwise.The employment status of a person is defined and prescribed by law and not by what the parties say it should be. It is settled that the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them.However, the agreed terms and conditions must not be contrary to law, morals, customs, public policy or public order. The Service Contract provision in question must be struck down for being contrary to law and public policy since it is apparently being used by the respondent cooperative merely to circumvent the compulsory coverage of its employees, who are also its owners-members, by the Social Security Law. This Court is not unmindful of the pronouncement it made in Cooperative Rural Bank of Davao City, Inc. v. FerrerCalleja wherein it held that: A cooperative, therefore, is by its nature different from an ordinary business concern, being run either by persons, partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees x x x. An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners. In the opinion of August 14, 1981 of the Solicitor General he correctly opined that employees of cooperatives who are themselves members of the cooperative have no right to form or join labor organizations for purposes of collective bargaining for being themselves co-owners of the cooperative. However, in so far as it involves cooperatives with employees who are not members or co-owners thereof, certainly such employees are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country. The situation in the aforesaid case is very much different from the present case.The declaration made by the Court in the aforesaid case was made in the context of whether an employee who is also an owner-member of a cooperative can exercise the right to bargain collectively with the employer who is the cooperative wherein he is an owner-member. Obviously, an owner-member cannot bargain collectively with the cooperative of which he is also the owner because an owner cannot bargain with himself.In the instant case, there is no issue regarding an owner-members right to bargain collectively with the cooperative.The question involved here is whether an employer-employee relationship can exist between the cooperative and an owner-member.In fact, a closer look at Cooperative Rural Bank of Davao City, Inc. will show that it actually recognized that an owner-member of a cooperative can be its own employee. It bears stressing, too, that a cooperative acquires juridical personality upon its registration with the Cooperative Development Authority. It has its Board of Directors, which directs and supervises its business; meaning, its Board of Directors is the one in charge in the conduct and management of its affairs. With that, a cooperative can be likened to a corporation with a personality separate and distinct from its owners-

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members.Consequently, an owner-member of a cooperative can be an employee of the latter and an employer-employee relationship can exist between them. In the present case, it is not disputed that the respondent cooperative had registered itself with the Cooperative Development Authority, as evidenced by its Certificate of Registration No. 0-623-2460. In its bylaws, its Board of Directors directs, controls, and supervises the business and manages the property of the respondent cooperative.Clearly then, the management of the affairs of the respondent cooperative is vested in its Board of Directors and not in its owners-members as a whole.Therefore, it is completely logical that the respondent cooperative, as a juridical person represented by its Board of Directors, can enter into an employment with its owners-members. In sum, having declared that there is an employer-employee relationship between the respondent cooperative and its owners-member, we conclude that the petitioner SSC has jurisdiction over the petitioncomplaint filed before it by the petitioner SSS

Jaguar Security and Investigation Agency vs Sales (2008) G.R. 162420 Facts: Petitioner Jaguar Security and Investigation Agency ("Jaguar") is a private corporation engaged in the business of providing security services to its clients, one of whom is Delta Milling Industries, Inc. ("Delta"). Private respondents Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus Silva, Jr., Jaime Moron and Daneth Fetalvero were hired as security guards by Jaguar. They were assigned at the premises of Delta in Libis, Quezon City. Caranyagan and Tamayo were terminated by Jaguar on May 26, 1998 and August 21, 1998, respectively. Allegedly their dismissals were arbitrary and illegal. Sales, Moron, Fetalvero and Silva remained with Jaguar. All the guardemployees, claim for monetary benefits such as underpayment, overtime pay, rest day and holiday premium pay, underpaid 13th month pay, night shift differential, five days service and incentive leave pay. In addition to these money claims, Caranyagan and Tamayo argue that they were entitled to separation pay and back wages, for the time they were illegally dismissed until finality of the decision. Furthermore, all respondents claim for moral and exemplary damages. On September 18, 1998, respondent security guards instituted the instant labor case before the labor arbiter. On May 25, 1999, the labor arbiter rendered a decision in favor of private respondents Sales, et al., the dispositive portion of which provides: "WHEREFORE, judgment is hereby rendered dismissing the charges of illegal dismissal on the part of the complainants MELVIN R. TAMAYO and DIONISIO C. CARANYAGAN for lack of merit but ordering respondents JAGUAR SECURITY AND INVESTIGATION AGENCY and DELTA MILLING INDUSTRIES, INC., to jointly and severally pay all the six complainants, namely: RODOLFO A. SALES, MELVIN R. TAMAYO, JAIME MORON and DANETH FETALVERO the following money claims for their services rendered from April 24, 1995 to April 24, 1998: a) b) c) d) e) f) wage differentials overtime pay differentials (4 hours a day) rest day pay holiday pay holiday premium pay 13th month pay differentials

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g)

five days service incentive leave pay per year subject to the exception earlier cited.

The Research and Information Unit of this Commission is hereby directed to compute and quantify the above awards and submit a report thereon within 15 days from receipt of this decision. For purposes of any appeal, the appeal bond is tentatively set at P100,000.00. All other claims are DISMISSED for lack of merit. SO ORDERED." On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public respondent NLRC to resolve its cross-claim against Delta as the party ultimately liable for payment of the monetary award to the security guards. In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it was not the proper forum to raise the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principally liable to the employees. Thus, it directed petitioner to file a separate civil action for recovery of the amount before the regular court having jurisdiction over the subject matter, for the purpose of proving the liability of Delta. Jaguar sought reconsideration of the dismissal, but the Commission denied the same in its Resolution dated November 9, 2001. Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21, 2002 and Resolution dated February 13, 2004, dismissed the petition for lack of merit. Issue: Whether or not petitioner may claim reimbursement from Delta Milling through a cross-claim filed with the labor court? Held: The Court ruled in the negative. The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists. In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. In its crossclaim, petitioner is not seeking any relief under the Labor Code but merely reimbursement of the monetary benefits claims awarded and to be paid to the guard employees. There is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim involves a civil dispute between petitioner and Delta Milling. Petitioner's crossclaim is within the realm of civil law, and jurisdiction over it belongs to the regular courts. Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when petitioner actually pays its employees the adjudged liabilities. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors. In this case, it appears that petitioner has yet to pay the guard employees. The petition is DENIED.

Almeda et al., vs Asahi Glass (2008) G.R. 177785 Facts: This a complaint for illegal dismissal with claims for moral and exemplary damages and attorneys fees filed by Almeda, et al against Asahi Glass and San Sebastian Allied Services, Inc. SSASI. Petitioners alleged that Asahi and SSASI entered into a service contract whereby SSASI undertook to provide Asahi with the necessary manpower for its operations. Pursuant to such a contract, SSASI employed petitioners Randy Almeda, Edwin Audencial, Nolie Ma. Cecelia Timbal LlB 2 Rm 402

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Ramirez and Ernesto Calicagan as glass cutters, and petitioner Reynaldo Calicagan as Quality Controller, all assigned to work for respondent. Asahi terminated its service contract with SSASI, which in turn, terminated the employment of petitioners on the same date. Believing that SSASI was a labor-only contractor, and having continuously worked as glass cutters and quality controllers for the respondent - functions which are directly related to its main line of business as glass manufacturer - for three to 11 years, petitioners asserted that they should be considered regular employees of the Asahi; and that their dismissal from employment without the benefit of due process of law was unlawful. Asahi claimed that petitioners were employees of SSASI and were merely assigned by SSASI to work for respondent to perform intermittent services pursuant to an Accreditation Agreement. SSASI averred that it was the one who hired petitioners and assigned them to work for respondent on occasions that the latters work force could not meet the demands of its customers. Eventually, however, respondent ceased to give job orders to SSASI, constraining the latter to terminate petitioners employment. Issue: Are Almeda, et al employees of Asahi Glass even considering that they were originally hired by San Sebastian Allied Services, Inc.? Held: Yes. Almeda, et al are employees of Asahi Glass. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor or subcontractor has substantial capital or investment; and (c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social and welfare benefits. On the other hand, labor-only contracting, a prohibited act, is an arrangement in which the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In laboronly contracting, the following elements are present: (a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; (b) The employees recruited, supplied or placed by such contractor or subcontractor is performing activities which are directly related to the main business of the principal. In labor-only contracting, the statutes create an employer-employee relationship for a comprehensive purpose: to prevent circumvention of labor laws. The contractor is considered as merely the agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees are directly Ma. Cecelia Timbal LlB 2 Rm 402

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employed by the principal employer. Therefore, if SSASI was a labor-only contractor, then respondent shall be considered as the employer of petitioners who must bear the liability for the dismissal of the latter, if any. An important element of legitimate job contracting is that the contractor has substantial capital or investment, which respondent failed to prove. There is a dearth of evidence to prove that SSASI possessed substantial capital or investment when respondent began contractual relations with it more than a decade before 2003. The Court did not find a single financial statement or record to attest to the economic status and financial capacity of SSASI to venture into and sustain its own business independent from petitioner. Furthermore, the Court is unconvinced by respondents argument that petitioners were performing jobs that were not directly related to respondents main line of business. Respondent is engaged in glass manufacturing. One of the petitioners served as a quality controller, while the rest were glass cutters. The only excuse offered by respondent that petitioners services were required only when there was an increase in the markets demand with which respondent could not cope - only prove even more that the services rendered by petitioners were indeed part of the main business of respondent. It would mean that petitioners supplemented the regular workforce when the latter could not comply with the markets demand; necessarily, therefore, petitioners performed the same functions as the regular workforce. The indispensability of petitioners services was fortified by the length and continuity of their performance, lasting for periods ranging from three to 11 years. More importantly, the Court finds that the crucial element of control over petitioners rested in respondent. The power of control refers to the authority of the employer to control the employee not only with regard to the result of work to be done, but also to the means and methods by which the work is to be accomplished. It should be borne in mind that the power of control refers merely to the existence of the power and not to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the former has a right to wield the power. Petitioners followed the work schedule prepared by respondent. They were required to observe all rules and regulations of the respondent pertaining to, among other things, the quality of job performance, regularity of job output, and the manner and method of accomplishing the jobs. Other than being the one who hired petitioners, there was absolute lack of evidence that SSASI exercised control over them or their work. The fact that it was SSASI which dismissed petitioners from employment is irrelevant. It is hardly proof of control, since it was demonstrated only at the end of petitioners employment. What is more, the dismissal of petitioners by SSASI was a mere result of the termination by respondent of its contractual relations with SSASI. SSASI is a labor-only contractor; hence, it is considered as the agent of respondent. Respondent is deemed by law as the employer of petitioners. Equally unavailing is respondents stance that its relationship with petitioners should be governed by the Accreditation Agreement stipulating that petitioners were to remain employees of SSASI and shall not become regular employees of the respondent. A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or as job contractor, it being crucial that its character be measured in terms of and determined by the criteria set by statute

Sasan, Sr et al, vs NLRC and EPCIB (2008) G.R. 176240 Facts:

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Equitable-PCI Bank (E-PCIBank), a banking entity entered into a Contract for Services with HI, a corporation primarily engaged in the business of providing janitorial and messengerial services. Pursuant to their contract, HI shall hire and assign workers to E-PCIBank to perform janitorial/messengerial and maintenance services. The contract was impliedly renewed year after year. Petitioners were among those employed and assigned to E-PCIBank at its branch along Gorordo Avenue, Lahug, Cebu City, as well as to its other branches in the Visayas. On 23 July 2001, petitioners filed with the Arbitration Branch of the NLRC separate complaints against E-PCIBank and HI for illegal dismissal, with claims for separation pay, service incentive leave pay, allowances, damages, attorneys fees and costs; later amended to include a claim for 13 th month-pay. Petitioners claimed that they had become regular employees of E-PCIBank with respect to the activities for which they were employed, having continuously rendered janitorial and messengerial services to the bank for more than one year; that E-PCIBank had direct control and supervision over the means and methods by which they were to perform their jobs; and that their dismissal by HI was null and void because the latter had no power to do so since they had become regular employees of E-PCIBank. E-PCIBank averred that it entered into a Contract for Services with HI, an independent job contractor which hired and assigned petitioners to the bank to perform janitorial and messengerial services thereat. It was HI that paid petitioners wages, monitored petitioners daily time records (DTR) and uniforms, and exercised direct control and supervision over the petitioners and that therefore HI has every right to terminate their services legally. E-PCIBank could not be held liable for whatever misdeed HI had committed against its employees. HI asserted that it was an independent job contractor engaged in the business of providing janitorial and related services to business establishments, and E-PCIBank was one of its clients. Petitioners were its employees, part of its pool of janitors/messengers assigned to E-PCIBank. The Contract for Services between HI and E-PCIBank expired on 15 July 2000. E-PCIBank no longer renewed said contract with HI. HI designated petitioners to new work assignments, but the latter refused to comply with the same. Petitioners were not dismissed by HI, whether actually or constructively, thus, petitioners complaints before the NLRC were without basis. The LA rendered a Decision finding that HI was not a legitimate job contractor on the ground that it did not possess the required substantial capital or investment to actually perform the job, work, or service under its own account and responsibility as required under the Labor Code. HI is therefore a labor-only contractor and the real employer of petitioners is E-PCIBank which is held liable to petitioners. E-PCIBank and HI appealed the same to the NLRC. HI submitted before the NLRC several documents which it did not present before the LA. The NLRC took into consideration the documentary evidence presented by HI for the first time on appeal and, on the basis thereof, declared HI as a highly capitalized venture with sufficient capitalization, which cannot be considered engaged in labor-only contracting. Issues: 1. W/N HI is a labor-only contactor 2. W/N E-PCIBank should be deemed petitioners principal employer 3. W/N petitioners were illegally dismissed from their employment. Ma. Cecelia Timbal LlB 2 Rm 402

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Held: HI is a legitimate job contractor. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor or subcontractor has substantial capital or investment; and (c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits. In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present: (a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and (b) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. In distinguishing between permissible job contracting and prohibited labor-only contracting, we elucidated in Vinoya v. National Labor Relations Commission, that it is not enough to show substantial capitalization or investment in the form of tools, equipment, etc. Other facts that may be considered include the following: whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode and manner or terms of payment. Simply put, the totality of the facts and the surrounding circumstances of the case are to be considered. Each case must be determined by its own facts and all the features of the relationship are to be considered. We take note that HI has been issued by the Department of Labor and Employment (DOLE) Certificate of Registration Numbered VII-859-1297-048, stating among others that it had complied with the requirements as provided for under the Labor Code, as amended, and its Implementing Rules.

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The evidence on record also shows that HI is carrying on a distinct and independent business from E-PCIBank. The employees of HI are assigned to clients to perform janitorial and messengerial services, clearly distinguishable from the banking services in which E-PCIBank is engaged. Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipments, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. An independent contractor must have either substantial capital or investment in the form of tools, equipment, machineries, work premises, among others. The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. It is enough that it has substantial capital. In the case of HI, it has proven both. Once it is established that an entity such as in this case, HI has substantial capital, it was no longer necessary to adduce further evidence to prove that it does not fall within the purview of labor-only contracting. There is even no need for HI to refute the contention of petitioners that some of the activities they performed such as those of messengerial services are directly related to the principal business of E- PCIBank. In any event, we have earlier declared that while these services rendered by the petitioners as janitors, messengers and drivers are considered directly related to the principal business of a bank, in this case E-PCIBank, nevertheless, they are not necessary in the conduct of its (E-PCIBANKs) principal business. Etched in an unending stream of cases are four standards in determining the existence of an employer-employee relationship, namely: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismissal; and, (d) the presence or absence of control of the putative employees conduct. Most determinative among these factors is the so-called control test. All the circumstances establish that HI undertook said contract on its account, under its own responsibility, according to its own manner and method, and free from the control and direction of E-PCIBank. Where the control of the principal is limited only to the result of the work, independent job contracting exists. The janitorial service agreement between E-PCIBank and HI is a case of permissible job contracting. Considering the foregoing, plus taking judicial notice of the general practice in private, as well as in government institutions and industries, of hiring an independent contractor to perform special services, ranging from janitorial, security and even technical services, we can only conclude that HI is a legitimate job contractor. As such legitimate job contractor, the law creates an employer-employee relationship between HI and petitioners which renders HI liable for the latters claims. In view of the preceding conclusions, petitioners will never become regular employees of E-PCIBank regardless of how long they were working for the latter. Petitioners were not illegally dismissed by HI. Upon the termination of the Contract of Service between HI and EPCIBank, petitioners cannot insist to continue to work for the latter. Their pull-out from E-PCIBank did not constitute illegal dismissal since, first, petitioners were not employees of E-PCIBank; and second, they were pulled out from said assignment due to the non-renewal of the Contract of Service between HI and E-PCIBank. At the time they filed their complaints with the Labor Arbiter, petitioners were not even dismissed by HI; they were only off-detail pending their re-assignment by HI to another client. And when they were actually given new assignments by HI with other clients, petitioners even refused the same. Ma. Cecelia Timbal LlB 2 Rm 402

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Purefoods Corp., vs NLRC et al., (2008) G.R. 172241 Facts: Lolita Neri (Neri) originally filed a claim for nonpayment of additional wage increase, regularization, nonpayment of service incentive leave, underpayment of 13th month pay, and nonpayment of premium pay for holiday and holiday pay against Purefoods Corporation (Purefoods). By July 4, 1992, however, Neri was dismissed from her work as a Deli-Attendant. Subsequently, or on 13 July 1992, eleven (11) other complainants joined forces with Neri and together they filed an amended complaint, with Neri charging Purefoods with illegal dismissal. All the other complainants, save for Neri, were still working for Purefoods at the time of the filing of the amended complaint. On August 31, 1993, Labor declared Neri and the complainants as Purefoods' regular employees; and Neri as having been illegally dismissed and entitled to reinstatement with payment of backwages. Purefoods filed a partial appeal, praying that the claims of complainants be dismissed for lack of merit, or in the alternative, the case be remanded for formal hearing on the merits and to implead D.L. Admark as a party-respondent.The NLRC granted the appeal and remanded the case for further hearings on the factual issues. The case was remanded to Labor Arbiter, who, after finding that Neri is not an employee of petitioner, but rather of D.L. Admark, an independent labor contractor, dismissed the complaint. A memorandum on appeal was nominally filed by all the complainants; the NLRC ruled in complainants' favor and reversed and set aside the labor arbiter's decision. According to the NLRC, the pieces of evidence on record established the employer-employee relationship between Purefoods and Neri and the other complainants. Purefoods moved for the reconsideration of the decision but its motion was denied for lack of merit. Hence, its recourse to the Court of Appeals via a petition for certiorari. The Court of Appeals, relying on the case of Escario v. NLRC, held that D.L. Admark is a legitimate independent contractor. However, it ruled that complainants are regular employees of Purefoods. Citing Art. 280 of the Labor Code, the appellate court found that complainants were engaged to perform activities which are usually necessary or desirable in the usual business or trade of Purefoods, and that they were under the control and supervision of Purefoods' supervisors, and not of D.L. Admark's. It noted that in the Promotions Agreements between D.L. Admark and Purefoods, there was no mention of the list of D.L. Admark employees who will handle particular promotions for petitioner, and that complainants' periods of employment are not fully covered by the Promotions Agreements. Issue: Whether or not Neri and the other complainants are employees of PUREFOODS or A.D. ADMARKS? Held: The Court agrees with Purefoods' argument that Art. 280 of the Labor Code finds no application in a trilateral relationship involving a principal, an independent job contractor, and the latter's employees. Indeed, the Court has ruled that said provision is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment relationship is in dispute. It is therefore erroneous on the part of the Court of Appeals to rely on Art. 280 in determining whether an employer-employee relationship exists between respondent Neri and Purefoods. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. In this arrangement, the following conditions must be met: (a) the contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all

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matters connected with the performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. To support its position that respondent is not its employee, Purefoods relies on the following: (i) the Promotions Agreements it entered into with D.L. Admark; (ii) Department Order No. 10 (Series of 1997) which defines legitimate contracting or subcontracting; and (iii) Escario v. NLRC wherein the Court declared D.L. Admark as a legitimate labor contractor. On the other hand, early on, Neri and the rest of the complainants admitted that they worked for petitioner through D.L. Admark. However, they also averred that they were under the control and supervision of petitioner's employeessalesmen, poultry sales managers, deli supervisorswho give them work orders and to whom they submit weekly inventory reports and monthly competitive sales report. In support of these statements, Neri appended several documents (various Identification Cards, Certification from Rustan's Supermarkets stating that respondent Neri is from Purefoods, Memoranda to respondent Neri written by a supervisor from Purefoods, letters from Purefoods area sales managers introducing complainants as Purefoods Merchandisers). Purefoods, meanwhile, claims that these documents must be taken in the context of the performance of the service contracted outpromotion of its products. In the first place, D.L. Admark's status as a legitimate independent contractor has already been established in Escario v. NLRC. In the said case, complainants, through D.L. Admark, worked as merchandisers for California Manufacturing Corporation (CMC). They filed a case before the labor arbiter for the regularization of their employment status with CMC, and while the case was pending, D.L. Admark sent termination letters to complainants. The complainants thereafter amended their complaint to include illegal dismissal. The Court considered the following circumstances as tending to establish D.L. Admark's status as a legitimate job contractor: 1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising, marketing and merchandising activities. 2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services rather than one of manpower placement. 3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions, marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by its magazine the "Phenomenon." 4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied. Moreover, applying the four-fold test used in determining employer-employee relationship, the Court found that: the employees therein were selected and hired by D.L. Admark; D.L. Admark paid their salaries, as evidenced by the payroll prepared by D.L. Admark and sample contribution forms; D.L. Admark had the power of dismissal as it admitted that it was the one who terminated the employment of the employees; and finally, it was D.L. Admark who exercised control and supervision over the employees.

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Furthermore, it is evident from the Promotions Agreements entered into by Purefoods that D.L. Admark is a legitimate labor contractor. A sample agreement reads in part: WHEREAS, The FIRST PARTY is engaged in the general promotion business; WHEREAS, The SECOND PARTY will launch its "Handog sa Graduates" promotion project; WHEREAS, The FIRST PARTY has offered its services to the SECOND PARTY, in connection with the said promotion project, and the latter has accepted the said offer; NOW, THEREFORE, for and in consideration of the foregoing premises, and of the mutual convenience between them, the parties have agreed as follows: 1. The FIRST PARTY shall handle and implement the "Handog sa Graduates" promotion project of the SECOND PARTY, said project to last from February 1, 1992 to July 31, 1992. 2. The FIRST PARTY shall indemnify the SECOND PARTY for any loss or damage to the latter's properties, if such loss or damage is due to the fault or negligence of the FIRST PARTY or its agents or employees. 3. There shall be no employer-employee relationship between the FIRST PARTY or its agents or employees and the SECOND PARTY. 4. In consideration for the services to be rendered by the FIRST PARTY to the SECOND PARTY, the latter shall pay the former the amount of Two Million Six Hundred Fifty Two Thousand pesos only (P2,652,000.00) payable as follows: The agreements confirm that D.L. Admark is an independent contractor which Purefoods had engaged to supply general promotion services, and not mere manpower services, to it. The provisions expressly permit D.L. Admark to handle and implement Purefoods' project, and categorically state that there shall be no employer-employee relationship between D.L. Admark's employees and Purefoods. While it may be true that complainants were required to submit regular reports and were introduced as Purefoods merchandisers, these are not enough to establish Purefoods' control over them. Even if the report requirements are somehow considered as control measures, they were imposed only to ensure the effectiveness of the promotion services rendered by D.L. Admark. It would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement.Indeed, it would be foolhardy for any company to completely give the reins and totally ignore the operations it has contracted out. Significantly, the pieces of evidence submitted by Neri do not support her claim of having been a regular employee of Purefoods. We note that two "Statement of Earnings and Deductions"were issued for the same period, December 1989, and in one "Statement," someone deliberately erased the notation "January 1997," thereby casting doubt on the authenticity of the said documents. Even the identification cards presented by Neri are neither binding on Purefoods nor even indicative of her claimed employee status of Purefoods, issued as they were by the supermarkets concerned and not by Purefoods itself. Moreover, the check voucher issued by Purefoods marked "IN PAYMENT OF DL ADMARK DELI ATTENDANTS 12.00 PESOS ADJUSTMENT JAN 30, 1991 TO JUNE 22, 1992," signed and received by Neri, is proof that Purefoods never considered Neri as its own employee, but rather as one of D.L. Admark's deli attendants. We also note that Neri herself admitted in her Sinumpaang Salaysay and in the hearings that she applied with D.L. Admark and that she worked for Purefoods through D.L. Admark. Neri was aware from the start that D.L. Admark was her employer and not Purefoods. She had kept her contract with D.L. Admark, and inquired about her Ma. Cecelia Timbal LlB 2 Rm 402

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employment status with D.L. Admark. It was D.L. Admark, as her employer, which had the final say in, and which actually effected, her termination. In view of the foregoing, we hold that Neri is not an employee of Purefoods, but that of D.L. Admark. In the absence of employer-employee relations between Neri and Purefoods, the complaint for illegal dismissal and other monetary claims must fail.

Maranaw Hotels and Resort vs CA (2009) G.R. 149660 Facts: Oabel was hired by petitioner as an extra beverage attendant. He worked in Century Park Hotel, an establishment owned by the petitioner. Petitioner contracted with Manila Resource Development Corp or MANRED. Oabel was transferred to MANRED with the latter deporting itself as her employer. Oabel worked as secretary, public relations, gift shop attendant, waitress and shop attendant. Oabel filed a petition for regularization of employment. She was dismissed from employment. Petitioner argues that it entered into a service agreement with MANRED. MANRED maintains that Oabel is its employee and was willing to reinstate her. Held: Notably, private respondents purported employment with MANRED commenced only in 1996, way after she was hired by the petitioner as extra beverage attendant on April 24, 1995. There is thus much credence in the private respondents claim that the service agreement executed between the petitioner and MANRED is a mere ploy to circumvent the law on employment, in particular that which pertains on regularization. In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not cease with the end of each event or function and that there is an ever present need for individuals to perform certain tasks necessary in the petitioners business. Thus, although the tasks themselves may vary, the need for sufficient manpower to carry them out does not. In any event, as borne out by the findings of the NLRC, the petitioner determines the nature of the tasks to be performed by the private respondent, in the process exercising control. This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED is a labor-only contractor. Concordantly, the real employer of private respondent Oabel is the petitioner. It appears further that private respondent has already rendered more than one year of service to the petitioner, for the period 1995-1998, for which she must already be considered a regular employee, pursuant to Article 280 of the Labor Code: Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

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An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. (Emphasis supplied)

Cola-Cola Bottlers Phils., vs Agito et al., (2009) G.R. 179546 Facts: Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) and engaged in manufacturing, bottling and distributing soft drink beverages and other allied products. Respondents filed before the NLRC two complaints against petitioner, Interserve, Peerless Integrated Services, Inc., Better Builders, Inc., and Excellent Partners, Inc. for reinstatement with backwages, regularization, nonpayment of 13th month pay, and damages. Respondents alleged in their Position Paper that they were salesmen assigned at the Lagro Sales Office of petitioner. They had been in the employ of petitioner for years, but were not regularized. Their employment was terminated without just cause and due process. However, they failed to state the reason/s for filing a complaint against Interserve; Peerless Integrated Services, Inc.; Better Builders, Inc.; and Excellent Partners, Inc. Petitioner filed its Position Paper (with Motion to Dismiss), where it averred that respondents were employees of Interserve who were tasked to perform contracted services in accordance with the provisions of the Contract of Services executed between petitioner and Interserve. Said Contract between petitioner and Interserve, covering the period of 1 April 2002 to 30 September 2002, constituted legitimate job contracting, given that the latter was a bona fide independent contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. To prove the status of Interserve as an independent contractor, petitioner presented the following pieces of evidence: (1) the Articles of Incorporation of Interserve; (2) the Certificate of Registration of Interserve with the Bureau of Internal Revenue; (3) the Income Tax Return, with Audited Financial Statements, of Interserve for 2001; and (4) the Certificate of Registration of Interserve as an independent job contractor, issued by the Department of Labor and Employment (DOLE). As a result, petitioner asserted that respondents were employees of Interserve, since it was the latter which hired them, paid their wages, and supervised their work, as proven by: (1) respondents Personal Data Files in the records of Interserve; (2) respondents Contract of Temporary Employment with Interserve; and (3) the payroll records of Interserve. Petitioner, thus, sought the dismissal of respondents complaint against it on the ground that the Labor Arbiter did not acquire jurisdiction over the same in the absence of an employer-employee relationship between petitioner and the respondents. Petitioner argues that there could not have been labor-only contracting, since respondents did not perform activities that were indispensable to petitioners principal business. And, even assuming that they did, such fact alone does not establish an employer-employee relationship between petitioner and the respondents, since respondents were unable Ma. Cecelia Timbal LlB 2 Rm 402

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to show that petitioner exercised the power to select and hire them, pay their wages, dismiss them, and control their conduct. Issue: WON Interserve is a legitimate job contractor. Held: Interserve is not a legitimate job contractor. Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restriction, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employee does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. The afore-quoted provision recognizes two possible relations among the parties: (1) the permitted legitimate job contract, or (2) the prohibited labor-only contracting. A legitimate job contract, wherein an employer enters into a contract with a job contractor for the performance of the formers work, is permitted by law. Thus, the employer-employee relationship between the job contractor and his employees is maintained. In legitimate job contracting, the law creates an employer-employee relationship between the employer and the contractors employees only for a limited purpose, i.e., to ensure that the employees are paid their wages. The employer becomes jointly and severally liable with the job contractor only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the employer is not responsible for any claim made by the contractors employees. On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent in recruiting and supplying the principal employer with workers for the purpose of circumventing labor law provisions setting down the rights of employees. It is not condoned by law. A finding by the appropriate authorities that a contractor is a "labor-only" contractor establishes an employer-employee relationship between the principal employer and the contractors employees and the former becomes solidarily liable for all the rightful claims of the employees. Section 5 of the Rules Implementing Articles 106-109 of the Labor Code, as amended, provides the guidelines in Ma. Cecelia Timbal LlB 2 Rm 402

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determining whether labor-only contracting exists: Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) The contractor does not exercise the right to control the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out. The "right to control" shall refer to the right reversed to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. (Emphasis supplied.) When there is labor-only contracting, Section 7 of the same implementing rules, describes the consequences thereof: Section 7. Existence of an employer-employee relationship.The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following case, as declared by a competent authority: a. where there is labor-only contracting; or b. where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof. Labor-only contracting would give rise to: (1) the creation of an employer-employee relationship between the principal and the employees of the contractor or sub-contractor; and (2) the solidary liability of the principal and the contractor to the employees in the event of any violation of the Labor Code. The law clearly establishes an employer-employee relationship between the principal employer and the contractors employee upon a finding that the contractor is engaged in "labor-only" contracting. Article 106 of the Labor Code categorically states: "There is labor-only contracting where the person supplying workers to an employee does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, Ma. Cecelia Timbal LlB 2 Rm 402

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and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer." Thus, performing activities directly related to the principal business of the employer is only one of the two indicators that "labor-only" contracting exists; the other is lack of substantial capital or investment. The Court finds that both indicators exist in the case at bar. Interserve did not have substantial capital or investment in the form of tools, equipment, machineries, and work premises; and respondents, its supposed employees, performed work which was directly related to the principal business of petitioner. Interserve falls under the definition of a "labor-only" contractor, under Article 106 of the Labor Code; as well as Section 5(i) of the Rules Implementing Articles 106-109 of the Labor Code, as amended. Interserve is a labor-only contractor under Section 5(ii) of the Rules Implementing Articles 106-109 of the Labor Code, as amended, since it did not exercise the right to control the performance of the work of respondents. Paragraph 3 of the Contract specified that the personnel of contractor Interserve, which included the respondents, would comply with "CLIENT" as well as "CLIENTs policies, rules and regulations." It even required Interserve personnel to subject themselves to on-the-spot searches by petitioner or its duly authorized guards or security men on duty every time the said personnel entered and left the premises of petitioner. Said paragraph explicitly established the control of petitioner over the conduct of respondents. Although under paragraph 4 of the same Contract, Interserve warranted that it would exercise the necessary and due supervision of the work of its personnel, there is a dearth of evidence to demonstrate the extent or degree of supervision exercised by Interserve over respondents or the manner in which it was actually exercised. There is even no showing that Interserve had representatives who supervised respondents work while they were in the premises of petitioner. Also significant was the right of petitioner under paragraph 2 of the Contract to "request the replacement of the CONTRACTORS personnel." True, this right was conveniently qualified by the phrase "if from its judgment, the jobs or the projects being done could not be completed within the time specified or that the quality of the desired result is not being achieved," but such qualification was rendered meaningless by the fact that the Contract did not stipulate what work or job the personnel needed to complete, the time for its completion, or the results desired. The said provision left a gap which could enable petitioner to demand the removal or replacement of any employee in the guise of his or her inability to complete a project in time or to deliver the desired result. The power to recommend penalties or dismiss workers is the strongest indication of a companys right of control as direct employer.1avvphil.zw+ Paragraph 4 of the same Contract, in which Interserve warranted to petitioner that the former would provide relievers and replacements in case of absences of its personnel, raises another red flag. An independent job contractor, who is answerable to the principal only for the results of a certain work, job, or service need not guarantee to said principal the daily attendance of the workers assigned to the latter. An independent job contractor would surely have the discretion over the pace at which the work is performed, the number of employees required to complete the same, and the work schedule which its employees need to follow. the Contract of Services between Interserve and petitioner did not identify the work needed to be performed and the final result required to be accomplished. Instead, the Contract specified the type of workers Interserve must provide petitioner ("Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD") and their qualifications (technical/vocational course graduates, physically fit, of good moral character, and have not been convicted of any crime). The Contract also states that, "to carry out the undertakings specified in the immediately preceding paragraph, the CONTRACTOR shall employ the necessary personnel," thus, acknowledging that Interserve did not Ma. Cecelia Timbal LlB 2 Rm 402

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yet have in its employ the personnel needed by petitioner and would still pick out such personnel based on the criteria provided by petitioner. In other words, Interserve did not obligate itself to perform an identifiable job, work, or service for petitioner, but merely bound itself to provide the latter with specific types of employees. These contractual provisions strongly indicated that Interserve was merely a recruiting and manpower agency providing petitioner with workers performing tasks directly related to the latters principal business. Interserve was engaged in prohibited labor-only contracting, petitioner shall be deemed the true employer of respondents. As regular employees of petitioner, respondents cannot be dismissed except for just or authorized causes, none of which were alleged or proven to exist in this case, the only defense of petitioner against the charge of illegal dismissal being that respondents were not its employees.

South Davao Development Co. vs Gamo (2009) G.R. 171814 Facts: Petitioner South Davao Development Company is the operator of a coconut and mango farm in San Isidro, Davao Oriental and Inawayan/Baracatan, Davao del Sur. On 1963 petitioner hired respondent Sergio L. Gamo (Gamo) as a foreman. Sometime in 1987, petitioner appointed Gamo as a copra maker contractor. Respondents Ernesto Belleza, Carlos Rojas, Maximo Malinao were all employees in petitioners coconut farm, while respondents Felix Terona, Virgilio Cosep, Maximo Tolda, and Nelson Bagaan were assigned to petitioners mango farm. All of the abovenamed respondents (copra workers) were later transferred by petitioner to Gamo as the latters copraceros. From 1987 to 1999, Gamo and petitioner entered into a profit-sharing agreement wherein 70% of the net proceeds of the sale of copra went to petitioner and 30% to Gamo. The copra workers were paid by Gamo from his 30% share. Petitioner wanted to standardize payments to its "contractors" in its coconut farms. Petitioner proposed a new payment scheme to Gamo. The new scheme provided a specific price for each copra making activity. Gamo submitted his counter proposal. Petitioner did not accept Gamos counter proposal since it was higher by at least fifty percent (50%) from its original offer. Without agreeing to the new payment scheme, Gamo and his copra workers started to do harvesting work. Petitioner told them to stop. Eventually, petitioner and Gamo agreed that the latter may continue with the harvest provided that it would be his last "contract" with petitioner. Gamo suggested to petitioner to look for a new "contractor" since he was not amenable to the new payment scheme. Gamo and petitioner failed to agree on a payment scheme, thus, petitioner did not renew the "contract" of Gamo. Gamo and the copra workers alleged that they were illegally dismissed. On the other hand, respondent Eleonor Cosep (Eleonor) was employed as a mango classifier in the packing house of petitioners mango farm in San Isidro, Davao Oriental. Sometime in October 1999, she did not report for work as she had wanted to raise and sell pigs instead. Petitioner, through Malone Pacquiao, tried to convince Eleonor to report for work but to no avail.

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Respondents filed a complaint for illegal dismissal against petitioner. They alleged that sometime in December 1999, petitioner verbally terminated them en masse. Issues: (1) whether there is a valid job contracting between petitioner and Gamo; and (2) whether Eleonor had effectively abandoned her work. Held: To establish the existence of an independent contractor, we apply the following conditions: first, the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and second, the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Gamo and the copra workers did not exercise independent judgment in the performance of their tasks. The tools used by Gamo and his copra workers like the karit, bolo, pangbunot, panglugit and pangtapok are not sufficient to enable them to complete the job. Reliance on these primitive tools is not enough. In fact, the accomplishment of their task required more expensive machineries and equipment, like the trucks to haul the harvests and the drying facility, which petitioner corporation owns. SC also ruled that there exist employer- employee relationship applying the 4 fold test especially the control power exercised by petitioner wherein petitioner corporation transferred the copra workers from their previous assignments to work as copraceros. It was also in the exercise of the same power that petitioner corporation put Gamo in charge of the copra workers although under a different payment scheme. Thus, it is clear that an employer-employee relationship has existed between petitioner corporation and respondents since the beginning and such relationship did not cease despite their reassignments and the change of payment scheme. 3.) It is well settled that abandonment as a just and valid ground for dismissal requires the deliberate and unjustified refusal of the employee to return for work. Two elements must be present, namely: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. The second element is more determinative of the intent and must be evinced by overt acts. Mere absence, not being sufficient, the burden of proof rests upon the employer to show that the employee clearly and deliberately intended to discontinue her employment without any intention of returning. In Samarca v. Arc-Men Industries, Inc, we held that abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. An employee who takes steps to protest her layoff cannot be said to have abandoned her work because a charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement. When Eleonor filed the illegal dismissal complaint, it totally negated petitioners theory of abandonment. Also, to effectively dismiss an employee for abandonment, the employer must comply with the due process requirement of sending notices to the employee. In Brahm Industries, Inc. v. NLRC, we ruled that this requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious concern since it Ma. Cecelia Timbal LlB 2 Rm 402

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constitutes a safeguard of the highest order in response to mans innate sense of justice. Petitioner was not able to send the necessary notice requirement to Eleonor. Based on the foregoing, Eleonor did not abandon her work.

Jethro Intelligence & Security Corp., vs Secretary of DOLE (2009) G.R. 172537 Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13 th month pay, and night shift differential, the Department of Labor and Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakults premises in Calamba, Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order No. 18-02. Hearings on Garcias complaint and on the subsequent complaints of his co-respondents Gil Cordero et al. were conducted during which Jethro submitted copies of payrolls covering June 16 to 30, 2003, February to May 16-31, 2004, June 16-30, 2003, and February 1-15, 2004. Jethro failed to submit daily time records of the claimants from 2002 to June 2004, however, despite the order for it to do so. By Order of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials, regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium. Petitioners were also ordered to submit proof of payment to the claimants within ten calendar days, failing which the entire award would be doubled, pursuant to Republic Act No. 8188, and the corresponding writs of execution and garnishment would be issued. Issues: 1. Whether the SOLE has no jurisdiction over the case because, following Article 129 of the Labor Code, the aggregate money claim of each employee exceeded P5,000.00. 2. Whether petitioner Jethro, as the admitted employer of respondents, could not be expected to keep payrolls and daily time records in Yakults premises as its office is in Quezon City, hence, the inspection conducted in Yakults plant had no basis. 3. Whether or not the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order. Held: While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730). Art. 128 explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary xxx thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representative to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection

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In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law. Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law. It bears emphasis that the SOLE, under Article 106 of the Labor Code, as amended, exercises quasi-judicial power, at least to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He/she or the Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The significance of and binding effect of the compliance orders of the DOLE Secretary is enunciated in Article 128 of the Labor Code. And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor Standards Cases in Regional Offices provides that the filing of a petition for certiorari shall not stay the execution of the appealed order or decision, unless the aggrieved party secures a temporary restraining order (TRO) from the Court. In the case at bar, no TRO or injunction was issued, hence, the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order.

Traveno et al., vs Bobongon Banana Growers Multi-purpose Coop et al., (2009) G.R. 164205 Facts: Petitioners asseverated that while they worked under the direct control of supervisors assigned by TACOR and DFI, these companies used different schemes to make it appear that petitioners were hired through independent contractors, including individuals, unregistered associations, and cooperatives; that the successive changes in the names of their employers notwithstanding, they continued to perform the same work under the direct control of TACOR and DFI supervisors; and that under the last scheme adopted by these companies, the nominal individual contractors were required to, as they did, join a cooperative and thus became members of respondent Bobongon Banana Growers Multi-purpose Cooperative. Issue: WON the relationship that exist between parties is job contracting. Held: To the Court, the Contract between the Cooperative and DFI, far from being a job contracting arrangement, is in essence a business partnership that partakes of the nature of a joint venture. The rules on job contracting are, therefore, inapposite. The Court may not alter the intention of the contracting parties as gleaned from their stipulations without violating the autonomy of contracts principle under Article 1306 of the Civil Code which gives the contracting parties the utmost liberality and freedom to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good custom, public order or public policy.

Aliviado vs Procter and Gamble Phils. Inc., et al (2010) G.R. 160506 Facts:

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Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992 or March 11, 1993. They all individually signed employment contracts with either PrommGem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice. P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products. In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal. On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee relationship between petitioners and P&G. He found that the selection and engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to the means and methods by which their work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors. Appealing to the NLRC, petitioners disputed the Labor Arbiters findings. On July 27, 1998, the NLRC rendered a Decision dismissing their appeal. Petitioners then filed a petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Labor Arbiter and the NLRC. However, said petition was also denied by the CA. Petitioners filed a motion for reconsideration but the motion was also denied. Issue: Whether or not Promm-Gem and SAPS are labor-only contractors. Held: Promm-Gem is an independent contractor however, SAPS is a labor-only contractor. The pertinent Labor Code provision on the matter states: ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

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Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 1802, distinguishes between legitimate and labor-only contracting: Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) [T]he contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02. The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not Ma. Cecelia Timbal LlB 2 Rm 402

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merely contractual or project, employees. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates on the part of Promm-Gem bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order. Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor. On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31,250.00. There is no other evidence presented to show how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets. In Vinoya v. National Labor Relations Commission, the Court held that "[w]ith the current economic atmosphere in the country, the paid-in capitalization of PMCI amounting to P75,000.00 cannot be considered as substantial capital and, as such, PMCI cannot qualify as an independent contractor."Applying the same rationale to the present case, it is clear that SAPS having a paid-in capital of only P31,250 - has no substantial capital. SAPS lack of substantial capital is underlined by the records which show that its payroll for its merchandisers alone for one month would already total P44,561.00. It had 6-month contracts with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own capital and investment. Its capital is not even sufficient for one months payroll. SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate its needed revenue to sustain its operations independently. Substantial capital refers to capitalization used in the performance or completion of the job, work or service contracted out. In the present case, SAPS has failed to show substantial capital. Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that the former is engaged in "labor-only contracting". "Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the labor-only contractor." The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Consequently, petitioners recruited and supplied by SAPS -- which engaged in labor-only contracting -- are considered as the employees of P&G while those having worked under, and been dismissed by Promm-Gem, are considered the employees of Promm-Gem, not of P&G.

DBP vs NLRC (1995) G.R. 108031 Facts: In September 1983, petitioner Development Bank of the Philippines, as mortgagee of TPWII, foreclosed its plant facilities and equipment. Nevertheless, TPWII continued its business operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities and equipment. In January 1986 petitioner took possession of the Ma. Cecelia Timbal LlB 2 Rm 402

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foreclosed properties. From then on the company ceased its operations. As a consequence private respondent Leonor A. Ang was on 15 April 1986 verbally terminated from the service. After hearing on a complaint for separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances against TPWII, its General Manager, and petitioner, the Labor Arbiter found TPWII primarily liable to private respondent but only for her separation pay and vacation and sick leave pay because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed. The General Manager was absolved of any liability. But with respect to petitioner, it was held subsidiarily liable in the event the company failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an employee to be paid benefits due him from the properties of his employer is superior to the right of the latter's mortgagee, citing this Court's resolution in PNB v. Delta Motor Workers Union. On 16 November 1992 public respondent National Labor Relations Commission affirmed the ruling of the Labor Arbiter.Petitioner argues that the decision of public respondent runs counter to the consistent rulings of this Court in a long line of cases emphasizing that the applicant of Art. 110 of the Labor Code is contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer.

Issue: Whether or not Art. 110 of the Labor Code, as amended, which refers to worker preference in case of bankruptcy or liquidation of an employer's business, is applicable to the present case notwithstanding the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII. Held: Article 110 is applicable NOT applicable in the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII.We hold that public respondent gravely abused its discretion in affirming the decision of the Labor Arbiter. Art. 110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions of the Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is avoided. Art. 110, then prevailing, provides: ARTICLE 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of

an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and Regulations Implementing the Labor Code provides: SECTION 10. Payment of wages in case of bankruptcy. Unpaid wages earned by the employees

before the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. We interpreted this provision in Development Bank of the Philippines v. Santos to mean that . . . a declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order . . .

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The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be putting the worker in a better position than the State which could only assert its own prior preference in case of a judicial proceeding. Art. 110, which was amended by R.A. 6715 effective 21 March 1989, now reads: ARTICLE 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of

an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. Obviously, the amendment expanded the concept of "worker preference" to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. The Rules and Regulations Implementing R.A. 6715, approved 24 May 1989, also amended the corresponding implementing rule, and now reads: SECTION 10. Payment of wages and other monetary claims in case of bankruptcy. In case of

bankruptcy or liquidation of the employer's business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid. Although the terms "declaration" (of bankruptcy) or "judicial" (liquidation) have been notably eliminated, still in Development Bank of the Philippines v. NLRC , this Court did not alter its original position that the right to preference given to workers under Art. 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. In effect, we reiterated our previous interpretation in Development Bank of the Philippines v. Santos where we said: It (worker preference) will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the 'claims of the Government and other creditors' may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the adjudication made will be binding on all parties-in-interest since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony. In ruling, as we did, in Development Bank of the Philippines v. Santos, we took into account the following pronouncements:In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvent's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated. The rationale therefore has been expressed in the recent case of DBP v. Secretary of Labor (G.R. No. 79351, 28 November 1989), which we quote: A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtors are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale (of) the debtor's specific property. Indubitably, the preferential right of

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credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established. In the present case, there is as yet no declaration of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to enforce the worker's preference.The additional ratiocination of public respondent that "under Article 110 of the Labor Code complainant enjoys a preference of credit over the properties of TPWII being held in possession by DBP," is a dismal misconception of the nature of preference of credit, a subject matter which we have already discussed in clear and simple terms and even distinguished from a lien in Development Bank of the Philippines v. NLRC: . . . A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. . . . In the words of Republic v. Peralta, supra: 'Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article 2241, number 6: 'claims for laborers' wages, on the goods manufactured or the work done'; or by Article 2242, number 3: 'claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals and other works. . . . To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6, and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2244. The DBP anchors its claims on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not attached to any specific property, is an ordinary preferred credit although its impact is to move it from second priority to first priority in order of preference established by Article 2244 of the Civil Code. The present controversy could have been easily settled by public respondent had it referred to ample jurisprudence which already provides the solution. Stare decisis et non quieta movere. Once a case is decided by this Court as the final arbiter of any justiciable controversy one way, then another case involving exactly the same point at issue should be decided in the same manner. Public respondent had no choice on the matter. It could not have ruled any other way. This Court having spoken in a string of cases against public respondent, its duty is simply to obey judicial precedents. Any further disregard, if not defiance, of our rulings will be considered a ground to hold public respondent in contempt.

Batong Buhay Gold Mines vs Dela Serna (1999) G.R. 86963 Facts: Ma. Cecelia Timbal LlB 2 Rm 402

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On February 5, 1987, private respondents who are employees of petitioner Batong Buhay Gold Mines, Inc. (BBGMI), filed a complaint against BBGMI for non-payment of basic pay and allowances pursuant to Wage Orders Nos. 2 and 5, 13th month pay for 1985, 1986 and 1987, non-payment of salaries, vacation and sick leave and salaries of employees who were placed on forced leave since November 1985. Upon motion of private respondents, an inspection was conducted on BBGMI. The Regional Director adopted the recommendation of the Labor Standards and Welfare Officers and he issued an Order dated July 31, 1987 directing BBGMI to pay to private respondent the sum of P4,818,746.40. A writ of execution was issued and some of the properties of BBGMI were seized and sold at public auction. Finally, BBGMI posted a supersedeas bond which restrained further enforcement of the writ of execution. BBGMI appealed the Order dated July 31, 1987 of the Regional Director to public respondent Undersecretary Labor and Employment Dionisio dela Serna claiming that the Regional Director had no jurisdiction over the case. Acting thereon, the public respondent issued an Order dated September 16, 1988 upholding the jurisdiction of the Regional Director and annulling all the auction sales for nsufficiency of price. Consequently, motions for intervention were filed by MFT Corp. as the highest bidder in the auction sale conducted on October 29, 1987, and Salter Holdings Pty. Ltd. claiming that MFT Corp. had already assigned its rights over the subject properties in its favor. The said motions were granted by the public respondent and in his order dated December 14, 1988 it directed the exclusion from annulment of the properties sold at the October 29, 1987 auction sale as claimed by the intervenors. Hence, this petition which questioned the jurisdiction of the Regional Director over the complaint and whether or not the auction sales conducted are valid. The Court ruled that the Regional Director has jurisdiction over the BBGMI employees. The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of the Department of Labor and Employment (DOLE). Labor standards refers 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. Labor standards cases are governed by Article 128 (b) of the Labor Code. Issue: Whether or not the auction sales conducted by Special Sheriff Ramos valid to satisfy the judgment award. Held: The auction sales in the first order were invalid but on different grounds. The auction sale in the second order. It bears stressing that the writ of execution issued by the Regional Director led to the several auction sales conducted on September 24, 1987, October 2, 1987, October 23, 1987, October 29, 1987 and October 30, 1987. In the first Order of public respondent, the five (5) auction sales were declared null and void. As the public respondent put it, "the scandalously low price for which the personal properties of the respondent were sold leads us to no other recourse but to invalidate the auction sales conducted by the special sheriff." In the September 16, 1988 Order of public respondent, the personal properties and corresponding prices for which they were sold were to satisfy the judgment award in the amount of P4,818,746.00." As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed absent any showing of grave abuse of discretion tainting the same. But in the case under scrutiny, there was grave abuse of discretion when the public respondent, without any evidentiary support, adjudged such prices as "scandalously low". He merely relied on the self-serving assertion by the petitioner that the value of the auctioned properties was more than the price bid. Obviously, this ratiocination did not suffice to set aside the auction sales. The Ma. Cecelia Timbal LlB 2 Rm 402

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presumption of regularity in the performance of official function is applicable here. Conformably, any party alleging irregularity vitiating auction sales must come forward with clear and convincing proof. Furthermore, it is a well-settled principle that: "Mere inadequacy of price is not, of itself sufficient ground to set

aside an execution sale where the sale is regular, proper and legal in other respects, the parties stand on an equal footing, there are no confidential relation between them, there is no element of fraud, unfairness, or oppression, and there is no misconduct, accident, mistake or surprise connected with, and tending to cause, the inadequacy." Consequently, in declaring the nullity of the subject auction sales on the ground of inadequacy of price, the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction. But, this is not to declare the questioned auction sales as valid. The same are null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines. The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP) even prior to the filing of the complaint of petitioner's employees. The properties having been mortgaged to DBP, the applicable law is Section 14 of Executive Order No. 81, dated 3 December 1986, otherwise known as the "The 1986 Revised Charter of the Development Bank of the Philippines," which exempts the properties of petitioner mortgaged to DBP from attachment or execution sales. Section 14 of E.O. 81, reads: "SECTION 14. Exemption from Attachment. The provisions of any law to the contrary notwithstanding,

securities on loans and/or other accommodations granted by the Bank or its predecessor-in-interest shall not be subject to attachment, execution or any other court process, nor shall they be included in the property of insolvent persons or institutions, unless all debts and obligations of the Bank or its predecessor-in-interest, penalties, collection of expenses, and other charges, subject to the provisions of paragraph (e) of Sec. 9 of this Charter." Private respondents contend that even if subject properties were mortgaged to DBP (now under Asset Privatization Trust), Article 110 of the Labor Code, as amended by RA 6715, applies just the same. According to them, the said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This contention is untenable. In the case of DBP vs. NLRC, the Supreme Court held that the workers preference regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates bankruptcy or liquidation proceedings of the employer's business. What is more, it does not disregard the preferential lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification, concurrence and preference of credits. It is well to remember that the said properties were transferred to the intervenors, when Fidel Bermudez, the highest bidder at the auction sale, sold the properties to MFT Corporation which, in turn, sold the same properties to Salter Holdings Pty., Ltd. Public respondent opined that the contract of sale between the intervenors and the highest bidder should be respected as these sales took place during the interregnum after the auction sale was conducted on October 29, 1987 and before the issuance of the first disputed Order declaring all the auction sales null and void. On this issue, the Court rules otherwise.As regards personal properties, the general rule is that title, like a stream, cannot rise higher than its source. Consequently, a seller without title cannot transfer a title better than what he holds. MFT Corporation and Salter Holdings Pty., Ltd. trace their title from Fidel Bermudez, who was the highest bidder of a void auction sale over properties exempt from execution. Such being the case, the subsequent sale made by him (Fidel Bermudez) is incapable of vesting title or ownership in the vendee. The Order dated December 14, 1988, declaring the October 29, 1987 auction sale as valid, was issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Ma. Cecelia Timbal LlB 2 Rm 402

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Barayoga vs Asset Privatization Trust (2005) G.R. 160073 Facts: Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur.On December 8, 1986, [Respondent] Asset Privatization Trust (APT), a public trust was created under Proclamation No. 50, as amended, mandated to take title to and possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine government identified for privatization or disposition. Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino issued Administrative Order No. 14 identifying certain assets of government institutions that were to be transferred to the National Government. Among the assets transferred was the financial claim of the Philippine National Bank against BISUDECO in the form of a secured loan. Consequently, by virtue of a Trust Agreement executed between the National Government and APT on February 27, 1987, APT was constituted as trustee over BISUDECO's account with the PNB. Sometime later, on August 28, 1988, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take over the management of the sugar plantation and milling operations until August 31, 1992. Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its mortgaged properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriff's Certificate of Sale. On July 23, 1991, the union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages and other labor standard benefits plus damages. In the meantime, on July 15, 1992, APT's Board of Trustees issued a resolution accepting the offer of Bicol-Agro-Industrial Cooperative (BAPCI) to buy the sugar plantation and mill. Again, on September 23, 1992, the board passed another resolution authorizing the payment of separation benefits to BISUDECO's employees in the event of the company's privatization. Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT and took over its sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil). On December 17, 1992, the union filed a similar complaint, later to be consolidated with its earlier complaint and docketed as RAB V Case No. 07-00184-91. On March 2, 1993, it filed an amended complaint, impleading as additional party respondents APT and Pensumil. In their Position Paper, the union alleged that when Philsucor initially took over the operations of the company, it retained BISUDECO's existing personnel under the same terms and conditions of employment. Nonetheless, at the start of the season sometime in May 1991, Philsucor started recalling workers back to work, to the exception of the union members. Management told them that they will be re-hired only if they resign from the union. Just the same, thereafter, the company started to employ the services of outsiders under the 'pakyaw' system. BISUDECO, Pensumil and APT all interposed the defense of lack of employer-employee relationship.After due proceedings, on April 30, 1998, Labor Arbiter Fructuoso T. Aurellano disposed as follows: 'WHEREFORE, premises considered, respondent APT is hereby ordered to pay herein complainants of the mandated employment benefits provided for under Section 27 of Proclamation No. 50 which benefits had been earlier extended to other employees similarly situated.

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The NLRC affirmed APT's liability for petitioners' money claims. While no employer-employee relationship existed between members of the petitioner union and APT, at the time of the employees' illegal dismissal, the assets of BISUDECO had been transferred to the national government through APT. Moreover, the NLRC held that APT should have treated petitioners' claim as a lien on the assets of BISUDECO. The Commission opined that APT should have done so, considering its awareness of the pending complaint of petitioners at the time BISUDECO sold its assets to BAPCI, and APT started paying separation pay to the workers. Finding their computation to be in order, the NLRC awarded to petitioners their money claims for underpayment, labor-standard benefits, and ECOLA. It also awarded them their back wages, computed at the prevailing minimum wage, for the period May 1, 1991 (the date of their illegal dismissal) until October 30, 1992 (the sale of BISUDECO assets to the BAPCI). On the other hand, the NLRC ruled that petitioners were not entitled to separation pay because of the huge business losses incurred by BISUDECO, which had resulted in its bankruptcy. Respondent sought relief from the CA via a Petition for Certiorari under Rule 65 of the Rules of Court. The CA ruled that APT should not be held liable for petitioners' claims for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages, as well as other labor-standard benefits plus damages. As found by the NLRC, APT was not the employer of petitioners, but was impleaded only for possessing BISUDECO's mortgaged properties as trustee and, later, as the highest bidder in the foreclosure sale of those assets. Citing Batong Buhay Gold Mines v. Dela Serna, 8 the CA concluded that petitioners' claims could not be enforced against APT as mortgagee of the foreclosed properties of BISUDECO. Clarification of the facts according to the SC: It should be stressed at the outset that, pursuant to Administrative Order No. 14, Series of 1987, PNB's assets, loans and receivables from its borrowers were transferred to APT as trustee of the national government. Among the liabilities transferred to APT was PNB's financial claim against BISUDECO, not the latter's assets and chattel. Contrary to petitioners' assertions, BISUDECO remained the owner of the mortgaged properties in August 1988, when the Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar plantation until August 31, 1992, under a so-called Contract of Lease between the two corporations. At the time, APT was merely a secured creditor of BISUDECO. It was only in April 1991 that APT foreclosed the assets and chattels of BISUDECO because of the latter's continued failure to pay outstanding loan obligations to PNB/APT. The properties were sold at public auction to APT, the highest bidder, as indicated in the Sheriff's Certificate of Sale issued on April 2, 1991. It was only in September 1992 (after the expiration of the lease/management Contract with Philsucor in August 1992), however, when APT took over BISUDECO assets, preparatory to the latter's privatization. In the present case, petitioner-union's members who were not recalled to work by Philsucor in May 1991 seek to hold APT liable for their monetary claims and allegedly illegal dismissal. Significantly, prior to the actual sale of BISUDECO assets to BAPCI on October 30, 1992, the APT board of trustees had approved a Resolution on September 23, 1992. The Resolution authorized the payment of separation benefits to the employees of the corporation in the event of its privatization. Not included in the Resolution, though, were petitioner-union's members who had not been recalled to work in May 1991. Issues and Rulings: I. Whether or not APT is liable to pay petitioners' monetary claims, including back wages from May 1, 1991, to

October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI).

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We rule in the negative. The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were not all automatically assumed by APT as purchaser of the foreclosed properties at the auction sale. Any assumption of liability must be specifically and categorically agreed upon. In Sundowner Development Corp. v. Drilon, the Court ruled that, unless expressly assumed, labor contracts like collective bargaining agreements are not enforceable against the transferee of an enterprise. Labor contracts are in personam and thus binding only between the parties. No succession of employment rights and obligations can be said to have taken place between the two. Between the employees of BISUDECO and APT, there is no privity of contract that would make the latter a substitute employer that should be burdened with the obligations of the corporation. To rule otherwise would result in unduly imposing upon APT an unwarranted assumption of accounts not contemplated in Proclamation No. 50 or in the Deed of Transfer between the national government and PNB. Furthermore, under the principle of absorption, a bona fide buyer or transferee of all, or substantially all, the properties of the seller or transferor is not obliged to absorb the latter's employees. The most that the purchasing company may do, for reasons of public policy and social justice, is to give preference of reemployment to the selling company's qualified separated employees, who in its judgment are necessary to the continued operation of the business establishment. In any event, the national government (in whose trust APT previously held the mortgage credits of BISUDECO) is not the employer of petitioner-union's members, who had been dismissed sometime in May 1991, even before APT took over the assets of the corporation. Hence, under existing law and jurisprudence, there is no reason to expect any kind of bailout by the national government. Even the NLRC found that no employer-employee relationship existed between APT and petitioners. Thus, the Commission gravely abused its discretion in nevertheless holding that APT, as the transferee of the assets of BISUDECO, was liable to petitioners. A careful reading of the Court's Decision in that case plainly shows that it does not contain the words quoted by counsel for petitioners. At this juncture, we admonish their counsel of his bounden duty as an officer of the Court to refrain from misquoting or misrepresenting the text of its decisions. Ever present is the danger that, if not faithfully and exactly quoted, they may lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may thereby be misled. In that case, contrary to the assertions of petitioners, the Court held as follows: "There can be no controversy for it is a principle well-recognized, that it is within the employer's legitimate sphere of management control of the business to adopt economic policies or make some changes or adjustments in their organization or operations that would insure profit to itself or protect the investment of its stockholders. As in the exercise of such management prerogative, the employer may merge or consolidate its business with another, or sell or dispose all or substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the process. Such dismissal or termination should not however be interpreted in such a manner as to permit the employer to escape payment of termination pay. . . . . "In a number of cases on this point, the rule has been laid down that the sale or disposition must be motivated by good faith as an element of exemption from liability. Indeed, an innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them. Nor is the transferee liable for past unfair labor practices of the previous owner, except, when the liability therefor is assumed by the new employer under the contract of sale, or when liability arises because of the new owner's participation in thwarting or defeating the rights of the employees." Ma. Cecelia Timbal LlB 2 Rm 402

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In other words, the liabilities of the previous owner to its employees are not enforceable against the buyer or transferee, unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made in bad faith. Thus, APT cannot be held responsible for the monetary claims of petitioners who had been dismissed even before it actually took over BISUDECO's assets. II. Whether or not the claims of herein petitioners can be enforced against the foreclosed properties of

BISUDECO. No. It should be remembered that APT merely became a transferee of BISUDECO's assets for purposes of conservation because of its lien on those assets a lien it assumed as assignee of the loan secured by the corporation from PNB. Subsequently, APT, as the highest bidder in the auction sale, acquired ownership of the foreclosed properties. Relevant to this transfer of assets is Article 110 of the Labor Code, as amended by Republic Act No. 6715, which reads: "Article 110. Worker's preference in case of bankruptcy. In the event of bankruptcy or liquidation of the employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims shall be paid in full before the claims of the Government and other creditors may be paid." This Court has ruled in a long line of cases that under Articles 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred credit that enjoys preference with respect to a specific/determinate property of the debtor. On the other hand, the worker's preference under Article 110 of the Labor Code is an ordinary preferred credit. While this provision raises the worker's money claim to first priority in the order of preference established under Article 2244 of the Civil Code, the claim has no preference over special preferred credits. Thus, the right of employees to be paid benefits due them from the properties of their employer cannot have any preference over the latter's mortgage credit. In other words, being a mortgage credit, APT's lien on BISUDECO's mortgaged assets is a special preferred lien that must be satisfied first before the claims of the workers. Development Bank of the Philippines v. NLRC explained the rationale of this ruling as follows: ". . . . A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. . . ." Furthermore, workers' claims for unpaid wages and monetary benefits cannot be paid outside of a bankruptcy or judicial liquidation proceedings against the employer. 26 It is settled that the application of Article 110 of the Labor Code is contingent upon the institution of those proceedings, during which all creditors are convened, their claims ascertained and inventoried, and their preferences determined. Assured thereby is an orderly determination of the preference given to creditors' claims; and preserved in harmony is the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code. The Court hastens to add that the present Petition was brought against APT alone. In holding that the latter, which has never really been an employer of petitioners, is not liable for their claims, this Court is not reversing or ruling upon their entitlement to back wages and other unpaid benefits from their previous employer. Ma. Cecelia Timbal LlB 2 Rm 402

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Philippine Airlines vs Zamora (2007) G.R. 166996 Facts: On 1 February 2005, the Court of Appeals promulgated an Amended Decision modifying its 13 August 2004 Decision but at the same time resolving petitioner PAL's Motion for Reconsideration in this wise: WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED, the dispositive portion to read as follows: WHEREFORE, in view of the foregoing, the petition is GRANTED. The NLRC resolution dated April 27, 2001 is MODIFIED. Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is hereby ordered to pay petitioner Zamora his separation pay, in lieu of reinstatement, to be computed at one month salary for every year of service from February 9, 1981 and backwages to be computed from December 19, 1995, both up to October 1, 2000, the date of his incarceration. Considering that PAL is still under receivership, the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits. The Court of Appeals took into account respondent Zamora's incarceration when it recalled its order of reinstatement. Anent its earlier pronouncement against the suspension of the proceedings of the case owing to the present rehabilitation of petitioner PAL, the appellate court only had this to say: However, since PAL is still under receivership, the provisions of PD 902-A, should apply. The enforcement of the monetary claims of petitioner should be brought before the PAL Rehabilitation Receiver for proper disposition. Issue: WON respondent Zamoras monetary claim should be presented to the PAL rehabilitation receiver, subject to the rules on preference of credits. Held: No. The relevant law dealing with the suspension of actions for claims against corporations is Presidential Decree No. 902-A, 52 as amended. The term "claim," as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts or demands of a pecuniary nature. It means 'the assertion of a right to have money paid. It is plain from the foregoing provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver," all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions, neither should this Court. Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory. The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. As to the appellate court's amended directive that "the monetary claims of petitioner Zamora must be presented to the PAL Ma. Cecelia Timbal LlB 2 Rm 402

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Rehabilitation Receiver, subject to the rules on preference of credits," the same is erroneous for there has been no declaration of bankruptcy or judicial liquidation. Thus, the rules on preference of credits do not apply.

Philippine Airlines vs Philippine Airlines Employees Association (2007) G.R. 142399 Facts: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, as amended, seeking to set aside the 30 April 1999 Decision, and 10 March 2000 Resolution of the Court of Appeals, in CA-G.R. SP No. 50161 entitled, "Philippine Airlines, Inc. v. National Labor Relations Commission and Philippine Airlines Employees Association (PALEA)." In the assailed decision, the Court of Appeals dismissed the petition filed by herein petitioner Philippine Airlines, Inc. (PAL); accordingly, the appellate court affirmed the 28 January 1998 Decision and 23 June 1998 Resolution, of the First Division of the National Labor Relations Commission (NLRC), reversing and setting aside the 12 March 1990 Decision, of the Labor Arbiter in NLRC NCR No. 00-03-01134-89, and ordering the herein PAL to "pay the 13th month pay or mid-year bonus of the (concerned) members (of PALEA). Issue: Can a court or quasi-judicial agency amend or alter a Collective Bargaining Agreement by expanding its coverage to non-regular employees who are not covered by the bargaining unit? Held: All told, this Court is constrained to suspend the progress, development and other proceedings in the present petition.We take note, however, that the Securities and Exchange Commission (SEC) had mandated the rehabilitation of PAL. On 17 May 1999, the SEC approved the "Amended and Restated Rehabilitation Plan" of PAL and appointed a "permanent rehabilitation receiver for the latter." To date, PAL is still undergoing rehabilitation. The pertinent law concerning the suspension of actions for claims against corporations is Presidential Decree No. 902A, as amended.The underlying principle behind the suspension of claims pending rehabilitation proceedings was explained in the case of BF Homes, Incorporated v. Court of Appeals. This Court clarified that:In light of these powers, the reason for suspending actions for claims against the corporation should not be difficult to discover. It is not really to enable the management committee or the rehabilitation receiver to substitute the defendant in any pending action against it before any court, tribunal, board or body. Obviously, the real justification is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extrajudicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. The Court holds that rendition of judgment while petitioner is under a state of receivership could render violence to the rationale for suspension of payments in Section 6 (c) of P.D. 902-A, if the judgment would result in the granting of private respondent's claim to separation pay, thus defeating the basic purpose behind Section 6 (c) of P.D. 902-A which is to prevent dissipation of the distressed company's resources. In another PAL case, specifically, Philippine Airlines, Inc. v. Court of Appeals, this Court again resolved to grant PAL's Motion for Suspension of Proceedings by reason of the SEC Orders dated 23 June 1998 and 1 July 1998, appointing an Interim Rehabilitation Receiver and enjoining the suspension of all claims for payment against PAL, respectively. Therein it was declared that this Court is "not prepared to depart from the well-established doctrines" essentially maintaining that all actions for claims against a corporation pending before any court, tribunal or board

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shall ipso jure be suspended in whatever stage such actions may be found upon the appointment by the SEC of a management committee or a rehabilitation receiver. And, most recently, is the case of Philippine Airlines v. Zamora, we held in simple terms that: Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory. The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. In actual fact, allowing such actions to proceed would only increase the work-load of the management committee or the rehabilitation receiver, whose precious time and effort would be dissipated and wasted in defending suits against the corporation, instead of being channeled toward restructuring and rehabilitation.

Castillo vs Uniwide Warehouse Club (2010) G.R. 169725 Facts: This case stems from a complaint filed by Castillo against Uniwide and its President Jimmy Gow for payment of Saturdays worked for the year 2001; holiday pay; separation pay; actual, moral and exemplary damages; and attorneys fees. Two months after the filing of the complaint however, the respondents moved to dismiss said complaint on the ground that it petitioned the SEC for suspension of payments and approval of its rehabilitation plan. It appears that on June 29, 1999, the SEC had ruled favorably on the petition and ordered that all claims, actions and proceedings against herein respondents pending before any court, tribunal, board, office, body or commission be suspended, and that following the appointment of an interim receiver, the suspension order had been extended to until February 7, 2000. On April 11, 2000, the SEC declared the Uniwide Group of Companies to be in a state of suspension of payments and approved its rehabilitation plan. Labor Arbiter and NLRC denied the motion of respondent. Respondent then filed a petition under Rule 65 with the Court of Appeals which found merit in the petition and reversed the resolutions of the NLRC affirming the Labor Arbiter. Held: Petioner argues that suspension of the proceedings is not in order, because his claim against respondent and the latters corresponding liability are yet to be determined. Respondents countered by saying that the CA was correct since it was among those actions for claims that are automatically suspended on the appointment of a management committee or receiver according to Se. 6 of PD 902-A. Respondents advance the notion that while said Section 6 expressly referred to suspension of pending claims, the clear and unmistakable intention of the law is to bar the filing of any such claims in order to maintain parity of status among the different creditors of the distressed corporation at least while the rehabilitation efforts are ongoing. To begin with, corporate rehabilitation connotes the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continued operation is economically feasible and its creditors can recover by way of the present value of payments projected in the rehabilitation plan, more if the corporation continues as a going concern than if it is immediately liquidated. It Whether or not the proceeding can be validly suspended. Contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency, the purpose being to enable the company to gain a new lease on life and allow its creditors to be paid their claims out of Ma. Cecelia Timbal LlB 2 Rm 402

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its earnings. An essential function of corporate rehabilitation is the mechanism of suspension of all actions and claims against the distressed corporation, which operates upon the due appointment of a management committee or rehabilitation receiver. P.D. No. 902-A, as amended. Section 6(c) of the law mandates that, upon appointment of a management committee, rehabilitation receiver, board, or body, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board, or body shall be suspended. In a plethora of cases, the Court has upheld the suspension of proceedings regaring claims against distressed coprations pursuant to PD902-A. The actions that were suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. More importantly, the new rules on corporate rehabilitation, as well as the interim rules, provide an all-encompassing definition of the term and, thus, include all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise. There is no doubt that petitioners claim in this case, arising as it does from his alleged illegal dismissal, is a claim covered by the suspension order issued by the SEC, as it is one for pecuniary consideration. Jurisprudence is settled that the suspension of proceedings referred to in the law uniformly applies to all actions for claims filed against a corporation, partnership or association under management or receivership, without distinction, except only those expenses incurred in the ordinary course of business. In the oft-cited case of Rubberworld (Phils.) Inc. v. NLRC, the Court noted that aside from the given exception, the law is clear and makes no distinction as to the claims that are suspended once a management committee is created or a rehabilitation receiver is appointed. Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. Philippine Airlines, Inc. v. Zamora declares that the automatic suspension of an action for claims against a corporation under a rehabilitation receiver or management committee embraces all phases of the suit, that is, the entire proceedings of an action or suit and not just the payment of claims. It must be conceded that the date when the claim arose, or when the action was filed, has no bearing at all in deciding whether the given action or claim is covered by the stay or suspension order. What matters is that as long as the corporation is under a management committee or a rehabilitation receiver, all actions for claims against it, whether for money or otherwise, must yield to the greater imperative of corporate revival, excepting only, as already mentioned, claims for payment of obligations incurred by the corporation in the ordinary course of business. In the instant case, a Certification issued by the SEC and signed by its General Counsel states that as of August 17, 2006, the petition of Uniwide Sales, Inc. for declaration of suspension of payments and rehabilitations was still pending with it, and that the company was still under its rehabilitation proceedings. Hence, since petitioners claim was one for wages accruing from the time of dismissal, as well as for benefits and damages, the same should have been suspended pending the rehabilitation proceedings. In other words, the Labor Arbiter should have abstained from resolving the illegal dismissal case and, instead, directed petitioner to present his claim to the rehabilitation receiver duly appointed by the SEC, inasmuch as the stay or suspension order was effective and it subsisted from issuance until the dismissal of the petition for rehabilitation or the termination of the rehabilitation proceedings. The Court of Appeals was thus correct in directing the suspension of the proceedings.

Bank of the Philippine Islands vs NLRC (1989) G.R. 69746-47 Facts: On March 22, 1983, the NLRC resolved the bargaining deadlock between BPI and its employees by fixing the wage increases and other economic benefits and ordering them to be embodied in a new collective bargaining agreement to be concluded by BPIEU-Metro Manila and ALU with BPI. It did not decide the intra-union dispute, however, holding that this was under the original jurisdiction of the med-arbiter and the exclusive appellate jurisdiction of the Bureau of Labor Relations. Ma. Cecelia Timbal LlB 2 Rm 402

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Following the promulgation by the NLRC of its decision of March 23, 1983, in Certified Cases Nos. 0279 and 0281, private respondent Ignacio Lacsina filed a motion for the entry of attorney's lien for legal services to be rendered by him as counsel of BPIEU in the negotiation of the new collective bargaining agreement with BPI.The basis of this motion was a resolution dated August 26, 1982, signed by members of the BPI Employees Union, providing for the terms and conditions, including attorneys fees and his authority to check-off with the company. Accordingly, BPI deducted the amount of P200.00 from each of the employees who had signed the authorization. Upon learning about this, the petitioners (ALU and BPIEU-ALU) challenged the said order, on the ground that it was not authorized under the Labor Code. On April 15, 1983, the NLRC issued a resolution setting aside the order and requiring BPI to safe-keep the amounts sought to be deducted "until the rights thereto of the interested parties shall have been determined in appropriate proceedings. Subsequently, the NLRC issued an en banc resolution dated September 27, 1983, ordering the release to Lacsina of the amounts deducted "except with respect to any portion thereof as to which no individual signed authorization has been given by the members concerned or where such authorization has been withdrawn. The petitioners now impugn this order as contrary to the provisions and spirit of the Labor Code. While conceding that Lacsina is entitled to payment for his legal services, they argue that this must be made not by the individual workers directly, as this is prohibited by law, but by the union itself from its own funds. In support of this contention, they invoke Article 222(b) of the Labor Code, providing as follows: Art. 222. Appearances and Fees. (b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining

negotiations or conclusions of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorneys fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. They also cite the case of Pacific Banking Corporation v. Clave, where the lawyer's fee was taken not from the total economic benefits received by the workers but from the funds of their labor union. Issue: Is the mentioned Resolution signed by the BPI employees granting attorneys fees to Lacsina to be deducted from the employees wages valid? Held: Yes. The Court reads the afore-cited provision as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with the management. The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual workers to assume the obligation to pay the attorney's fees from their own pockets. So categorical is this intent that the law also makes it clear that any agreement to the contrary shall be null and void ab initio. We see no such imposition in the case at bar. A reading of the above-cited resolution will clearly show that the signatories thereof have not been in any manner compelled to undertake the obligation they have there assumed. On the contrary, it is plain that they were voluntarily authorizing the check-off of the attorney's fees from their payment of benefits and the turnover to Lacsina of the amounts deducted, conformably to their agreement with him. There is no compulsion here. And significantly, the authorized deductions affected only the workers who adopted and signed Ma. Cecelia Timbal LlB 2 Rm 402

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the resolution and who were the only ones from whose benefits the deductions were made by BPI. No similar deductions were taken from the other workers who did not sign the resolution and so were not bound by it. That only those who signed the resolution could be subjected to the authorized deductions was recognized and made clear by the order itself of the NLRC. It was there categorically declared that the check-off could not be made where "no individual signed authorization has been given by the members concerned or where such authorization has been withdrawn." The Pacific Banking Corporation case is not applicable to the present case because there was there no similar agreement as that entered into between Lacsina and the signatories of the resolution in question. Absent such an agreement, there was no question that the basic proscription in Article 222 would have to operate. It is noteworthy, though, that the Court there impliedly recognized arrangements such as the one at bar with the following significant observation: Moreover, the case is covered squarely by the mandatory and explicit prescription of Art. 222 which is another guarantee intended to protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent. A similar recognition was made in Galvadores v. Trajano, where the payment of the attorney's fees from the wages of the employees was not allowed because: "No check-offs from any amount due to employees may be effected without individual written authorities duly signed by the employees specifically stating the amount, purpose and beneficiary of the deduction. The required individual authorizations in this case are wanting." Finally, we hold that the agreement in question is in every respect a valid contract as it satisfies all the elements thereof and does not contravene law, morals, good customs, public order, or public policy. On the contrary, it enables the workers to avail themselves of the services of the lawyer of their choice and confidence under terms mutually acceptable to the parties and, hopefully, also for their mutual benefit.

Traders Royal Bank Employees Union vs NLRC (1997) G.R. 120592 Facts: Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services enumerated in their contract. During the existence of that agreement, petitioner union referred to private respondent the claims of its members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). These employees obtained favorable decision from their complaint which went through the SC. The Supreme Court, in its decision promulgated on August 30, 1990, modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner never contested the amount thus found by TRB. The latter duly paid its concerned employees their respective entitlement in said sum through their payroll. After private respondent received the above decision of the Supreme Court on September 18, 1990, he notified the petitioner union, the TRB management

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and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential through a letter dated October 8, 1990. Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay and remit said amount to him. The LA and the NLRC affirmed Atty. Cruz motion. Petitioner union filed a comment and opposition to said motion on July 15, 1991. Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged resolution of the NLRC is null and void, for the reasons hereunder stated. Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney' s fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC. Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same. Issue: Whether or not Atty. Cruz is entitled to 10 % of the judgment award as his attorneys fees even if it was not taken up in the main decision of the SC. Held: Yes, not in the concept contemplatedin Article 111 of the Labor Code. The Labor Arbiter erroneously set the amount of attorney's fees on the basis of Art. 111 of the Labor Code; a hearing should have been conducted for the proper determination of attorney's fees. There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the former may no longer entertain claims for attorney's fees. It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before the NLRC for a percentage thereof as attorney's fees.

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It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of attorney's fees, he did not in any way modify the judgment of the Supreme Court. A CLAIM FOR ATTORNEY'S FEES MAY BE ASSERTED EITHER IN THE VERY ACTION IN WHICH THE SERVICES OF A LAWYER HAD BEEN RENDERED OR IN A SEPARATE ACTION - It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client. It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award's complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court. The provisions of the contract entered into between petitioner and respondents are clear and need no further interpretation; all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a special retainer. RETAINER FEES, GENERAL RETAINER AND A SPECIAL RETAINER A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities. A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer. THE P3,000.00 MONTHLY FEE PROVIDED IN THE RETAINER AGREEMENT BETWEEN THE UNION AND THE LAW FIRM REFERS TO A GENERAL RETAINER OR A RETAINING FEE. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a

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consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there. We have already shown that the P3,000.00 is independent and different from the compensation which private respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to extend services, they were not able to come into agreement as to the law firm's actual performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services. PRIVATE RESPONDENT'S ENTITLEMENT TO AN ADDITIONAL REMUNERATION FOR SPECIAL SERVICES RENDERED IN THE INTEREST OF PETITIONER IS BASED ON QUASI-CONTRACT. The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter. Obligations do not emanate only from contracts. One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in our law, certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. A quasicontract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount. THE LABOR ARBITER ERRONEOUSLY SET THE AMOUNT OF ATTORNEY'S FEES ON THE BASIS OF ART. 111 OF THE LABOR CODE; A HEARING SHOULD HAVE BEEN CONDUCTED FOR THE PROPER DETERMINATION OF ATTORNEY'S FEES. - Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of attorney's fees at P17,574.43. As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees. As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the

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maximum allowable amount of attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees. It is axiomatic that the reasonableness of attorney's fees is a question of fact. Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by private respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of private respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the NLRC.

Brahm Industries vs NLRC (1997) G.R. 118853 Facts: On 8 February 1994 Labor Arbiter Fatima J. Franco ruled that complainants Roberto M. Durian and Jone M. Comendador were illegally dismissed by BRAHM and accordingly ordered the latter to: (a) reinstate complainants to their former positions or equivalent positions without loss of seniority rights, but if reinstatement was no longer possible, to pay them separation pay equivalent to one (1) month for every year of service; (b) pay Roberto M. Durian the amount of Forty-Eight Thousand Thirty-Eight Pesos and Twenty-Five Centavos (P48,038.25) representing his back wages; and, Jone M. Comendador the amount of Sixty Thousand Four Hundred Seventy-Four Pesos and Ninety-Two Centavos (P60,474.92) representing his back wages, 13th month pay and service incentive leave pay; and, (c) pay complainants the amount equivalent to 10% of the total award as attorney's fees. Upon appeal by BRAHM, the NLRC affirmed the decision of the Labor Arbiter, subject to the modification that the attorney's fees awarded be reduced to five percent (5%) of the total monetary award.BRAHM now argues that the NLRC gravely abused its discretion when it held that: (a) private respondents Roberto M. Durian and Jone M. Comendador were regular employees and not merely contractual employees hired on a per project basis; (b) they were illegally dismissed; and, (c) they were entitled to attorney's fees despite the fact that the award lacks factual and legal basis. Issue: Whether or not private respondents are entitled to attorneys fees. Held: Yes. With regard to the propriety of the award of attorney's fees in favor of private respondents, petitioner contends that it was erroneous for the NLRC to merely reduce the award of attorney's fees when it should have been completely deleted. Petitioner claims that the award is baseless since the matter of attorney's fees was touched only once in the dispositive portion of the Labor Arbiter's decision and no discussion or reason was stated therefor.

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This argument is unfounded. A perusal of the decision shows that the reason for the award of attorney's fees is clearly and unequivocally set forth in the body of the Labor Arbiter's decision, to witHaving been compelled to litigate, complainants should be paid an amount equivalent to ten percent (10%) of the total award as and for attorney's fees." It used as basis Art. 2208 of the Civil Code which allows attorney's fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. However, nothing precludes the appellate courts from reducing the award of attorney's fees when it is found to be unconscionable or excessive under the circumstances. Thus, we agree with the NLRC's ruling that the award of attorney's fees is proper on account of complainants' being compelled to litigate their claims against respondent. The amount is however reduced to five percent (5%) of the adjudged relief, it appearing that the substantial portion of the award refers to complainants' back wages and not to withheld salaries. Finally, this Court has consistently held that findings of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. Petitioner failed to convince us that we should depart from this time-honored rule.

Heirs of Aniban vs NLRC (1997) G.R. 155034

Facts: Reynaldo Aniban was employed by the Philippine Transmarine Carriers, Inc. (TRANSMARINE) acting in behalf of its foreign principal Norwegian Ship Management A/S (NORWEGIAN) as radio operator on board the vessel "Kassel." Aniban died due to myocardial infarction during the period of his employment. A claim was made for additional death benefits under the Collective Bargaining Agreement between Associated Marine Officers and Seamen's Union of the Philippines and NORWEGIAN. The claim was rejected on the ground that myocardial infarction was not an occupational disease. However, on 11 January 1994 the POEA ruled that myocardial infarction was an occupational disease in the case of R/O Aniban and granted the prayer of his heirs for payment of death benefits under the POEA Standard Employment Contract as well as under the Collective Bargaining Agreement plus attorney's fees of US$6,700.00 equivalent to 10% of the total award. On appeal, the NLRC reversed the POEA and denied the claim on the ground that it was the Employees' Compensation Commission (ECC) which had original jurisdiction to hear and determine the claim for death benefits. NLRC likewise deleted he award of attorneys fees on the ground that there was no unlawful withholding of wages. A motion to reconsider the decision of the NLRC was denied; hence, this petition by the heirs of Aniban. The Supreme Court ruled that the Employees Compensation Commission may not be considered as having jurisdiction over money claims, albeit death compensation benefits of overseas contract workers. Article 180 of the Labor Code provides that the Commission exercises appellate jurisdiction only over decisions rendered either by the GSIS or the SSS in the exercise of their respective original and exclusive jurisdictions. On the issue of whether the death of Aniban due to myocardial infarction is compensable, the Court ruled that it is compensable. Although the physical exertion involved in carrying out the functions of a radio operator may have been quite minimal, the pressure and

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strain that went with the position should be considered. Furthermore, the Court stressed that probability and not the ultimate degree of certainty is the test of proof in compensation. Issue: WON attorneys fees can be awarded in a case not involving unlawful withholding of wages. Held: Yes. ARTICLE 111 OF THE LABOR CODE DOES NOT LIMIT THE AWARD OF ATTORNEY'S FEES TO CASES OF UNLAWFUL WITHHOLDING OF WAGES ONLY; WHAT THE PROVISION EXPLICITLY PROHIBITS IS THE AWARD OF ATTORNEY'S FEES WHICH EXCEEDED 10% OF THE AMOUNT OF WAGES RECOVERED. On the award of attorney's fees which NLRC deleted on the ground that there was no unlawful withholding of wages, suffice it to say that Art.111 of the Labor Code does not limit the award of attorney's fees to cases of unlawful withholding of wages only. What it explicitly prohibits is the award of attorney's fees which exceed 10% of the amount of wages recovered. Thus, under the circumstances, attorney's fees are recoverable for the services rendered by petitioner's counsel to compel Aniban's employer to pay its monetary obligations under the CBA. However the amount of P50,000.00 claimed as attorney's fees in this case is the reasonable compensation based on the records and not the maximum 10% of the total award as granted by POEA. The reduction of unreasonable attorney's fees is within our regulatory powers.

Sapio vs Undaloc Construcion et al., (2008) G.R. 155034 Facts: The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City. Petitioner avers that he was paid a daily salary way below the minimum wage provided for by law. 14 His claim of salary differential represents the difference between the daily wage he actually received and the statutory minimum wageTo counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. 15 These payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00. Banking on the fact that the December 1995 payroll sheet was written in pencil, the Labor Arbiter concluded that the entries were susceptible to change or erasure and that that susceptibility in turn rendered the other payroll sheets though typewritten less credible. Thereupon, the Labor Arbiter proceeded to grant petitioner's salary differential to the tune of P24,902.88. Attorney's fee of P3,000.00 was also awarded. Respondents appealed the award of salary differential to the National Labor Relations Commission (NLRC). In a Decision dated 28 August 2000, the NLRC sustained the findings of the Labor Arbiter. The Court of Appeals did not subscribe to the common findings of the Labor Arbiter and the NLRC. The appellate court pointed out that allegations of fraud in the preparation of payroll sheets must be substantiated by evidence and not by mere suspicions or conjectures. Thus, it deleted the award of salary differential and attorney's fees. Issue: Whether or not the award petitioner-employee Saipo is entitled to salary differential and attorneys fees.

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Held: Yes. It is elementary in this jurisdiction that whoever alleges fraud or mistake affecting a transaction must substantiate his allegation, since it is presumed that a person takes ordinary care of his concerns and private transactions have been fair and regular. Persons are presumed to have taken care of their business. Absent any indication sufficient enough to support a conclusion, we cannot uphold the findings of the Labor Arbiter and the NLRC. The conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. While we adhere to the position of the appellate court that the "tendency" to alter the entries in the payrolls was not substantiated, we cannot however subscribe to the total deletion of the award of salary differential and attorney's fees, as it so ruled.The Labor Arbiter granted a salary differential of P24,902.88. The Labor Arbiter erred in his computation. He fixed the daily wage rate actually received by petitioner at P105.00 without taking into consideration the P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover, the Labor Arbiter misapplied the wage orders when he wrongly categorized respondent as falling within the first category. Based on the stipulated number of employees and audited financial statements, respondents should have been covered by the second category. To avoid further delay in the disposition of this case which is not in consonance with the objective of speedy justice, we have to adjudge the rightful computation of the salary differential based on the applicable wage orders. After all, the supporting records are complete. The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00. However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00. The award of attorney's fees is warranted under the circumstances of this case. Under Article 2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of wages of laborers and actions for indemnity under employer's liability laws but shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

Atty. Ortiz vs San Miguel Corp., (2008) G.R. 151983-84 Facts: Petitioner is a member of the Philippine Bar who represented the complainants in NLRC Cases No. V0255-94 and No. V-0068-95 instituted against herein private respondent San Miguel Corporation sometime in 1992 and 1993. Private respondent, on the other hand, is a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines. It is primarily engaged in the manufacture and sale of food and beverage particularly beer products. In line with its business, it operates breweries and sales offices throughout the Philippines. The complainants in NLRC Cases No. V-0255-94 and No. V-0068-95 was employees at private respondents Sales Offices in the provinces. NLRC Case No. V-0255-94 (Aguirre Cases) In 1992, several employees from the Bacolod, Cadiz, and Himamaylan Beer Sales Offices filed with the Labor Arbiter separate complaints against private respondent for illegal dismissal with prayer for reinstatement with backwages; elevation of employment status from casualtemporary to regular- permanent reckoned after six months from the start of complainants employment; underpayment of salaries; non-payment of holiday pay, service incentive leave pay, allowances and sick leaves; nonpayment of benefits under the existing Collective Bargaining Agreements (CBA); attorneys fees; moral, Ma. Cecelia Timbal LlB 2 Rm 402

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exemplary and other damages; and interest. The foregoing complaints were consolidated and initially docketed as RAB Cases No. 06-01-10031-92; 06-01-10048-92; 06-01-10049-92; 06-0210210-92; 06-02-10211-92; and 06-03-10255-92 (hereinafter collectively referred to as theAguirre Cases). After conducting a full-blown trial, the parties were given the opportunity to submit their respective memoranda. Subsequently, the cases were submitted for resolution. On 30 June 1994, Labor Arbiter Reynaldo J. Gulmatico (Labor Arbiter Gulmatico) rendered a Decision in the Aguirre Cases finding all the complainants to have been illegally dismissed. He ordered complainants reinstatement to their previous or equivalent positions without loss of seniority rights. He also ordered private respondent to pay the complainants (1) full backwages and other CBA benefits in the total amount of P6,197,952.88; (2) rice subsidy or its monetary equivalent; and (3) attorneys fees equivalent to 10% of the monetary award or in the amount of P619,795.28. Labor Arbiter Gulmatico, however, dismissed complainants claim for overtime pay, holiday pay, 13th month pay differential, service incentive leave pay, moral damages and all other claims for lack of merit. Unsatisfied with Labor Arbiter Gulmaticos monetary and economic awards, complainants appealed to the NLRC, where the Aguirre Cases were collectively docketed as NLRC Case No. V-0255-94. The NLRC would later render a Decision dated 21 July 1995 in the Aguirre Cases affirming the Decision of Labor Arbiter Gulmatico, with the following modifications: (1) granting sales commission to the complainants and adopting their computation thereof in their Appeal Memorandum[8] filed before the NLRC; (2) adjusting and/or reducing the amounts awarded to complainants Alfredo Gadian, Jr., Renato Junsay, Agustines Llacuna, and Florencio de la Piedra depending on the dates they were employed; (3) determining that Modesto Jabaybay, who died on 28 December 1993, was to receive only the amount of P356,128.02; (4) declaring that all the complainants except Romeo Magbanua, who withdrew his complaint, were entitled to whatever benefits were given under the CBA; and (5) that complainants Romeo Magbanua and Modesto Jabaybay shall no longer be reinstated. Private respondent moved for the reconsideration of the aforesaid 21 July 1995 NLRC Decision, but its motion was denied by the NLRC in its Resolution dated 27 February 1996. NLRC Case No. V-0068-95 (Toquero Case) While the Aguirre Cases were still pending resolution by Labor Arbiter Gulmatico, three other employees at the San Carlos Sales Office filed with the Labor Arbiter a similar complaint for illegal dismissal against private respondent in 1993. Their complaint was docketed as RAB Case No. 06-0710404-93 (hereinafter referred to as the Toquero Case). On 26 December 1994, Labor Arbiter Ray Allan T. Drilon (Labor Arbiter Drilon) rendered his Decision in the Toquero Case also ruling that the three complainants were illegally dismissed. Thus, he ordered the complainants immediate reinstatement to their former positions without loss of seniority rights. He ordered private respondent to pay complainants (1) backwages and other benefits in the amount of P572,542.50; (2) all benefits, privileges and rights enjoyed by the private respondents regular employees in the total amount of P339,055.00; (3) a total of 159 sacks of rice ration; (4) sales commissions based on the monthly sales of beer sold by their office for the last three years; and (5) attorneys fees in the amount of P91,159.75. Again, the complainants were not contented with Labor Arbiter Drilons Decision, and they appealed their case to the NLRC which was then docketed as NLRC Case No. V-0068-95. On 25 July 1995, the NLRC rendered a Decision modifying the 26 December 1994 Decision of Labor Arbiter Drilon by ordering the private respondent to pay the complainants the following: (1) additional awards of sales commission; (2) tailoring allowance; (3) monetary equivalent of their uniform for two years consisting of 24 sets of t-shirts and 6 pairs of pants; and (4) attorneys fees of 10% of the total monetary award or P198,296.95. In its Resolution dated 9 October 1995, the NLRC partially granted private respondents motion for reconsideration by allowing the deduction from the award of backwages any earnings of complainants elsewhere during the pendency of their case. CA-G.R. SP No. 54576-77 Failing to get a favorable ruling from the NLRC in both the Aguirre and Toquero Cases, private respondent elevated the NLRC Decisions to this Court via a Petition for Certiorari, where they were docketed as G.R. No. 124426 and G.R. No. 122975, respectively. On 15 July 1996, this Court issued a Resolution consolidating the two cases.In another Resolution dated 30 June 1999; this Court referred the said cases to the Court of Appeals conforming to its ruling in St. Martin Funeral Home v. NLRC and Bienvenido Aricayos. The Court of Appeals accepted the consolidated cases in its Resolution dated 7 September 1999, and docketed the same as CA-G.R. SP No. 54576-77. While the private respondents Petitions for Certiorari were pending Ma. Cecelia Timbal LlB 2 Rm 402

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before the Court of Appeals, all but one of the remaining complainants in the Aguirre and Toquero Cases appeared on various dates before Labor Arbiters Gulmatico and Drilon, and in the presence of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim in favor of private respondent. Based on the Deeds they executed, the complainants agreed to settle their claims against private respondent for amounts less than what the NLRC actually awarded. Private respondent withheld 10% of the total amount agreed upon by the parties in the said Deeds as attorneys fees and handed it over to petitioner. Private respondent then attached the Deeds of Release, Waiver and Quitclaim to its Manifestation and Motion filed before the appellate court. On 22 August 2001, the Court of Appeals rendered a Decision in CA-G.R. SP No. 54576-77 affirming the NLRC Decision dated 21 July 1995 and Resolution dated 27 February 1996 in the Aguirre Cases, only insofar as it concerned complainant Alfredo Gadian, Jr. (complainant Gadian), the only complainant who did not execute a Deed of Release, Waiver and Quitclaim. With respect to the other complainants in the Aguirre and Toquero Cases, their complaints were dismissed on account of their duly executed Deeds of Release, Waiver and Quitclaim. Private respondent moved for the partial reconsideration of the 22 August 2001 Decision of the Court of Appeals, seeking the reversal and setting aside of the 22 August 2001 Decision of the Court of Appeals in CA-G.R. SP. No. 54576-77, which affirmed the 21 July 1995 Decision and 27 February 1996 Resolution of the NLRC in the Aguirre Cases, insofar as complainant Gadian was concerned; and the dismissal of complainant Gadians complaint against private respondent for lack of merit. Complainant Gadian and his counsel, herein petitioner, for their part, likewise moved for the partial reconsideration of the same Decision of the appellate court praying that the award of attorneys fees of 10% should be based on the monetary awards adjudged by the NLRC. In a Resolution dated9 January 2002, the appellate court denied both motions. G.R. No. 151421 and No. 151427 Private respondent appealed before this Court by filing a Petition for Review, docketed as G.R. No. 151421 and No. 151427. However, private respondents Petition was denied due course by this Court in a Resolution dated 18 March 2002 for failure of the private respondent to show that a reversible error had been committed by the appellate court. Held: This Court has consistently ruled that a question of law exists when there is a doubt or controversy as to what the law is on a certain state of facts. On the other hand, there is a question of fact when the Whether petitioner is entitled to additional attorneys fees on top of what was already doubt or difference arises as to the alleged truth or falsehood of the alleged facts. For a question to be one of law, it must involve no examination of the probative value of the evidence presented by the litigants or any of them.[35] The test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question of fact. In the case at bar, the core issue presented by the petitioner is with respect to the amount of attorneys fees to which he should be entitled: whether he is entitled to the amount of attorneys fees as adjudged by the NLRC in its Decisions in the Aguirre and Toquero Cases or only to the 10% of the amounts actually paid to his clients, the complainants who signed the Deeds of Release, Waiver and Quitclaim. The aforesaid issue evidently involves a question of law. In determining whether the petitioner should be entitled to the attorneys fees stated in the NLRC Decisions, this Court does not need to go over the pieces of evidence submitted by the parties in the proceedings below to determine their probative value. What it needs to do is ascertain and apply the relevant law and jurisprudence on the award of attorneys fees to the prevailing parties in labor cases. Article 111 of the Labor Code, as amended, specifically provides: ART. 111. ATTORNEYS FEES. - (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorneys fees which exceed ten percent of the amount of wages recovered. (Emphasis supplied.)

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Masmud vs NLRC (2009) G.R. 183385 Facts: On July 9, 2003, Evangelina Masmuds (Evangelina) husband, the late Alexander J. Masmud (Alexander), filed a complaint3 against First Victory Shipping Services and Angelakos (Hellas) S.A. for non-payment of permanent disability benefits, medical expenses, sickness allowance, moral and exemplary damages, and attorneys fees. Alexander engaged the services of Atty. Rolando B. Go, Jr. (Atty. Go) as his counsel. In consideration of Atty. Gos legal services, Alexander agreed to pay attorneys fees on a contingent basis, as follows: twenty percent (20%) of total monetary claims as settled or paid and an additional ten percent (10%) in case of appeal. It was likewise agreed that any award of attorneys fees shall pertain to respondents law firm as compensation. On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary claims of Alexander. The dispositive portion of the decision, as quoted in the CA Decision, reads: WHEREFORE, foregoing considered, judgment is rendered finding the [First Victory Shipping Services and Angelakos (Hellas) S.A.+ jointly and severally liable to pay *Alexanders+ total permanent disability benefits in the amount of US$60,000.00 and his sickness allowance of US$2,348.00, both in Philippine currency at the prevailing rate of exchange at the time of payment; and to pay further the amount of P200,000.00 as moral damages,P100,000.00 as exemplary damages and attorneys fees equivalent to ten percent (10%) of the total monetary award. *Alexanders+ claim for payment of medical expenses is dismissed for lack of basis. SO ORDERED. Alexanders employer filed an appeal before the National Labor Relations Commission (NLRC). During the pendency of the proceedings before the NLRC, Alexander died. After explaining the terms of the lawyers fees to Evangelina, Atty. Go caused her substitution as complainant. On April 30, 2004, the NLRC rendered a Decision dismissing the appeal of Alexanders employer. The employer subsequently filed a motion for reconsideration. The NLRC denied the same in an Order dated October 26, 2004. On appeal before the CA, the decision of the LA was affirmed with modification. The award of moral and exemplary damages was deleted.5 Alexanders employers filed a petition for certiorari6 before this Court. On February 6, 2006, the Court issued a Resolution dismissing the case for lack of merit. Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the execution of the NLRC decision, which was later granted by the LA. The surety bond of the employer was garnished. Upon motion of Atty. Go, the surety company delivered to the NLRC Cashier, through the NLRC Sheriff, the check amounting toP3,454,079.20. Thereafter, Atty. Go moved for the release of the said amount to Evangelina. On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20 to Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum of P680,000.00. Dissatisfied, Atty. Go filed a motion to record and enforce the attorneys lien alleging that Evangelina reneged on their contingent fee agreement. Evangelina paid only the amount of P680,000.00, equivalent to 20% of the award as attorneys fees, thus, leaving a balance of 10%, plus the award pertaining to the counsel as attorneys fees. In response to the motion filed by Atty. Go, Evangelina filed a comment with motion to release the amount deposited with the NLRC Cashier. In her comment, Evangelina manifested that Atty. Gos claim for attorneys fees of 40% of the total monetary award was null and void based on Article 111 of the Labor Code. In effect, petitioner seeks affirmance of her conviction that the legal compensation of a lawyer in a labor proceeding should be based on Article 111 of the Labor Code. There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party, such that, in any of the cases provided by law where such award can be made, e.g., those authorized in Article 2208 of the Civil Code, the amount is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. Here, we apply the ordinary concept of attorneys fees, or the compensation that Atty. Go is entitled to receive for representing Evangelina, in substitution of her husband, before the labor tribunals and before the court. Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Gos compensation as her counsel and assiduously opposes their agreed retainer contract.

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Article 111 of the said Code provides: ART. 111. Attorney's fees. (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of the wages recovered. Held: Contrary to Evangelinas proposition, Article 111 of the Labor Code deals with the extraordinary concept of attorneys fees. It regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used as the standard in fixing the amount payable to the lawyer by his client for the legal services he rendered. In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining Atty. Gos compensation. Considering that Atty. Go successfully represented his client, it is only proper that he should receive adequate compensation for his efforts. Even as we agree with the reduction of the award of attorney's fees by the CA, the fact that a lawyer plays a vital role in the administration of justice emphasizes the need to secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel. The duty of the court is not alone to ensure that a lawyer acts in a proper and lawful manner, but also to see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client; he himself would not get his due. WHEREFORE, in view of the foregoing, the Decision dated October 31, 2007 and the Resolution dated June 6, 2008 of the Court of Appeals in CA-G.R. SP No. 96279 are hereby AFFIRMED.

Bernardo vs. NLRC (1999) G.R. 122917 Facts: Complainants numbering 43 are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called 'Employment Contract for Handicapped Workers.' Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article 280 and to bar them from becoming regular employees. Private respondent, on the other hand, submits that petitioners were hired only as "special workers and should not in any way be considered as part of the regular complement of the Bank." Rather, they were "special" workers under Article 80 of the Labor Code. Private respondent contends that it never solicited the services of petitioners, whose employment was merely an "accommodation" in response to the requests of government officials and civic-minded citizens. They were told from the start, "with the assistance of government representatives," that they could not become regular employees because there were no plantilla positions for "money sorters," whose task used to be performed by tellers. Their contracts were renewed several times, not because of need "but merely for humanitarian reasons." Respondent submits that "as of the present, the 'special position' that was created for the petitioners no longer exists in private respondent bank, after the latter had decided not to renew anymore their special employment contracts." In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows:

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"We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were hired as an accommodation to [the] recommendation of civic oriented personalities whose employment[s] were covered by . . . Employment Contract[s] with special provisions on duration of contract as specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the parties." The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing circumstances/milieu of the case." Issues: 1. 2. Whether or not petitioners have become regular employees. Whether or not the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription

against discrimination against disabled persons is applicable in this case. Held: Yes. The petition is meritorious. However, only the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular employees. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and justice. The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after which the employer shall determine whether or not they should be allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term. According to private respondent, the employment contracts were prepared in accordance with Article 80 of the Labor Code, which provides: "ARTICLE 80. Employment agreement. Any employer who employs handicapped workers shall enter into an

employment agreement with them, which agreement shall include: (a) (b) The names and addresses of the handicapped workers to be employed; The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the

applicable legal minimum wage; (c) (d) The duration of employment period; and The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representatives."The stipulations in the employment contracts indubitably conform with the aforecited provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), however, justify the application of Article 280 of the Labor Code. Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the

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handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. QUALIFIED DISABLED PERSONS REMOVE CONTRACT FROM AMBIT OF ARTICLE 80 OF LABOR CODE. - In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna Carta provides: "SECTION 5. Equal Opportunity for Employment. No disabled person shall be denied access to opportunities

for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person." The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides: "ARTICLE 280. Regular and Casual Employment. The provisions of written agreement to the contrary

notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." TEST WHETHER EMPLOYEE IS REGULAR - The test of whether an employee is regular was laid down in De Leon v. NLRC , in which this Court held: "The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists." Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than six months. As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum." The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees' fitness for the job. When the bank renewed the contract after the lapse of the six-month Ma. Cecelia Timbal LlB 2 Rm 402

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probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees. As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized cause. Because respondent failed to show such cause, these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other privileges. Considering the allegation of respondent that the job of money sorting is no longer available because it has been assigned back to the tellers to whom it originally belonged, petitioners are hereby awarded separation pay in lieu of reinstatement. Because the other sixteen worked only for six months, they are not deemed regular employees and hence not entitled to the same benefits. EMPLOYMENT CONTRACT WITH FIXED TERM; RULING IN BRENT CASE NOT APPLICABLE IN CASE AT BAR - Respondent bank, citing Brent School v. Zamora, in which the Court upheld the validity of an employment contract with a fixed term, argues that the parties entered into the contract on equal footing. It adds that the petitioners had in fact an advantage, because they were backed by then DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal. We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to be qualified disabled persons who, under the Magna Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners are qualified for their positions. The validation of the limit imposed on their contracts, imposed by reason of their disability, was a glaring instance of the very mischief sought to be addressed by the new law. Employment contract; impressed with public interest; parties are not at liberty to insulate themselves. - Moreover, it must be emphasized that a contract of employment is impressed with public interest. Provisions of applicable statutes are deemed written into the contract, and the "parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other." Clearly, the agreement of the parties regarding the period of employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied employees. Respondent's reason for terminating the employment of petitioners is instructive. Because the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it reasons that this task "could not be done by deaf mutes because of their physical limitations as it is very risky for them to travel at night." We find no basis for this argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their employment. EMPLOYMENT; CHARACTER OF EMPLOYMENT; HOW DETERMINED - Respondent argues that petitioners were merely "accommodated" employees. This fact does not change the nature of their employment. As earlier noted, an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them. Equally unavailing are private respondent's arguments that it did not go out of its way to recruit petitioners, and that its plantilla did not contain their positions. In L. T . Datu v. NLRC, the Court held that "the determination of whether

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employment is casual or regular does not depend on the will or word of the employer, and the procedure of hiring . . . but on the nature of the activities performed by the employee, and to some extent, the length of performance and its continued existence." Private respondent argues that the petitioners were informed from the start that they could not become regular employees. In fact, the bank adds, they agreed with the stipulation in the contract regarding this point. Still, we are not persuaded. In this light, we iterate our ruling in Romares v. NLRC : Article 280 was emplaced in our statute books to prevent the circumvention of the employee's right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. Where an employee has been engaged to perform activities which are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment. "At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in 'term employment' should not be the activities that the employee is called upon to perform but the day certain agreed upon the parties for the commencement and termination of their employment relationship. But this Court went on to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals." In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class, but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any other regular employees.

Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 Facts: Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company funds as grounds to terminate the services of an employee. That employee, herein private respondent Grace de Guzman, contrarily argues that what really motivated PT&T to terminate her services was her having contracted marriage during her employment, which is prohibited by petitioner in its company policies. She thus claims that she was discriminated against in gross violation of law, such a proscription by an employer being outlawed by Article 136 of the Labor Code. Issue: WON the policy of not accepting or considering as disqualified from work any woman worker who contracts marriage is valid?

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Held: Petitioners policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life, provides a gamut of protective provisions. Acknowledged as paramount in the due process scheme is the constitutional guarantee of protection to labor and security of tenure. Thus, an employer is required, as a condition sine qua non prior to severance of the employment ties of an individual under his employ, to convincingly establish, through substantial evidence, the existence of a valid and just cause in dispensing with the services of such employee, ones labor being regarded as constitutionally protected property. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows: ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. In the case at bar, it can easily be seen from the memorandum sent to private respondent by the branch supervisor of the company, with the reminder, that youre fully aware that the company is not accepting married women employee (sic), as it was verbally instructed to you. Again, in the termination notice sent to her by the same branch supervisor, private respondent was made to understand that her severance from the service was not only by reason of her concealment of her married status but, over and on top of that, was her violation of the companys policy against marriage (and even told you that married women employees are not applicable [sic] or accepted in our company. Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.

Del Monte Phils vs Velasco (2007) G.R. 153447 Facts: Velasco started working with Del Monte Philippines (petitioner) on October 21, 1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her absences without permission and a forfeiture of her vacation leave entitlement for the year 1990-1991 was imposed against her. On September 14, 1992, another warning letter was sent to respondent regarding her absences without permission during the year 1991-1992. Her vacation entitlement for the said employment year affected was consequently forfeited. In view of the said alleged absences without permission, on September 17, 1994, a notice of hearing was sent to respondent notifying her of the charges filed against her for violating the Absence Without Official Leave rule: that is

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for excessive absence without permission on August 15-18, 29-31 and September 1-10, 1994. Respondent having failed to appear on September 23, 1994 hearing, another notice of hearing was sent to her resetting the investigation on September 30, 1994. It was again reset to October 5, 1994. After hearing, the petitioner terminated the services of respondent effective January 16, 1994 due to excessive absences without permission. Issue: WON the employment of respondent had been terminated on account of her pregnancy, and therefore violates the Labor Code which prohibits an employer to discharge an employee on account of the latter's pregnancy. Held: Respondent's sickness was pregnancy-related and, therefore, the petitioner cannot terminate respondent's services because in doing so, petitioner will, in effect, be violating the Labor Code which prohibits an employer to discharge an employee on account of the latter's pregnancy. Article 137 of the Labor Code provides: that it shall be unlawful for any employer: (1) To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code; (2) To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy; or (3) To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. Respondent was able to subsequently justify her absences in accordance with company rules and policy; that the respondent was pregnant at the time she incurred the absences; that this fact of pregnancy and its related illnesses had been duly proven through substantial evidence; that the respondent attempted to file leaves of absence but the petitioner's supervisor refused to receive them; that she could not have filed prior leaves due to her continuing condition; and that the petitioner, in the last analysis, dismissed the respondent on account of her pregnancy, a prohibited act. Petitioner terminated the services of respondent on account of her pregnancy which justified her absences and, thus, committed a prohibited act rendering the dismissal illegal.

Ultra Villa Food Haus vs, Geniston (1999) G.R. 120473 Facts: Private respondent Renato Geniston was employed by petitioner Ultra Villa Food House and/or its alleged owner Rosie Tio. Private respondent alleged that he was employed as a "do it all guy" acting as waiter, driver and maintenance man, in said restaurant. During the elections of May 11, 1992, private respondent acted as Poll Watcher. The counting of votes lasted until 3:00 p.m. the next day, May 12. Private respondent did not report for work on both days on account of his poll watching. As a result, his employment was terminated by petitioner Tio on the ground of abandonment. Private respondent filed a case of illegal dismissal against petitioners. Petitioner Tio maintained that private respondent was her personal driver, not an employee of Ultra Villa Food Haus and denied dismissing private respondent whom she claimed abandoned his job. The Labor Arbiter found that private respondent was indeed petitioner's personal driver. The Labor Arbiter concluded that private respondent, being a personal driver, was not entitled to overtime pay, premium pay, service incentive leave and 13th month pay.On appeal, the NLRC reversed the decision of the labor arbiter and ordered the reinstatement of private respondent and payment of backwages, overtime pay, premium pay for holiday and rest days, etc. The NLRC also granted private respondent separation pay in lieu of reinstatement on account of the Ma. Cecelia Timbal LlB 2 Rm 402

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establishment's closure but denied his prayer for moral, actual and exemplary damages, and attorney's fees. Petitioner moved for reconsideration but was denied. Issues: (1) Whether private respondent was an employee of the Ultra Villa Food Haus or the personal driver of

petitioner; and (2) Held: I. THE LABOR ARBITER CORRECTLY RULED THAT PRIVATE RESPONDENT WAS PETITIONER'S PERSONAL DRIVER AND NOT AN EMPLOYEE OF THE SUBJECT ESTABLISHMENT. We find that private respondent was indeed the personal driver of petitioner, and not an employee of the Ultra Villa Food Haus. There is substantial evidence to support such conclusion, namely: (1) Private respondent's admission during the mandatory conference that he was petitioner's personal driver. (2) Copies of the Ultra Villa Food Haus payroll which do not contain private respondent's name. (3) Affidavits of Ultra Villa Food Haus employees attesting that private respondent was never an employee of said establishment. (4) Petitioner Tio's undisputed allegation that she works as the branch manager of the CFC Corporation whose office is located in Mandaue City. This would support the Labor Arbiter's observation that private respondents' position as driver would be "incongruous" with his functions as a waiter of Ultra Villa Food Haus. (5) The Joint Affidavit of the warehouseman and warehouse checker of the CFC Corporation stating that: Renato Geniston usually drive[s] Mrs. Tio from her residence to the office. Thereafter, Mr. Geniston will wait for Mrs. Tio in her car. Most of the time, Renato Geniston slept in the car of Mrs. Tio and will be awakened only when the latter will leave the office for lunch. Mr. Geniston will again drive Mrs. Tio to the office at around 2:00 o'clock in the afternoon and thereafter the former will again wait for Mrs. Tio at the latter's car until Mrs. Tio will again leave the office to make her rounds at our branch office at the downtown area. In contrast, private respondent has not presented any evidence other than his self-serving allegation to show that he was employed in the Ultra Villa Food Haus. On this issue, therefore, the evidence weighs heavily in petitioner's favor. The Labor Arbiter thus correctly ruled that private respondent was petitioner's personal driver and not an employee of the subject establishment. Accordingly, the terms and conditions of private respondent's employment are governed by Chapter III, Title III, Book III of the Labor Code as well as by the pertinent provisions of the Civil Code. PETITIONER IS NOT OBLIGED UNDER THE LAW TO GRANT PRIVATE RESPONDENT OVERTIME PAY, HOLIDAY PAY, PREMIUM PAY AND SERVICE INCENTIVE LEAVE. Chapter III, Title III, Book III, however, is silent on the grant of overtime pay, holiday pay, premium pay and service incentive leave to those engaged in the domestic or household service. Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the Labor Code, and Article 82, which defines the scope of the application of these provisions, expressly excludes domestic helpers from its coverage: Ma. Cecelia Timbal LlB 2 Rm 402 Whether private respondent was illegally dismissed from employment.

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Art. 82. Coverage. The provision of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. The limitations set out in the above article are echoed in Book III of the Omnibus Rules Implementing the Labor Code. Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits. II. PRIVATE RESPONDENT IS ENTITLED TO BE INDEMNIFIED FOR HIS UNJUST DISMISSAL AND FOR PETITIONER'S FAILURE TO COMPLY WITH THE REQUIREMENTS OF DUE PROCESS IN EFFECTING HIS DISMISSAL. To constitute abandonment, two requisites must concur: (1) the failure to report to work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship as manifested by some overt acts, with the second requisite as the more determinative factor. The burden of proving abandonment as a just cause for dismissal is on the employer. Petitioner failed to discharge this burden. The only evidence adduced by petitioner to prove abandonment is her affidavit. It is quite unbelievable that private respondent would leave a stable and relatively well paying job as petitioner's family driver to work as an election watcher. Though the latter may pay more in a day, elections in this country are so far in between that it is unlikely that any person would abandon his job to embark on a career as an election watcher, the functions of which are seasonal and temporary in nature. Consequently, we do not find private respondent to have abandoned his job. His dismissal from petitioner's employ being unjust, petitioner is entitled to an indemnity under Article 149 of the Labor Code. Petitioner likewise concedes that she failed to comply with due process in dismissing private respondent since private respondent had already abandoned his job. As we have shown earlier however, petitioner's theory of abandonment has no leg to stand on, and with it, her attempts to justify her failure to accord due process must also fall. Accordingly, private respondent is ordered to pay private respondent the sum of P1,000.00.

Remington Industrial Sales Corp,. vs Castaneda (2007) G.R. 153477 Facts: Erlinda alleged that she started working in August 1983 as company cook with a salary of Php 4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six (6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would end at around 5:30 p.m., or even later, after most of the employees, if not all, had left the company premises; that she continuously worked with Remington until she was unceremoniously prevented from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. She averred that she reported for work at the new site in Caloocan City on January 15, 1998, only to be informed that Remington no longer needed her services. Erlinda believed that her dismissal was illegal because she was not given the notices required by law; hence, she filed her complaint for reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th month pay and 10% attorney's fees.

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Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with Remington's business of trading in construction or hardware materials, steel plates and wire rope products. It also contended that contrary to Erlinda's allegations that she worked for eight (8) hours a day, Erlinda's duty was merely to cook lunch and "merienda", after which her time was hers to spend as she pleased. Remington also maintained that it did not exercise any degree of control and/or supervision over Erlinda's work as her only concern was to ensure that the employees' lunch and "merienda" were available and served at the designated time. Remington likewise belied Erlinda's assertion that her work extended beyond 5:00 p.m. as she could only leave after all the employees had gone. The truth, according to Remington, is that Erlinda did not have to punch any time card in the way that other employees of Remington did; she was free to roam around the company premises, read magazines, and to even nap when not doing her assigned chores. Remington averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda who refused to report for work when Remington moved to a new location in Caloocan City. LA and NLRC decided the case in favor of the complainant. Petitioner appealed to the CA. While the petition was pending with the Court of Appeals, the NLRC rendered another Decision in the same case on August 29, 2001, which included the retirement pay not included in their first decision. Petitioner challenged the second decision of the NLRC, including the resolution denying its motion for reconsideration, through a second Issues and Rulings: The petition must fail. I. Whether or not respondent is petitioner's regular employee or a domestic helper. We affirm that respondent was a regular employee of the petitioner and that the latter was guilty of illegal dismissal. Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and contends that respondent is the latter's domestic helper and not a regular employee of the company since Mr. Tan has a separate and distinct personality from the petitioner. It maintains that it did not exercise control and supervision over her functions; and that it operates as a trading company and does not engage in the restaurant business, and therefore respondent's work as a cook, which was not usually necessary or desirable to its usual line of business or trade, could not make her its regular employee.This contention fails to impress. In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the staff houses of an industrial company was a regular employee of the said firm. We ratiocinated that:Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper" or "domestic servant" are defined as follows: "The term 'househelper' as used herein is synonymous to the term 'domestic servant' and shall refer to any person, whether male or female, who renders services in and about the employer's home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's family." The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps. The criteria is the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a Ma. Cecelia Timbal LlB 2 Rm 402

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company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the business of the employer. In such instance, they are employees of the company or employer in the business concerned entitled to the privileges of a regular employee. Petitioner contends that it is only when the househelper or domestic servant is assigned to certain aspects of the business of the employer that such househelper or domestic servant may be considered as such an employee. The Court finds no merit in making any such distinction. The mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended. In the case at bar, the petitioner itself admits in its position paper that respondent worked at the company premises and her duty was to cook and prepare its employees' lunch and merienda. Clearly, the situs, as well as the nature of respondent's work as a cook, who caters not only to the needs of Mr. Tan and his family but also to that of the petitioner's employees, makes her fall squarely within the definition of a regular employee under the doctrine enunciated in the Apex Mining case. That she works within company premises, and that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner's right of control over her functions, which is the primary indicator of the existence of an employer-employee relationship. Moreover, it is wrong to say that if the work is not directly related to the employer's business, then the person performing such work could not be considered an employee of the latter. The determination of the existence of an employer-employee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved. Indeed, it would be the height of injustice if we were to hold that despite the fact that respondent was made to cook lunch and merienda for the petitioner's employees, which work ultimately redounded to the benefit of the petitioner corporation, she was merely a domestic worker of the family of Mr. Tan. We note the findings of the NLRC, affirmed by the Court of Appeals, that no less than the company's corporate secretary has certified that respondent is a bonafide company employee; she had a fixed schedule and routine of work and was paid a monthly salary of P4,000.00; she served with the company for 15 years starting in 1983, buying and cooking food served to company employees at lunch and merienda, and that this service was a regular feature of employment with the company. Indubitably, the Court of Appeals, as well as the NLRC, correctly held that based on the given circumstances, the respondent is a regular employee of the petitioner. II. Whether or not respondent was illegally dismissed. Petitioner contends that there was abandonment on respondent's part when she refused to report for work when the corporation transferred to a new location in Caloocan City, claiming that her poor eyesight would make long distance travel a problem. Thus, it cannot be held guilty of illegal dismissal. On the other hand, the respondent claims that when the petitioner relocated, she was no longer called for duty and that when she tried to report for work, she was told that her services were no longer needed. She contends that the petitioner dismissed her without a just or authorized cause and that she was not given prior notice, hence rendering the dismissal illegal.

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We rule for the respondent. As a regular employee, respondent enjoys the right to security of tenure under Article 279 38 of the Labor Code and may only be dismissed for a just or authorized cause, otherwise the dismissal becomes illegal and the employee becomes entitled to reinstatement and full backwages computed from the time compensation was withheld up to the time of actual reinstatement. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty; hence, a just cause for termination of employment by the employer under Article 282 of the Labor Code, which enumerates the just causes for termination by the employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. This, the petitioner failed to do in the case at bar. Alongside the petitioner's contention that it was the respondent who quit her employment and refused to return to work, greater stock may be taken of the respondent's immediate filing of her complaint with the NLRC. Indeed, an employee who loses no time in protesting her layoff cannot by any reasoning be said to have abandoned her work, for it is well-settled that the filing of an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of her desire to return to work, thus, negating the employer's charge of abandonment. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. The employer's case succeeds or fails on the strength of its evidence and not on the weakness of the employee's defense. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. III. Whether the second NLRC decision promulgated during the pendency of the first petition for certiorari has basis in law. The petitioner contends that the respondent's motion for reconsideration, upon which the second NLRC decision was based, was not under oath and did not contain a certification as to why it was not decided on time as required under the New Rules of Procedure of the NLRC. Furthermore, the former also raises for the first time the contention that respondent's motion was filed beyond the ten (10)-calendar day period required under the same Rules, since the latter received a copy of the first NLRC decision on December 6, 2000, and respondent filed her motion only on December 18, 2000. Thus, according to petitioner, the respondent's motion for reconsideration was a mere scrap of paper and the second NLRC decision has no basis in law. We do not agree. It is well-settled that the application of technical rules of procedure may be relaxed to serve the demands of substantial justice, particularly in labor cases. Labor cases must be decided according to justice and equity and the substantial merits of the controversy. Rules of procedure are but mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. This Court has consistently held that the requirement of verification is formal, and not jurisdictional. Such requirement is merely a condition affecting the form of the pleading, non-compliance with which does not necessarily render it fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The court may order the correction of the pleading if verification is lacking or act on the

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pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. Anent the argument that respondent's motion for reconsideration, on which the NLRC's second decision was based, was filed out of time, such issue was only brought up for the first time in the instant petition where no new issues may be raised by a party in his pleadings without offending the right to due process of the opposing party. Nonetheless, the petitioner asserts that the respondent received a copy of the NLRC's first decision on December 6, 2000, and the motion for reconsideration was filed only on December 18, 2000, or two (2) days beyond the ten (10)calendar day period requirement under the New Rules of Procedure of the NLRC and should not be allowed. This contention must fail. Under Article 223 of the Labor Code, the decision of the NLRC shall be final and executory after ten (10) calendar days from the receipt thereof by the parties. While it is an established rule that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the judgment final and executory, it is equally settled that the NLRC may disregard the procedural lapse where there is an acceptable reason to excuse tardiness in the taking of the appeal. Among the acceptable reasons recognized by this Court are (a) counsel's reliance on the footnote of the notice of the decision of the Labor Arbiter that "the aggrieved party may appeal . . . within ten (10) working days"; (b) fundamental consideration of substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final decision; and (d) special circumstances of the case combined with its legal merits or the amount and the issue involved. We hold that the particular circumstances in the case at bar, in accordance with substantial justice, call for a liberalization of the application of this rule. Notably, respondent's last day for filing her motion for reconsideration fell on December 16, 2000, which was a Saturday. In a number of cases, we have ruled that if the tenth day for perfecting an appeal fell on a Saturday, the appeal shall be made on the next working day. The reason for this ruling is that on Saturdays, the office of the NLRC and certain post offices are closed. With all the more reason should this doctrine apply to respondent's filing of the motion for reconsideration of her cause, which the NLRC itself found to be impressed with merit. Indeed, technicality should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties for the ends of justice are reached not only through the speedy disposal of cases but, more importantly, through a meticulous and comprehensive evaluation of the merits of a case. Finally, as to petitioner's argument that the NLRC had already lost its jurisdiction to decide the case when it filed its petition for certiorari with the Court of Appeals upon the denial of its motion for reconsideration, suffice it to state that under Section 7 of Rule 65 of the Revised Rules of Court, the petition shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent from further proceeding with the case. Thus, the mere pendency of a special civil action for certiorari, in connection with a pending case in a lower court, does not interrupt the course of the latter if there is no writ of injunction. Clearly, there was no grave abuse of discretion on the part of the NLRC in issuing its second decision which modified the first, especially since it failed to consider the respondent's motion for reconsideration when it issued its first decision.

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Tolosa vs NLRC (2008) G.R. 149578 Facts: Petitioner was the widow of Capt. Virgilio Tolosa who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk, to be the master of the Vessel named M/V Lady Dona. His contract officially began on November 1, 1992, as supported by his contract of employment when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT. TOLOSA was allegedly shown to be in good health. During 'channeling activities' upon the vessel's departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in the succeeding twelve (12) days, his health rapidly deteriorated resulting in his death on November 18, 1992. When petitioner filed a complaint with the POEA, transferred to the DOLE, NLRC, the Labor Arbiter ruled in her favor. The NLRC, affirmed by the Court of Appeals, however, ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. Hence, this appeal. Summary of Ruling: The Court affirmed the appealed decision. Petitioner's action was recovery of damages based on a quasi-delict or tort, not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. Petitioner is actually suing shipmates Garate and Asis for gross negligence, and the said shipmates have no employer-employee relations with Capt. Tolosa. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws, but also damages under the Civil Code, these relief must still be based on an action that has reasonable causal connection with matters Issues and Rulings: 1. Whether or not the NLRC has jurisdiction over the case (whether the labor arbiter and the NLRC had jurisdiction over petitioner's action). Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents as employers of her husband (Captain Tolosa) to provide him with timely, adequate and competent medical services under Article 161 of the Labor Code: "ART 161. Assistance of employer. It shall be the duty of any employer to provide all the necessary

assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of emergency." Likewise, she contends that Article 217 (a) (4) of the Labor Code vests labor arbiters and the NLRC with jurisdiction to award all kinds of damages in cases arising from employer-employee relations. Petitioner also alleges that the "reasonable causal connection" rule should be applied in her favor. Citing San Miguel Corporation v. Etcuban, she insists that a reasonable causal connection between the claim asserted and the employeremployee relation confers jurisdiction upon labor tribunals. She adds that she has satisfied the required conditions: 1) the dispute arose from an employer-employee relation, considering that the claim was for damages based on the failure of private respondents to comply with their obligation under Article 161 of the Labor Code; and 2) the dispute can be resolved by reference to the Labor Code, because the material issue is whether private respondents complied with their legal obligation to provide timely, adequate and competent medical services to guarantee Captain Tolosa's occupational safety. We disagree.

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We affirm the CA's ruling that the NLRC and the labor arbiter had no jurisdiction over petitioner's claim for damages, because that ruling was based on a quasi delict or tort per Article 2176 of the Civil Code. REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION; LABOR TRIBUNALS; ACTION BASED ON QUASI DELICT THAT DOES NOT INVOLVE LABOR DISPUTE, NOT INCLUDED - Time and time again, we have held that the allegations in the complaint determine the nature of the action and, consequently, the jurisdiction of the courts. After carefully examining the complaint/position paper of petitioner, we are convinced that the allegations therein are in the nature of an action based on a quasi delict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross negligence. Petitioner's complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa. The labor arbiter himself classified petitioner's case as "a complaint for damages, blacklisting and watchlisting (pending inquiry) for gross negligence resulting in the death of complainant's husband, Capt. Virgilio Tolosa." We stress that the case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations, as we ruled in Georg Grotjahn GMBH & Co. v. Isnani: "Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement." The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that the primary reliefs she seeks are as follows: (a) loss of earning capacity denominated therein as "actual damages" or "lost income" and (b) blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a life expectancy of 65 years. This amount is recoverable if the action is based on a quasi delict as provided for in Article 2206 of the Civil Code, 18 but not in the Labor Code. DAMAGES PROVIDED BY THE CIVIL CODE; AWARD PROPER IF RELIEF SOUGHT HAS CAUSAL RELATIONS WITH LABOR MATTERS - While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements. The central issue is determined essentially from the relief sought in the complaint. In San Miguel Corporation v. NLRC, this Court held:"It is the character of the principal relief sought that appears essential in this connection. Where such principal relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim." The labor arbiter found private respondents to be grossly negligent. He ruled that Captain Tolosa, who died at age 58, could expect to live up to 65 years and to have an earning capacity of US$176,400.

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LOSS OF EARNING CAPACITY; NOT TO BE EQUATED WITH LABOR BENEFITS COGNIZED IN LABOR DISPUTES - It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause within the realm of civil law. Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations. In the present case, petitioner's claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests with the labor secretary. Thus, claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter. REGULAR COURTS HAVE AUTHORITY OVER ACTION FOR DAMAGES PREDICATED ON QUASI DELICT AND HAS NO CONNECTION WITH LABOR-RELATED CLAIMS - It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental, and in which the cause of action proceeds from a different source of obligation such as a tort. Since petitioner's claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or collective bargaining agreements, jurisdiction over the action lies with the regular courts not with the NLRC or the labor arbiters. 2. Whether or not Evelyn is entitled to the monetary awards granted by the labor arbiter (whether the monetary award granted by the labor arbiter has already reached finality). ISSUES NOT RAISED IN COURTS A QUO CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL Petitioner contends that the labor arbiter's monetary award has already reached finality, since private respondents were not able to file a timely appeal before the NLRC. This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal. Thus, points of law, theories, and arguments not brought to the attention of the Court of Appeals need not and ordinarily will not be considered by this Court. Petitioner's allegation cannot be accepted by this Court on its face; to do so would be tantamount to a denial of respondents' right to due process. Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be entertained in a petition for review under Rule 45 of the Rules of Court. In general, the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to a review of errors of law allegedly committed by the court a quo.

Phil Global Communications Inc vs de Vera (2005) G.R. 157214 Facts:

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De Vera and petitioner company entered into a contract where respondent was to attend to the medical needs of petitioner s employees while being paid a retainer fee of P4,000 per month. Later, De Vera was informed y petitioner that the retainership will be discontinued. Respondent filed a case for illegal dismissal. Issue: Whether or not de Vera is an employee of PhilComm or an independent contractor. Held: Applying the four fold test, de Vera is not an employee. There are several indicators apart from the fact that the power to terminate the arrangement lay on both parties: from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); he was subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer-employee relationship; the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary. Finally, the element of control is absent. Petition granted.

U-Bix Corp. vs Bandiola (2007) G.R. 157168 Facts: Sometime in April 1995, Bandiola was employed by U-BIX to install furniture for its customers. On 13 April 1997, Bandiola and two other U-BIX employees were involved in a vehicular accident on their way to Baguio, where they were assigned by U-BIX to install furniture for an exhibit. As a result of the accident, Bandiola sustained a fracture on his left leg. Bandiola and his co-employees were initially brought to the Rosario District Hospital. The next day, 14 April 1997, they were transferred to the Philippine Orthopedic Hospital (Orthopedic). After his broken leg was cemented, Bandiola was advised to go back for further medical treatment. U-BIX paid for the medical expenses incurred in both mentioned hospitals. When Bandiola asked for additional financial assistance for further expenses in the treatment of his leg which even needed to be casted in fiberglass, U-BIX allegedly refused. On September 1998, Bandiola filed a Complaint before the Labor Arbiter, where he alleged underpayment of salary; non-payment of overtime pay; premium pay for work performed on holidays and rest days; separation pay; service incentive leave pay; 13th month pay; and the payment of actual, moral and exemplary damages. In its Decision, dated 16 September 1998, Labor Arbiter allowed Bandiola's claim for salary differential, service incentive leave pay and 13th month pay due to U-BIX's failure to present payrolls or similar documents. Incidentally, the award of these claims is no longer questioned in the present petition. The other claims, particularly those for medical expenses that Bandiola allegedly incurred and for moral and exemplary damages, were dismissed. Bandiola asserts that U-BIX failed to extend to him any financial assistance after he was injured in the performance of his duties, and that as a result, he suffered physical pain, mental torture, fright, sleepless nights, and serious anxiety. He claims that this entitles him to moral and exemplary damages. Bandiola filed an appeal before the NLRC. NLRC amended the Decision rendered by the Labor Arbiter ruling that UBIX should reimburse Bandiola the amount for the medical expenses he incurred in connection with his fractured leg; and further ruled that U-BIX is liable to pay Bandiola P25,000.00 in moral damages and P25,000.00 in exemplary damages for refusing to reimburse Bandiola for the medical expenses he incurred after it failed to report to the Social Security System (SSS) the injuries sustained by Bandiola

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It affirmed Bandiola's entitlement to reimbursement of his medical expenses, but reduced the amount to P7,742.50, the amount of actual damages he was able to prove. It also affirmed without modification the award of moral and exemplary damages, and the monetary award granted by the Labor Arbiter Issue: WON petitioner U-BIX should reimburse respondent Bandiola for alleged medical expenses of P7,742.50 and pay for moral damages of P25,000.00 and exemplary damages of P25,000.00 to said respondent Bandiola. Held: Yes. Contrary to the arguments put forward by U-BIX, it is liable to reimburse Bandiola the amount of P7,742.50 for medical expenses because its failure to comply with its duty to record and report Bandiola's injury to the SSS precluded Bandiola from making any claims. Moreover, U-BIX, by its own admission, reimbursed its other employees who were involved in the same accident for their medical expenses. Clearly, the reimbursement of medical expenses for injuries incurred in the course of employment is part of the benefits enjoyed by U-BIX's employees. The only justification for its refusal to reimburse Bandiola was that he intended to defraud the company by presenting spurious receipts amounting to P7,742.50 that were allegedly issued four months before their presentation. EMPLOYEES COMPENSATION FOR WORK-RELATED INJURIES, DISABILITIES AND DEATHS - Articles 205 and 206 of the Labor Code set the reportorial requirements in cases when an employee falls sick or suffers an injury arising in the course of employment. An injury is said to arise "in the course of employment" when it takes place within the period of employment, at a place where the employee may reasonably be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. 20 The aforecited provisions of the Labor Code provide that: ART 205. (a) RECORD OF DEATH OR DISABILITY

All employers shall keep a logbook to record chronologically the sickness, injury or death of their

employees, setting forth therein their names, dates and places of the contingency, nature of the contingency and absences. Entries in the logbook shall be made within five days from notice or knowledge of the occurrence of contingency. Within five days after entry in the logbook, the employer shall report to the System only those contingencies he deems to be work-connected. (b) All entries in the employers logbook shall be made by the employer or any of his authorized official after

verification of the contingencies or the employees absences for a period of a day or more. Upon request by the System, the employer shall furnish the necessary certificate regarding information about any contingency appearing in the logbook, citing the entry number, page number and date. Such logbook shall be made available for inspection to the duly authorized representatives of the System. ART 206. NOTICE OF SICKNESS, INJURY OR DEATH

Notice of sickness, injury or death shall be given to the employer by the employee or by his dependents or anybody on his behalf within five days from the occurrence of the contingency. No notice to the employer shall be required if the contingency is known to the employer or his agents or representatives. GENERAL RULE AND EXCEPTION ON NOTIFICATION - As a general rule, the injured employee must notify his employer, who is obligated to enter the notice in a logbook within five days after notification. Within five days after making the entry, the employer of a private company reports the work-related sickness or injury to the SSS. The claim is forwarded to the SSS, which decides on the validity of the claim. When the SSS denies the claim, the denial may be appealed to the Employees' Compensation Commission (ECC) within 30 days.

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However, the law provides an exception to the rule requiring an employee to notify his or her employer of his injuries. Under Section B of ECC Board Resolution No. 2127, issued on 5 August 1982, notice of injury, sickness or death of the employee need not be given to the employer in any of the following situations: (1) (2) When the employee suffers the contingency within the employer's premises; When the employee officially files an application for leave of absence by reason of the contingency from

which he suffers; (3) When the employer provides medical services and/or medical supplies to the employee who suffers from

the contingency; and (4) When the employer can be reasonably presumed to have had knowledge of the employee's contingency, in

view of the following circumstances: (4.1) (4.2) (4.3) The employee was performing an official function for the employer when the contingency occurred; The employee's contingency has been publicized through mass media outlets; or The specific circumstances of the occurrence of the contingency have been such that the employer can be

reasonably presumed to have readily known it soon thereafter; or (4.4) Any other circumstances that may give rise to a reasonable presumption that the employer has been aware

of the contingency. In the present case, there is no dispute that Bandiola's leg injury was sustained in the course of his employment with U-BIX. At the time of the accident, Bandiola was on the way to Baguio, where he was ordered by U-BIX to install furniture for an exhibit. Moreover, U-BIX was aware that Bandiola, as well as his other co-employees, were injured during the accident. U-BIX admitted to providing Bandiola and his co-employees with medical assistance and it even sent its representative, Rey Reynes, to Rosario District Hospital, where they were confined, and had them transferred to the Orthopedic. U-BIX was also aware that the Orthopedic instructed Bandiola to return for further medical treatment. It is implicit that Bandiola needed further treatment for his broken leg and was, thus, incapacitated to work. Given the foregoing circumstances, U-BIX had the legal obligation to record pertinent information in connection with the injuries sustained by Bandiola in its logbook within five days after it had known about the injuries; and to report the same to the SSS within five days after it was recorded in the logbook, in accordance with Articles 205 and 206 of the Labor Code. Had U-BIX performed its lawful duties, the SSS, or the ECC on appeal, could have properly considered whether or not Bandiola was entitled to reimbursement for his medical expenses, as well as disability benefits while he was unable to work. However, U-BIX did not present any evidence showing that it had complied with these legal requirements. It had not even replied to Bandiola's allegations in his Position Paper, dated 13 April 1998, that its employees were not even members of the SSS. HISTORY AND IMPORTANCE OF EMPLOYEES COMPENSATION - As early as 1938, this Court emphasized, in the case of Murillo v. Mendoza, 22 that labor laws have demonstrated an impetus towards ensuring that employees are compensated for work-related injuries. The law has since treated such compensation as a right, which the employees can claim, instead of an act of charity to be given at the employer's discretion.

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The intention of the Legislature in enacting the Workmen's Compensation Act was to secure workmen and their dependents against becoming objects of charity, by making a reasonable compensation for such accidental calamities as are incidental to the employment. Under such act injuries to workmen and employees are to be considered no longer as results of fault or negligence, but as the products of the industry in which the employee is concerned. Compensation for such injuries is, under the theory of such statute, like any other item in the cost of production or transportation, and ultimately charged to the consumer. The law substitutes for liability for negligence an entirely new conception; that is, that if the injury arises out of and in the course of the employment, under the doctrine of man's humanity to man, the cost of compensation must be one of the elements to be liquidated and balanced in the course of consumption. In other words, the theory of law is that, if the industry produces an injury, the cost of that injury shall be included in the cost of the product of the industry. In De Jesus v. Employee's Compensation Commission, this Court further noted that while the present law protects employers from spurious and long overdue claims, it stresses at the same time that the claims for compensation are to be promptly and properly addressed. More importantly, employers no longer need to determine the validity of a claim or to defend themselves from spurious claims. Their duties are thus limited to paying the monthly premiums and reporting the sickness, injury or death for which compensation is due. The new law establishes a state insurance fund built up by the contributions of employers based on the salaries of their employees. The injured worker does not have to litigate his right to compensation. No employer opposes his claim. There is no notice of injury nor requirement of controversion. The sick worker simply files a claim with a new neutral Employees' Compensation Commission which then determines on the basis of the employee's supporting papers and medical evidence whether or not compensation may be paid. The payment of benefits is more prompt. The cost of administration is low. The amount of death benefits has also been doubled. On the other hand, the employer's duty is only to pay the regular monthly premiums to the scheme. It does not look for insurance companies to meet sudden demands for compensation payments or set up its own funds to meet these contingencies. It does not have to defend itself from spuriously documented or long past claims. The new law applies the social security principle in the handling of workmen's compensation. The Commission administers and settles claims from a fund under its exclusive control. The employer does not intervene in the compensation process and it has no control, as in the past, over payment of benefits. . . . . Since there is no employer opposing or fighting a claim for compensation, the rules on presumption of compensability and controversion cease to have importance. The lopsided situation of an employer versus one employee, which called for equalization through the various rules and concepts favoring the claimant, is now absent. By failing to report Bandiola's injury to the SSS, U-BIX disregarded the law and its purpose; that is, to provide a proper and prompt settlement of his claims. Instead, U-BIX arrogated upon itself the duty of determining which medical expenses are proper for reimbursement. In doing so, it could unnecessarily delay and unjustifiably refuse to reimburse Bandiola for medical expenses even if they were adequately supported by receipts, as was done in this instance. The expense and delay undergone by Bandiola since 1997 in obtaining reimbursement for his medical expenses of P7,742.50 very clearly defeat the purpose of the law. BURDEN OF PROOF ON THE DEFENDANT OF A CLAIM - U-BIX does not question its liability to pay for medical expenses incurred in connection with the 13 April 1997 accident; it admits that it paid for all the medical expenses of its other employees, who were involved in the accident. It refused, however, to reimburse Bandiola for further medical expenses on the ground that the receipts were counterfeit and belatedly presented to U-BIX.

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Bandiola presented eight receipts with a total amount of P7,742.50 issued by MCP and his attending physician, Dr. Celestino Musngi. The amounts indicated therein range from P200.00 to P2,936.00. The receipts were issued on 24 April 1997 and 6 May 1997, or around the time the accident occurred on 13 April 1997. From the face of the receipts, there is no showing that these documents are false or falsified. U-BIX could have easily confirmed with MCP or Dr. Celestino Musngi, who issued said receipts, the authenticity of the documents. However, it failed to allege that it took any steps to check the authenticity of the receipts. It also failed to present any evidence that these receipts are fake. Absent any proof, no weight can be attached to the allegation that the receipts are spurious. The party who alleges the fact has the burden of proving it. The burden of proof is assigned to the defendant of a claim when he or she alleges an affirmative defense, which is not a denial of an essential ingredient in the complainant's cause of action the existence of the receipts, in the present case but is one which, if established, will be a good defense, i.e., an avoidance of the claim. One who alleges an affirmative defense that is denied by the complainant the falsity of the receipts, in this case has the burden of proving it. Unless the party asserting the affirmative of an issue sustains the burden of proof, his or her cause will not succeed. If he or she fails to establish the facts of which the matter asserted is predicated, the complainant is entitled to a verdict or decision in his or her favor. In this case, U-BIX's affirmative defense that the receipts are spurious is rejected due to utter lack of proof. U-BIX asserts that no demand was made by the petitioner and that it only came to know of Bandiola's medical expenses when it received the Summons to attend a preliminary conference before the Labor Arbiter. For his part, Bandiola insists that before filing the case with the NLRC, he approached U-BIX three times for financial assistance in connection with his medical expenses, but he was refused. Bandiola identified the persons he spoke to as Rey Reynes and a certain Ms. Clarisse. U-BIX alleges that it sent Rey Reynes to look for Bandiola in the address recorded in their office files, but that he no longer resided therein. Bandiola contested this allegation by stating that he had not changed his residence. As of 20 September 2006, Bandiola still resided at the same address, Sampaloc Site II-B, Barangay B.F. Homes, Paraaque City, as evidenced by the Certificate of Indigency issued by Barangay BF Homes Chairperson Florencia N. Amurao. U-BIX maintains that Bandiola kept the company in the dark regarding his medical expenses because he intended to file a baseless suit aimed at extorting money from the company. This Court finds it implausible that a worker who received less than minimum wage would choose to initiate legal proceedings before even seeking to collect from his employer. To automatically presume that Bandiola intended to defraud the company despite the absence of supporting evidence would constitute a hasty and unsubstantiated generalization, which displays a prejudice against ordinary workers, such as Bandiola. U-BIX's continued and stubborn refusal to reimburse Bandiola's medical expenses was made evident during the mandatory conference before the Labor Arbiter when it refused to recognize the receipts shown to it. If U-BIX had refused to take cognizance of the receipts presented during a quasi-judicial proceeding before a public officer, then it would have been more likely that it ignored, if not flat-out refused, to consider the said receipts when the same were presented by a lowly employee. Under the facts of the case, Bandiola is entitled to moral and exemplary damages. There is no question that moral damages may be awarded in cases when a wrongful act or omission has caused the complainant mental anguish, fright and serious anxiety. Articles 2217 and 2219, in connection with Article 21 of the Civil Code, read:

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Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219. Moral damages may be recovered in the following and analogous cases: (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. U-BIX failed to perform its legal obligation to report to the SSS the injuries suffered by Bandiola, and, thereafter, failed to extend the same "financial aid" it extended to other employees who were involved in the same accident. After it was shown the receipts for the medical expenses Bandiola paid for in connection with the injuries, U-BIX unreasonably refused to reimburse him for the expenses. It is not difficult to accept Bandiola's claim that he suffered mental anguish, serious anxiety and fright when U-BIX left him without any options for financial support while he was suffering from and rendered incapacitated by work-related injuries. He was severely distressed by his plight that he felt that he could no longer continue to work for U-BIX. U-BIX's unjustified and continued refusal to reimburse Bandiola after it failed to report his injury to the SSS, despite the receipts he presented, demonstrates bad faith. By singling out Bandiola from its other employees, who were reimbursed for their medical expenses, and forcing him to litigate for ten years in order to claim the unsubstantial amount of P7,742.50, U-BIX was clearly indulging in malicious conduct. AWARD ON MORAL DAMAGES - As regards the award of moral damages, this Court has ruled that there is no hard and fast rule in determining the fair amount for moral damages, since each case must be governed by its own peculiar circumstances. It should enable the injured parties to obtain means, diversions or amusements that will serve to alleviate the moral sufferings the injured party has undergone by reason of defendant's culpable action. In other words, the award of moral damages is aimed at a restoration within the limits of the possible, of the spiritual and/or psychological status quo ante; and therefore it must be proportionate to the suffering inflicted. Therefore, in light of the sufferings sustained by Bandiola, this Court sustains the award of P25,000.00 as moral damages. Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of example or correction for public good. It reads: Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the

public good, in addition to the moral, temperate, liquidated or compensatory damages. Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences, and their imposition is required by public policy to suppress the wanton acts of the offender. The Labor Code provides for the medical expenses, as well as disability benefits of workers suffering from workrelated injuries and recognizes such compensation as their right. Indeed, a system has been put in place for the prompt collection of the benefits, which are given by law to injured employees. All that U-BIX was required to do was to report the injury; it need not have defended itself from what it perceived to be spurious claims. Instead, it took upon itself the duty of determining the validity of Bandiola's claims and unjustifiably refused to reimburse his properly receipted medical expenses. The prolonged litigation of his valid claims is not the only miserable situation which the present labor laws sought to prevent, but the pathetic situation wherein a laborer is placed at the mercy of his or her employer for recompense that is his or hers by right. Exemplary damages are, thus, rightfully imposed against U-BIX. Ma. Cecelia Timbal LlB 2 Rm 402

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Escasinas et al., vs Shangri-la Mactan Island Resort et al., (2009) G.R. 178827 Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work of nurses under her.

The Labor Arbiter (LA) declared petitioners to be regular employees of Shangri-la, noting that the petitioners usually perform work which is necessary and desirable to Shangri-las business, and thus ordered Shangri-la to grant them the wages and benefits due them as regular employees from the time their services were engaged.

Upon appeal, the NLRC declared that no employer-employee relationship existed between Shangri-la and petitioners. It ruled that contrary to the finding of the LA, even if Art. 280 of the Labor Code states that if a worker performs work usually necessary or desirable in the business of an employer, he cannot be automatically deemed a regular employee, and that the Memorandum of Agreement between the respondent and the respondent doctor amply shows that respondent doctor was in fact engaged by Shangri-la on retainer basis, under which she could hire her own nurses and other clinic personnel.

The Court of Appeals (CA) affirmed the NLRC decision, concluding that all aspects of employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la. Issues:

1. Whether or not Article 157 of the Labor Code make it mandatory for covered establishment to employ health personnel; 2. Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.

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Held: The Court holds that, contrary to petitioners postulation, Art. 157 does not require the engagement of full-time nurses as regular employees of a company employing not less than 50 workers. Thus, the Article provides:

ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of: (a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight [8] hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.

Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its employees, not necessarily to hire or employ a service provider. As held in Philippine Global Communications vs. De Vera: x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer to retain, not employ, a part-time physician who needed to stay in the premises of the nonhazardous workplace for two (2) hours. Ma. Cecelia Timbal LlB 2 Rm 402

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The term full-time in Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read alongside Art. 280 in order to vest employeremployee relationship on the employer and the person so engaged. So De Vera teaches:

x x For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. x x x

The phrase services of a full-time registered nurse should thus be taken to refer to the kind of services that the nurse will render in the companys premises and to its employees, not the manner of his engagement.

The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.

On the other hand, existence of an employer- employee relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-las principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employees last drawn salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their Ma. Cecelia Timbal LlB 2 Rm 402

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SSS premium as well as their wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, Clinic Policies and Employee Manual claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-las regular workers, governs how they perform their respective tasks and responsibilities. In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners employer.

ISS Indochina Corp., vs Ferrer (2005) G.R. 156381 Facts: Respondents, in their complaint, alleged that petitioner hired them as construction workers for its Taiwan-based principal/employer Formosa Plastics Corporation. Pursuant to the parties' contracts of employment, each respondent would receive a monthly salary of NT$15,360.00. Their employment covered a period of one (1) year or from May 1, 1997 to May 1, 1998. On May 1, 1997, respondents, along with other Filipino contract workers, were deployed to Taiwan. But upon their arrival, only 20 workers, excluding respondents, were employed as construction workers at Formosa Plastics Corporation. Aggrieved, they sought assistance from Manila Economic and Cultural Office (MECO) officials who directed them to sign separate affidavits alleging that they were assigned, not as construction workers for Formosa Plastics Corporation, but as cable tray/pipe tract workers at Shin Kwan Enterprise Co., Ltd. On May 17, 1997, they were repatriated to the Philippines. They alleged that they were forced to resign since "they were left out from among those workers who were considered for employment."Subsequetly, a complaint was filed by private respondents for illegal dismissal, payment of salaries, refund of placement fee, damages and attorney's fees filed with the Office of the Labor Arbiter against JSS Indochina Corporation, petitioner, docketed as NLRC NCR OFW Case (L) 97-05-3715. Petitioner denied the allegations in the complaint, claiming that, assisted by MECO officials, respondents preterminated their respective contracts of employment as they refused to work after being assigned as cable tray/pipe tract workers by Formosa Plastics Corporation to 33 KV Worksite being administered by Shin Kwan Construction Company Limited. Issue: Whether or not respondents were illegally dismissed from employment by petitioner. Held: We take this opportunity to stress the need for strict enforcement of the law and the rules and regulations governing Filipino contract workers abroad. Many hapless citizens of this country who have sought foreign employment to earn a few dollars to ensure for their families a life worthy of human dignity and provide proper education and a decent future for their children have found themselves enslaved by foreign masters, harassed or abused and deprived of their employment for the slightest cause. No one should be made to unjustly profit from their suffering. Hence, recruiting agencies must not only faithfully comply with Government-prescribed responsibilities; they must impose upon themselves the duty, borne out of a social conscience, to help citizens of this

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country sent abroad to work for foreign principals. They must keep in mind that this country is not exporting slaves but human beings, and above all, fellow Filipinos seeking merely to improve their lives. There is no question that petitioner violated its contract with respondents. As found by the Labor Arbiter, the NLRC and the Appellate Court, petitioner did not assign them as construction workers for Formosa Plastics Corporation. Instead, they were directed to work as cable tray/pipe tract workers at Shin Kwan Enterprise Co., Ltd. The Labor Arbiter found that respondents' "decision to resign from their employment were made by force of circumstances not attributable to their own fault," and "it was not their fault that they were left out from among those workers who were considered for employment by the foreign employer." Likewise, the NLRC held that respondents' "decision to go home to the Philippines was justified in view of the evident breach of contract" by petitioner, as "it clearly appeared that upon their arrival at the jobsite, there was no employer on hand." Clearly, both labor tribunals correctly concluded, as affirmed by the Court of Appeals, that they were forced to resign and to pre-terminate their employment contracts in view of petitioner's breach of their provisions. Undoubtedly, the termination of respondents' services is without just or valid cause. Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act, provides: "SECTION 10. Money Claims.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. Verily, as correctly held by the Court of Appeals, respondents who were unjustly dismissed from work are actually entitled to an amount representing their three (3) months salary considering that their employment contract has a term of exactly one (1) year; plus a full refund of their placement fee, with no ceiling, with interest at 12% per annum. In Olarte vs. Nayona, we ordered petitioner Olarte to pay respondent Nayona, an illegally dismissed overseas contract worker, an amount corresponding to her 3 months salary and to reimburse her placement fee of P23,000.00, with legal interest of 12% per annum.

People vs Capt. Gasacao (2005) G.R. 168449 Facts: Appellant was the Crewing Manager of Great Eastern Shipping Agency Inc., a licensed local manning agency, while his nephew and co-accused, Jose Gasacao, was the President. As the crewing manager, appellant's duties included receiving job applications, interviewing the applicants and informing them of the agency's requirement of payment of performance or cash bond prior to deployment. On August 4, 2000, appellant and Jose Gasacao were charged with Large Scale Illegal Recruitment defined under Section 6, paragraphs (a), (l) and (m) of Republic Act (RA) No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, and penalized under Section 7 (b) of the same law, before the RTC of Quezon City.

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Only the appellant was arrested while Jose Gasacao remained at large. When arraigned, appellant pleaded not guilty to the offense charged. Thereafter, trial on the merits ensued. On March 5, 2001, the RTC of Quezon City, Branch 218, rendered its Joint Decision convicting appellant of Large Scale Illegal Recruitment in Crim. Case No. Q-00-94240 and acquitting him of the charge in Crim. Case No. Q-00-94241. Conformably with our pronouncement in People v. Mateo, 6 which modified pertinent provisions of the Rules of Court insofar as they provide for direct appeals from the RTC to the Supreme Court in cases where the penalty imposed is death, reclusion perpetua or life imprisonment, as in this case, as well as this Court's Resolution dated September 19, 1995, we resolved on February 2, 2005 to transfer the case to the Court of Appeals for appropriate action and disposition. Issue: WON an error attended the trial court's findings, as affirmed by the Court of Appeals, that appellant was guilty beyond reasonable doubt of the crime of large scale illegal recruitment. Held: ILLEGAL RECRUITMENT Sec. 6. DEFINITIONS. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting,

contracting, transporting, utilizing, hiring, procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, that such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any persons, whether a non-licensee, non-holder, licensee or holder of authority. (a) To charge or accept directly or indirectly any amount greater than the specified in the schedule of allowable

fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (l) Failure to actually deploy without valid reason as determined by the Department of Labor and

Employment; and (m) Failure to reimburse expenses incurred by the workers in connection with his documentation and

processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. REPUBLIC ACT NO. 8042 (THE MIGRANT WORKERS AND OVERSEAS FILIPINO ACT OF 1995); LICENSE DIFFERENTIATED FROM AUTHORITY - A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. However, it appears that even licensees or holders of authority can be held liable for illegal recruitment should they commit any of the above-enumerated acts. Ma. Cecelia Timbal LlB 2 Rm 402

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Thus, it is inconsequential that appellant committed large scale illegal recruitment while Great Eastern Shipping Agency, Inc. was holding a valid authority. We thus find that the court below committed no reversible error in not appreciating that the manning agency was a holder of a valid authority when appellant recruited the private complainants. There is no merit in appellant's contention that he could not be held liable for illegal recruitment since he was a mere employee of the manning agency, pursuant to Section 6 of RA No. 8042 which provides: The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable. ILLEGAL RECRUITMENT IN LARGE SCALE, CREWING MANAGER OF A SHIPPING AGENCY PROMISED THE COMPLAINANTS THAT THEY WILL BE DEPLOYED ABROAD AFTER THEY HAVE PAID THE CASH BOND Contrary to appellant's claim, he is not a mere employee of the manning agency but the crewing manager. As such, he receives job applications, interviews applicants and informs them of the agency's requirement of payment of performance or cash bond prior to the applicant's deployment. As the crewing manager, he was at the forefront of the company's recruitment activities. The testimonies of the private complainants clearly established that appellant is not a mere employee of Great Eastern Shipping Agency Inc. As the crewing manager, it was appellant who made representations with the private complainants that he can secure overseas employment for them upon payment of the cash bond. It is well settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. 10 Appellant's act of promising the private complainants that they will be deployed abroad within three months after they have paid the cash bond clearly shows that he is engaged in illegal recruitment. AN EMPLOYEE OF A COMPANY OR CORPORATION ENGAGED THEREIN MAY BE HELD LIABLE AS PRINCIPAL TOGETHER WITH HIS EMPLOYER. The trial court's appreciation of the complainants' testimonies deserves the highest respect since it was in a better position to assess their credibility. Even assuming that appellant was a mere employee, such fact is not a shield against his conviction for large scale illegal recruitment. In the case of People vs. Cabais, we have held that an employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with the employer, if it is shown that he actively and consciously participated in the recruitment process. Clearly, the acts of appellant vis--vis the private complainants, either as the crewing manager of Great Eastern Shipping Agency Inc. or as a mere employee of the same, constitute acts of large scale illegal recruitment which should not be countenanced.

We find no reason to deviate from the findings of the trial court that appellant is guilty beyond reasonable doubt of large scale illegal recruitment. It was established that he promised overseas employment to five applicants, herein private complainants. He interviewed and required them to complete and submit documents purportedly needed for their employment. Although he informed them that it is optional, he collected cash bonds and promised their deployment notwithstanding the proscription against its collection under Section 60 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 13 which state that:

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SEC. 60. Prohibition on Bonds and Deposits. In no case shall an employment agency require any bond or cash deposit from the worker to guarantee performance under the contract or his/her repatriation.

Acua vs CA (2006) G.R. 159832 Facts: Petitioners are Filipino overseas workers deployed by private respondent Join International Corporation (JIC), a licensed recruitment agency, to its principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China, under a uniformly-worded employment contract for a period of two years. Herein private respondent Elizabeth Alaon is the president of Join International Corporation. Sometime in September 1999, petitioners filed with private respondents applications for employment abroad. After their papers were processed, petitioners claimed they signed a uniformly-worded employment contract with private respondents which stipulated that they were to work as machine operators with a monthly salary of NT$15,840.00, exclusive of overtime, for a period of two years. On December 9, 1999, with 18 other contract workers they left for Taiwan. Upon arriving at the job site, a factory owned by 3D, they were made to sign another contract which stated that their salary was only NT$11,840.00. They were likewise informed that the dormitory which would serve as their living quarters was still under construction. They were requested to temporarily bear with the inconvenience but were assured that their dormitory would be completed in a short time. Petitioners alleged that they were brought to a "small room with a cement floor so dirty and smelling with foul odor". Forty women were jampacked in the room and each person was given a pillow. Since the ladies' comfort room was out of order, they had to ask permission to use the men's comfort room. Petitioners claim they were made to work twelve hours a day, from 8:00 p.m. to 8:00 a.m. The petitioners averred that on December 16, 1999, due to unbearable working conditions, they were constrained to inform management that they were leaving. They booked a flight home, at their own expense. Before they left, they were made to sign a written waiver. In addition, petitioners were not paid any salary for work rendered on December 11-15, 1999. Immediately upon arrival in the Philippines, petitioners went to private respondents' office, narrated what happened, and demanded the return of their placement fees and plane fare. Private respondents refused. On December 28, 1999, private respondents offered a settlement. Petitioner Mendez received P15,080. The next day, petitioners Acua and Ramones went back and received P13,640 10 and P16,200, respectively. They claim they signed a waiver, otherwise they would not be refunded. On January 14, 2000, petitioners Acua and Mendez invoking Republic Act No. 8042 filed a complaint for illegal dismissal and non-payment/underpayment of salaries or wages, overtime pay, refund of transportation fare, payment of salaries/wages for 3 months, moral and exemplary damages, and refund of placement fee before the National Labor Relations Commission (NLRC).

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Issue: Whether or not petitioners were illegally dismissed under Rep. Act No. 8042, thus entitling them to benefits plus damages.

Held: No illegal dismissal. As we have held previously, constructive dismissal covers the involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. In this case, the appellate court found that petitioners did not deny that the accommodations were not as homely as expected. In the petitioners' memorandum, they admitted that they were told by the principal, upon their arrival, that the dormitory was still under construction and were requested to bear with the temporary inconvenience and the dormitory would soon be finished. We likewise note that petitioners did not refute private respondents' assertion that they had deployed approximately sixty other workers to their principal, and to the best of their knowledge, no other worker assigned to the same principal has resigned, much less, filed a case for illegal dismissal. To our mind these cited circumstances do not reflect malice by private respondents nor do they show the principal's intention to subject petitioners to unhealthy accommodations. Under these facts, we cannot rule that there was constructive dismissal. Overtime Pay.Private respondents also claim that petitioners were not entitled to overtime pay, since they had offered no proof that they actually rendered overtime work. Petitioners, on the other hand, say that they could not show any documentary proof since their employment records were all in the custody of the principal employer. It was sufficient, they claim, that they alleged the same with particularity. It is a time-honored rule that in controversies between a worker and his employer, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the worker's favor. The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. Accordingly, we rule that private respondents are solidarily liable with the foreign principal for the overtime pay claims of petitioners. Moral and exemplary damages.On the award of moral and exemplary damages, we hold that such award lacks legal basis. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence, for the law always presumes good faith. Petitioners allege they suffered humiliation, sleepless nights and mental anguish, thinking how they would pay the money they borrowed for their placement fees. Even so, they failed to prove bad faith, fraud or ill motive on the part of private respondents. Moral damages cannot be awarded. Without the award of moral damages, there can be no award of exemplary damages, nor attorney's fees. Quitclaims are valid.Quitclaims executed by the employees are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers' legal rights, considering the economic disadvantage of the employee and the inevitable pressure upon him by financial necessity. Nonetheless, the so-called "economic difficulties and financial crises" allegedly confronting the employee is not an acceptable ground to annul the compromise agreement unless it is accompanied by a gross disparity between the actual claim and the amount of the settlement.

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A perusal of the records reveals that petitioners were not in any way deceived, coerced or intimidated into signing a quitclaim waiver in the amounts of P13,640, P15,080 and P16,200 respectively. Nor was there a disparity between the amount of the quitclaim and the amount actually due the petitioners. According to the Bangko Sentral Treasury Department, the prevailing exchange rates on December 1999 was NT$1 to P1.268805. Hence, after conversion to Philippine pesos, the amount of the quitclaim paid to petitioners was actually higher than the amount due them.

Asian International Manpower Services vs CA (2006) G.R. 169652 Facts: Proxy Maid Services Centre (Proxy), a Hong Kong based recruitment agency hired her through AIMS, a recruitment entity in the Philippines. On February 10, 2000, she signed an employment contract to work as a domestic helper of Low See Ting who later cancelled the contract sometime in March 2000. Nevertheless, Lacerna heeded AIMS's advice to proceed to Hong Kong on the assurance that she will be provided with an employment abroad. Upon arrival at Proxy's office on April 1, 2000, Lacerna was fetched by her employer, Tan Kmin Shwe Lin Charmain (Charmain). However, the latter dismissed her in a Notification dated May 2, 2000 citing as reason the "difficulty in communication." On May 20, 2000, Proxy transferred Lacerna to Tam Ching-yee, Donna. On June 30, 2000 she was dismissed by Donna without stating the reason for her termination. Neither did Proxy explain why she was dismissed. On July 1, 2000, Lacerna agreed to take a three-day trial period with another employer, Daisy Lee. However, before she could sign her contract with the latter, the Hong Kong government denied her request for change of employer and advised her to submit a fresh application with her country of origin. Following the denial of her work permit, Lacerna returned to the Philippines on July 13, 2000 but was informed by AIMS that Daisy Lee is no longer interested in hiring her. Lacerna demanded the return of her placement fee but was denied, hence, she filed the instant illegal dismissal case.AIMS, on the other hand, alleged that Lacerna resigned after working for five days as a domestic helper of Low See Ting from April 1, 2000 to April 5, 2000, as evidenced by her resignation letter. Proxy paid her wages and fare for a return ticket to the Philippines but she refused to be repatriated. Thereafter, with the assistance of Proxy, she was hired in the household of Charmain. Unfortunately, the latter dismissed Lacerna on the ground of difficulty in communication. On May 8, 2000, the Hong Kong Immigration Department granted her an extension of time to stay in Hong Kong with a warning that the same is her last chance to stay in the country. When Lacerna requested another extension, the same was denied and she was directed to leave Hong Kong. In her Reply, Lacerna insisted that her first employer was Charmain because she never worked for Low See Ting, who as early as March 2000, cancelled the contract before she flew to Hong Kong. She added that the signature appearing in the resignation letter and receipt of payment for the period April 1 to 5, 2000 is not her handwriting.

Issue: Was Lacerna illegally dismissed? If yes, may AIMS be held liable for the monetary claims of Lacerna Held: On both issues, the Court rules in the affirmative.

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There is no dispute that the last employer of Lacerna was Donna and not Daisy Lee because the Hong Kong government directed her repatriation before she could sign her contract with the latter. In dismissing her, Donna gave no reason for her termination. Neither did Proxy explain the ground for her dismissal. And where there is no showing of a clear, valid, and legal cause for the termination, the law considers the matter, a case of illegal dismissal. In termination cases involving Filipino workers recruited for overseas employment, the burden of proving just or authorized cause for termination rests with the foreign based employer/principal and the local based entity which recruited the worker both being solidarily liable for liabilities arising from the illegal dismissal of the worker. In this case, the Court of Appeals correctly declared Lacerna's termination illegal since no reason was given to justify her termination. AIMS argued that it cannot be held liable for the monetary claims of Lacerna because its contract was limited only to Lacerna's employment with Low See Ting. When she resigned as domestic helper of the latter, the contract was allegedly extinguished making AIMS no longer privy to the subsequent employment contract entered into by Proxy and Lacerna. However, the records of the Immigration Department of Hong Kong belie the contention of AIMS that Lacerna was employed by Low See Ting. The Immigration Department noted that the application of Lacerna was her second request for change of employer. She filed the first application after her contract was pre-terminated on May 4, 2000. This refers to the pre-termination by Charmain in the Notification of Cancellation of Employment Contract dated May 2, 2000. However, the prospective employer subject of said first application backed out, hence, Lacerna submitted a second application for change of employer which was granted with a warning that the same will be her last chance to stay in Hong Kong. Said second application landed her a job in the household of Donna on May 20, 2000. When the latter dismissed Lacerna on June 30, 2000, she applied for the third time to change employer but was denied by the Immigration Department which directed her to leave Hong Kong. The Hong Kong Immigration Department gave Lacerna only two chances to change employer. The subject of the first was the prospective employer who backed out, and the second was Donna. If we follow the version of AIMS, then the sequence of her employment would have been that with: (1) Low See Ting, (2) Charmain, (3) prospective employer who backed out, and (4) Donna. However Lacerna's employment with Low See Ting is not supported by the records of the Immigration Department. If Low See Ting was the first employer, then Lacerna's two chances to change employer would have ended on her prospective employer who backed out and would not have enabled her to work for Charmain and Donna. Clearly, the version of AIMS does not jibe with the official records of the Hong Kong government. Hence, between the alleged Lacerna's resignation letter to Low See Ting and the letters of the Hong Kong Immigration Department showing that Lacerna could not have been employed by her, credence must be given to the said official records, especially so that AIMS never assailed their authenticity. Moreover, even granting that Lacerna truly resigned as domestic helper of Low See Ting, the liability of AIMS was not extinguished. The contract of Lacerna as approved by the Philippine Overseas Employment Administration (POEA) reveals that Proxy was her designated principal employer; the agreed salary was HK$3,670.00 a month; and the contract duration was for two years. Since AIMS was the local agency which recruited Lacerna for Proxy, it is solidarily liable with the latter for liabilities arising from her illegal dismissal. To detach itself from the liability of Proxy, AIMS must show by clear and convincing evidence that its contract is limited to Lacerna's employment by Low See Ting.

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However, aside from its bare allegation, AIMS presented no proof to corroborate its claim. On the contrary, it appears that in transferring Lacerna from one employer to another, Proxy did not demand a new placement fee from Lacerna. This only shows that Proxy's conduct was in accordance with the original contract executed with AIMS and not on an entirely new and separate agreement entered into in Hong Kong. This interpretation is in accord with the rule that all doubts in the construction of labor contracts should be resolved in favor of the working class. The Constitution mandates the protection of labor and the sympathetic concern of the State for the workers conformably to the social justice policy. Verily, to absolve AIMS from liability based on its unsubstantiated claim that it is not privy to the subsequent employment provided by Proxy for Lacerna would be to undermine the avowed policy of the State. The joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. Thus, Section 10 of R.A. No. 8042, provides: SEC. 10. Money Claims. he liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less The illegal dismissal of Lacerna entitles her to the full reimbursement of placement fee with interest at twelve percent (12%) per annum, plus salaries for the unexpired portion of her employment contract or for three months for every year of the unexpired term, whichever is less. Thus, the Court of Appeals was correct in ordering AIMS to pay HK$11,010.00 corresponding to three months of her salary or its equivalent in the Philippine Peso at the time of payment, plus placement fee of P18,0000.00. No moral and exemplary damages.The Court of Appeals, however, erred in awarding moral and exemplary damages inasmuch as Lacerna failed to prove that AIMS and Proxy are guilty of bad faith. While it is true that they were not able to justify Lacerna's dismissal, the same does not automatically amount to bad faith. Moral and exemplary damages cannot be based solely upon the premise that the employer dismissed the employee without cause or due process. The termination must be attended with bad faith, or fraud, or was oppressive to labor or done in a manner contrary to morals, good customs or public policy and that social humiliation, wounded feelings, or grave anxiety resulted therefrom. Similarly, exemplary damages are recoverable only when the dismissal was effected in a wanton, oppressive or malevolent manner. To merit the award of these damages, additional facts showing bad faith are necessary but Lacerna failed to plead and prove the same in this case. Hence, the awards of moral and exemplary damages should be deleted.

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The award of attorney's fees is sustained.In actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum of ten percent (10%) of the total monetary award by way of attorney's fees is justified under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. There need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly and that the employee was forced to file a case, as in the instant case.

Sim vs. NLRC (2007) G.R. 157376 Facts: Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor Arbiter, alleging that she was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. Eventually, she was promoted to Manager position, until September 1999, when she received a letter from Remegio David the Senior Officer, European Head of PCIBank, and Managing Director of PCIB-Europe informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds. Respondent denied any employer-employee relationship between them, and sought the dismissal of the complaint.On September 3, 2001, the Labor Arbiter rendered its Decision dismissing the case for want of jurisdiction and/or lack of merit. On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's appeal for lack of merit. Without filing a motion for reconsideration with the NLRC, petitioner went to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. In a Resolution dated October 29, 2002, the CA dismissed the petition due to petitioner's non-filing of a motion for reconsideration with the NLRC Issues and Rulings: I. Whether or not labor relations system in the Philippines has extra-territorial jurisdiction. The Court notes, however, a palpable error in the Labor Arbiter's disposition of the case, which was affirmed by the NLRC, with regard to the issue on jurisdiction. It was wrong for the Labor Arbiter to rule that "labor relations system in the Philippines has no extra-territorial jurisdiction." Article 217 of the Labor Code provides for the jurisdiction of the Labor Arbiter and the National Labor Relations Commission, viz.: ART. 217. Jurisdiction of Labor Arbiters and the Commission.

(a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. 2. Unfair labor practice cases; Termination disputes; Ma. Cecelia Timbal LlB 2 Rm 402

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3.

If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of

pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee

relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of

strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other

claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

Moreover, Section 10 of Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, provides: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the

National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. Also, Section 62 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 provides that the Labor Arbiters of the NLRC shall have the original and exclusive jurisdiction to hear and decide all claims arising out of employeremployee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages, subject to the rules and procedures of the NLRC. Under these provisions, it is clear that labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations, including termination disputes involving all workers, among whom are overseas Filipino workers. In Philippine National Bank v. Cabansag, the Court pronounced: . . Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws "which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country." In any event, since the CA did not commit any error in dismissing the petition before it for failure to file a prior motion for reconsideration with the NLRC, and considering that the Labor Arbiter and the NLRC's factual findings as regards the validity of petitioner's dismissal are accorded great weight and respect and even finality when the same are supported by substantial evidence, the Court finds no compelling reason to relax the rule on the filing of a motion for reconsideration prior to the filing of a petition for certiorari. Ma. Cecelia Timbal LlB 2 Rm 402

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II. Whether or not a prior motion for reconsideration is indispensable for the filing of a petition for certiorari under Rule 65 of the Rules of Court with the CA. Under Rule 65, the remedy of filing a special civil action for certiorari is available only when there is no appeal; or any plain, speedy, and adequate remedy in the ordinary course of law. A "plain" and "adequate remedy" is a motion for reconsideration of the assailed order or resolution, the filing of which is an indispensable condition to the filing of a special civil action for certiorari. This is to give the lower court the opportunity to correct itself. There are, of course, exceptions to the foregoing rule, to wit: (a) (b) where the order is a patent nullity, as where the court a quo has no jurisdiction; where the questions raised in the certiorari proceedings have been duly raised and passed upon by the

lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice

the interests of the Government or of the petitioner or the subject matter of the action is perishable; (d) (e) (f) where, under the circumstances, a motion for reconsideration would be useless; where petitioner was deprived of due process and there is extreme urgency for relief; where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial

court is improbable; (g) (h) (i) where the proceedings in the lower court are a nullity for lack of due process; where the proceeding was ex parte or in which the petitioner had no opportunity to object; and where the issue raised is one purely of law or public interest is involved.

Petitioner, however, failed to qualify her case as among the few exceptions. In fact, the Court notes that the petition filed before the CA failed to allege any reason why a motion for reconsideration was dispensed with by petitioner. It was only in her motion for reconsideration of the CA's resolution of dismissal and in the petition filed in this case that petitioner justified her non-filing of a motion for reconsideration. It must be emphasized that a writ of certiorari is a prerogative writ, never demandable as a matter of right, never issued except in the exercise of judicial discretion. Hence, he who seeks a writ of certiorari must apply for it only in the manner and strictly in accordance with the provisions of the law and the Rules. Petitioner may not arrogate to himself the determination of whether a motion for reconsideration is necessary or not. To dispense with the requirement of filing a motion for reconsideration, petitioner must show a concrete, compelling, and valid reason for doing so, which petitioner failed to do. Thus, the Court of Appeals correctly dismissed the petition. Petitioner also contends that the issue at bench is purely a question of law, hence, an exception to the rule. A reading of the petition filed with the CA shows otherwise. The issues raised in this case are mixed questions of fact and law. There is a question of fact when doubt or difference arises as to the truth or falsehood of the alleged facts, and there is a question of law where the doubt or difference arises as to what the law is on a certain state of facts. Petitioner, aside from questioning the ruling of the NLRC sustaining the Labor Arbiter's view that it does not have any jurisdiction over the case, also questions the NLRC's ruling affirming the Labor Arbiter's conclusion that she was

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validly dismissed by respondent. The legality of petitioner's dismissal hinges on the question of whether there was an employer-employee relationship, which was denied by respondent; and, if in the affirmative, whether petitioner, indeed, committed a breach of trust and confidence justifying her dismissal. These are mixed questions of fact and law and, as such, do not fall within the exception from the filing of a motion for reconsideration. Consequently, the CA was not in error when it dismissed the petition. More so since petitioner failed to show any error on the part of the Labor Arbiter and the NLRC in ruling that she was dismissed for cause. The rule is that the Court is bound by the findings of facts of the Labor Arbiter or the NLRC, unless it is shown that grave abuse of discretion or lack or excess of jurisdiction has been committed by said quasi-judicial bodies. The Court will not deviate from said doctrine without any clear showing that the findings of the Labor Arbiter, as affirmed by the NLRC, are bereft of sufficient substantiation. Petitioner does not deny having withdrawn the amount of P3, 000,000.00 lire from the bank's account. What petitioner submits is that she used said amount for the Radio Pilipinas sa Roma radio program of the company. Respondent, however, countered that at the time she withdrew said amount, the radio program was already off the air. Respondent is a managerial employee. Thus, loss of trust and confidence is a valid ground for her dismissal. The mere existence of a basis for believing that a managerial employee has breached the trust of the employer would suffice for his/her dismissal.

Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195 Facts: Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned to work. On February 15, 1997, the private respondent reported for his working station one and one-half hours late. On February 17, 1997, the master of the vessel served to the private respondent an official warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice. On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary claims. The private respondent alleged that he was paid only US$300.00 per month as monthly salary for five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. Issue: WON respondent is entitled to overtime pay which was incorporated in his award for the unexpired portion of the contract despite the fact that he did not render overtime work.

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Held: The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the computation of his salaries for the entire unexpired period of his contract has no factual or legal basis and the same should have been disallowed. Petitioner contends that there is no factual or legal basis for the inclusion of said amount because, after respondent's repatriation, he could not have rendered any overtime work. This time, petitioner's contention is well-taken. The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission, where the NLRC was questioned for awarding to an illegally dismissed overseas worker fixed overtime pay equivalent to the unexpired portion of the latter's contract. In resolving the question, the Court, citingCagampan v. National Labor Relations Commission, held that although an overseas employment contract may guarantee the right to overtime pay, entitlement to such benefit must first be established, otherwise the same cannot be allowed.

Masangcay vs Trans-Global Maritime Agency Inc., (2008) G.R. 172800 Facts: Ventnor is a foreign company based in Liberia and engaged in maritime commerce. It is represented in the Philippines by its manning agent, and co-respondent herein, Trans-Global, a corporation organized and existing under Philippine laws. Petitioner Marciano Masangcay was hired by Ventnor, through its manning agent, TransGlobal, as an oiler on M/T Eastern Jewel, an oil tanker. While on board M/T Eastern Jewel, Masangcay noticed a reddish discoloration of his urine upon urination. This happened several times and later became associated with bouts of left lower abdominal pain radiating to the loin area. Masangcay was brought to the Fujairah Hospital, United Arab Emirates, because of lower abdominal pain and left loin pain with difficulty in urinating. Better removal of the right pelvi-ureteric calculus was the recommended treatment but Masangcay refused surgical intervention and insisted on being repatriated back to the Philippines instead. Upon his arrival in Manila, Masangcay was immediately referred to Trans-Globals designated physician. Masangcay was hospitalized at the Makati Medical Center for treatment. The removal of the non-functioning right kidney was advised but Masangcay refused. Masangcay was then referred to Dr. Reynaldo C. de la Cruz of the National Kidney and Transplant Institute (NKTI) for a second opinion. An operation was made and proved successful. Dr. dela Cruz pronounced that Masangcay was fit to resume work as all his laboratory examinations showed normal results. Accordingly, Trans-Globals designated physician, declared Masangcay fit to go back to work after a regular medical examination. Trans-Global, in behalf of Ventnor, paid Masangcay his full 120 days Sick Leave Pay as well as all his medical and hospital expenses and professional fees of his attending physicians. Masangcay was asked to report back to the office of Trans-Global for deployment line-up. When Masangcay reported to the premises of Trans-Global, however, he was informed by the Port Captain that he can no longer be deployed due to negative reports about him coming from its principal, Ventnor. Masangcay instituted a complaint against Trans-Global and Ventnor, including Trans-Globals President, Michael Estaniel, before the National Labor Relations Commission (NLRC) for the payment of disability benefit, damages and attorneys fees. Masangcay alleged that his illness was contracted during the term of his Contract of Employment. Labor Arbiter found Masangcays complaint meritorious and ordered Trans-Global, Ventnor, and Estaniel to pay Masangcay for disability benefit. On appeal to the NLRC, the Commission affirmed the decision of the labor arbiter. The Court of Appeals granted the petition for certiorari of TransGlobal and Ventnor. It nullified and set aside the challenged Resolutions of the NLRC for having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction. Hence, this petition for review on certiorari under Rule 45 of the Revised Rules of Court. Issue: WON Masangcay is entitled to disability benefits on account of his present condition. Ma. Cecelia Timbal LlB 2 Rm 402

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Held: We rule in the negative. Under Sec. 20(b), paragraph 6, of the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels: permanent total or partial disability suffered by a seafarer during the term of his contract must be caused by work-related illness or injury. To be entitled to compensation and benefits under said provision, it is not sufficient to establish that the seafarers illness or injury has rendered him permanently or partially disabled, but it must also be shown that there is a causal connection between the seafarers illness or injury and the work for which he had been contracted for. Accordingly, in order to hold Trans-Global and Ventnor liable for payment of his claims, Masangcay must prove that he is suffering from permanent total or partial disability due to a work-related illness occurring during the term of his contract. Proof that he not only acquired or contracted his illness during the term of his employment contract is clearly not enough; Masangcay must also present evidence that such infirmity was work-related, or at the very least aggravated by the conditions of the work for which he was contracted for. The burden is clearly upon Masangcay to present substantial evidence, or such relevant evidence which a reasonable mind might accept as adequate to justify a conclusion, showing a reasonable connection that the nature of his employment or working conditions between the conditions of his work and his illness; or that the risk of contracting the same was increased by his working conditions. This, he did not do. Masangcay does not even assert that his illness is work-related and/or was, at the minimum, aggravated by his working conditions at the M/T Eastern Jewel. There is no substantiation that the progression of his ailment was brought about largely by the conditions of his job as an oiler. His medical history and/or records prior to his deployment as an oiler in M/T Eastern Jewel were neither presented nor alluded to in order to demonstrate that the working conditions on board said vessel increased the risk of contracting renal failure, chronic or otherwise. But even assuming that Masangcay is suffering from chronic renal failure, it still does not entitle him to compensation and benefits for a permanent disability. Chronic renal failure, is neither listed as a disability under Sec. 32 of the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels; nor an occupational disease under Sec. 32-A thereof. But other than Masangcays bare avowal of entitlement just because an illness became manifest during his contract of employment, there is nothing on record to substantiate the same and would have justified an award of compensation on top of the aid or assistance already extended to him by Trans-Global and Ventnor. The dispute could have easily been resolved had the parties stayed true to the provisions of Sec. 20(b), paragraph 3 of the 2000 POEA Amended Standard Terms and Conditions: If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctors decision shall be final and binding on both parties. Without the opinion of a third doctor, we are constrained to make a ruling based on the evidences submitted by the parties and made part of the records of this case, which included the medical certifications of their respective physicians. Masangcay makes no allegation, much less presents no proof, that the illness was caused or aggravated by his employment. The evidence on record is totally bare of essential facts on how he contracted or developed such disease and on how and why his working conditions increased the risk of contracting the same.

Magsaysay Maritime Corp., et al., vs Velasquez, et al., (2008) G.R. 179802 Facts: Respondent Jaime M. Velasquez was hired by petitioner Magsaysay Maritime Corporation as second cook for its foreign principal, co-petitioner ODF Jell ASA. While on duty as second cook on board the vessel M/T Bow Favour, respondent suffered high fever and was unable to work. He took fever relieving medicine but his condition worsened. By the fourth day, his body temperature reached 40.9C. Respondent was brought to a hospital in Singapore where he was confined. Thereafter, he was repatriated to the Philippines. Respondent alleged that upon his repatriation, he was not confined to St. Lukes Medical Center as he expected. He claimed that he was compelled Ma. Cecelia Timbal LlB 2 Rm 402

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to seek medical treatment from an independent doctor. He consulted a certain Dr. Efren Vicaldo who diagnosed him to be suffering from staphylococcal bacteremia, multiple metastatic abcesses, pleural effusion and hypertension and declared his disability as Impediment Grade 1 (120%). Dr. Vicaldo further concluded that respondent was unfit to resume work as seaman in any capacity. Hence, respondent filed a claim for disability benefits, illness allowance/ reimbursement of medical expenses, damages and attorneys fees but petitioners refused to pay. The Labor Arbiter rendered a decision in favor of respondent. The NLRC rendered a decision reversing that of the Labor Arbiter and dismissed respondents complaint for lack of merit. CA set aside the decision of the NLRC and reinstated that of the Labor Arbiter. Issue: WON the CA committed reversible error when it upheld the findings of respondents private physician rather than the findings of the company-designated physician. Held: CA committed reversible error in ignoring the medical assessment of the company-designated physician. The POEA Contract is clear in its provisions when it provided who should determine the disability grading or fitness to work of seafarers. The POEA contract recognizes only the disability grading provided by the company-designated physicians. Section 20 B.3 of the POEA clearly illustrate that respondents disability can only be assessed by the company-designated physician. If the companydesignated physician declares him fit to work, then the seaman is bound by such declaration. The parties are both bound by the provisions of the POEA Contract which declares that the degree of disability or fitness to work of a seafarer should be assessed by the company-designated physician. Jurisprudence is replete with pronouncements that it is the company-designated physicians findings which should form the basis of any disability claim of the seafarer. In this particular case, respondent refused to accept the assessment made by the companydesignated physician that he is fit to work. It is beyond cavil that it is the company-designated physician who is entrusted with the task of assessing the seamans disability. However, when the seamans private physician disagrees with the assessment of the company-designated physician, as here, a third doctors opinion may be availed of in determining his disability. This however was not resorted to by the parties. As such, the credibility of the findings of company-designated doctors was properly evaluated by the NLRC. The company-designated physician cleared respondent for work resumption upon finding that his infection has subsided after successful medication. We agree with the NLRC that the doctor more qualified to assess the disability grade of the respondent seaman is the doctor who regularly monitored and treated him. The company-designated physician possessed personal knowledge of the actual condition of respondent. Since the company-designated physician in this case deemed the respondent as fit to work, then such declaration should be given credence, considering the amount of time and effort the company doctor gave to monitoring and treating respondents condition. It is undisputed that the recommendation of Dr. Vicaldo was based on a single medical report which outlined the alleged findings and medical history of respondent despite the fact that Dr. Vicaldo treated or examined respondent only once. As between the findings of the company-designated physician (Dr. Alegre) and the physician appointed by respondent (Dr. Vicaldo), the former deserves to be given greater evidentiary weight.

Serrano vs Gallant Maritime Services et al., (2009) G.R. 167614 Facts: Antonio M. Serrano was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following Ma. Cecelia Timbal LlB 2 Rm 402

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terms and conditions: Duration of contract Position Basic monthly salary Hours of work Overtime Vacation leave with pay 12 months Chief Officer US$1,400.00 48.0 hours per week US$700.00 per month 7.00 days per month On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of MSI that he would be made Chief Officer by the end of April 1998. MSI did not deliver on their promise to make petitioner Chief Officer. Hence, Soriano refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998. Sorianos employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days. He filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73 as well moral and exemplary damages and attorneys fees. He got a favourable decision with the Labor Arbiter in the amount of US$ 8,770.00. In awarding Soriano a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's *b+asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month. MSI appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed. Soriano also appealed to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts. In a Decision dated June 15, 2000, the NLRC modified the LA Decision, ordering MSI to pay Soriano, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following: 1. 2. 3. Three (3) months salary $1,400 x 3 Salary differential 45.00 10% Attorneys fees424.50 US$4,200.00 US$4,245.00 TOTAL US$4,669.50 The NLRC corrected the LA's computation of the lump-sum salary awarded to Soriano by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay. Soriano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause. The NLRC denied the motion. Issue: WON Serrano is entitled to his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days. Held: Yes, Soriano is entitled to his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month. In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment. The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Ma. Cecelia Timbal LlB 2 Rm 402

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People vs Domingo (2009) G.R. 181475 Facts: In or about the month of November 1999 to January 20, 2000, in the Municipality of Malolos, province of Bulacan, Philippines, Domingo, being a non-licensee or non-holder of authority from the Department of Labor and Employment to recruit and/or place workers under local or overseas employment, did then and there willfully and feloniously, with false pretenses, undertake illegal recruitment, placement or deployment of Wilson A. Manzo, and 22 other individuals. This offense involved economic sabotage, as it was committed in large scale. The Informations for 23 counts of Estafa, all of which were similarly worded but varying with respect to the name of each complainant and the amount which each purportedly gave to Domingo. That in or about the month of November, 1999 to January, 2000, in the municipality of Malolos, province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, by means of deceit, false pretenses and fraudulent manifestations, and with intent of gain, did then and there willfully, unlawfully and feloniously defraud one [Wilson A. Manzo] by then and there falsely representing that he has the power and capacity to recruit and employ persons in Saipan and could facilitate the necessary papers in connection therewith if given the necessary amount, and by means of deceit of similar import, when in truth and in fact, as the accused knew fully well his representation was false and fraudulent and designed to inveigle [Wilson A. Manzo] to give, as in fact the latter gave and delivered the amount of [P14,000.00] to him, which the accused misappropriated to himself, to the damage and prejudice of Wilson A. Manzo in the said amount of [P14,000.00]. Rogelio Cambay: Domingo recruited him for a painting job in Marianas Island for which he paid him the amount of P15,000 in two installments P2,500 during his medical examination at Newton Clinic in Makati City, and the balance of P12,500 before the scheduled departure on January 25, 2000. On his scheduled departure, appellant did not show up at their meeting place in Malolos, Bulacan, hence, the around one hundred people who waited for him organized a search party to look for him in Zambales. Appellant was arrested on February 25, 2000 at the Balintawak tollgate. Verification with the Department of Labor and Employment showed that appellant was not a licensed recruiter. Florentino Ondra: He was recruited by Domingo for employment as laborer in Saipan, for which he gave P14,700 representing expenses for passporting, NBI clearance, and medical examination. Dionisio Aguilar: In September, 1999, he met Domingo thru a friend whereupon he was interviewed, tested for a hotel job, and scheduled for medical examination. He gave P30,000 to Domingo inside the latters car on November, 1999 after his medical examination. While he was twice scheduled for departure, it did not materialize. Ma. Leah Vivas: After meeting Domingo thru Eddie Simbayan on October 19, 1999, she applied for a job as a domestic helper in Saipan, for which she paid appellant P10,000, but like the other complainants, she was never deployed. Simeon Cabigao: He was recruited by Domingo in September, 1999 for employment as carpenter in Saipan with a guaranteed salary of $375 per month. For the promised employment, he paid Domingo P3,000 for medical fee, and an additional P9,000, supposedly to bribe the examining physician because, per information of Domingo, he (Cabigao) was found to have an ailment. He was scheduled for departure on February 23, 2000, but the same never took place. He was among those who looked for appellant in Zambales. Cabigao later recanted this testimony, per his affidavit dated March 3, 2003. Testifying anew, this time for the defense, he averred that the one who actually recruited him and his co-complainants and received their money was Danilo Gimeno (Gimeno), and that they only agreed among themselves to file a case against appellant because Gimeno was nowhere to be found. Domingos Argument: Domingo, denying all the accusations against him, claimed as follows: He was a driver hired by the real recruiter, Gimeno, whom he met inside the Victory Liner Bus bound for Manila in September, 2000. It was Gimeno Ma. Cecelia Timbal LlB 2 Rm 402

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who undertakes recruitment activities in Dakila, Malolos, Bulacan at the residence of Eddie Simbayan, and that the other cases for illegal recruitment filed against him before other courts have all been dismissed. Domingo likewise presented as witnesses Enrico Espiritu and Roberto Castillo who corroborated his claim that it was Gimeno who actually recruited them, and that the filing of the complaint against appellant was a desperate attempt on their part to get even because Gimeno could not be located. Issue: Whether or not Domingo is guilty of Illegal Recruitment despite that there is no evidence showing that he actually received money from complainants. Held: Y es, Domingo is guilty of Illegal Recruitment. The term recruitment and placement is defined under Article 13(b) of the Labor Code of the Philippines as follows: (b) Recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. On the other hand, Article 38, paragraph (a) of the Labor Code, as amended, under which the accused stands charged, provides: Art. 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement officer may initiate complaints under this Article. (b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. From the foregoing provisions, it is clear that any recruitment activities to be undertaken by nonlicensee or nonholder of authority shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. To prove illegal recruitment in large scale, the prosecution must prove three essential elements, to wit: (1) the person charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) he/she did not have the license or the authority to lawfully engage in the recruitment and placement of workers; and (3) he/she committed the prohibited practice against three or more persons individually or as a group. No receipt or document in which appellant acknowledged receipt of money for the promised jobs was adduced in evidence does not free him of liability. For even if at the time appellant was promising employment no cash was given to him, he is still considered as having been engaged in recruitment activities, since Article 13(b) of the Labor Code states that the act of recruitment may be for profit or not. It suffices that appellant promised or offered employment for a fee to the complaining witnesses to warrant his conviction for illegal recruitment.

Great Southern Maritime Services Corp vs Surigao (2009) G.R. 183646 Facts: On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and Promotion, Inc.[2] (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per month. Over a year later, she died allegedly of Ma. Cecelia Timbal LlB 2 Rm 402

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poisoning. Jasmins body was repatriated to Manila on September 3, 1998. The following day, the City Health Officer of Cabanatuan City conducted an autopsy and the resulting medical report indicated that Jasmin died under violent circumstances, and not poisoning as originally found by the KSA examining physician. On March 11, 1999, Jasmins remains were exhumed and examined by the National Bureau of Investigation (NBI). The toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and insecticides On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and exemplary damages for Jasmins death. In their complaint, the Cuaresmas claim that Jasmins death was work-related, having occurred at the employers premises that under Jasmins contract with Becmen, she is entitled to iqama insurance coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is the sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied by 35 years (or the remaining years of her productive life had death not supervened at age 25, assuming that she lived and would have retired at age 60). In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the Cuaresmas are not entitled to iqama insurance because this refers to the issuance not insurance of iqama, or residency/work permit required in the KSA. On February 28, 2001, the Labor Arbiter rendered a Decision dismissing the complaint for lack of merit. On appeal, the National Labor Relations Commission (Commission) reversed the decision of the Labor Arbiter. Relying on the findings of the City Health Officer of Cabanatuan City and the NBI as contained in their autopsy and toxicology report, respectively, the Commission, via its November 22, 2002 Resolution declared that, based on substantial evidence adduced, Jasmin was the victim of compensable work-connected criminal aggression. The appellate court affirmed the NLRCs findings that Jasmins death was compensable, the same having occurred at the dormitory, which was contractually provided by the employer. Thus her death should be considered to have occurred within the employers premises, arising out of and in the course of her employment. Issue: Whether the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the death of their daughter Jasmin. Held: Yes, they are. Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and Promotion, Inc., and their corporate directors and officers are found jointly and solidarily liable The Court cannot subscribe to the idea that Jasmin committed suicide while halfway into her employment contract. It is beyond human comprehension that a 25-year old Filipina, in the prime of her life and working abroad with a chance at making a decent living with a high-paying job which she could not find in her own country, would simply commit suicide for no compelling reason. Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and Promotion, Inc They have placed their own financial and corporate interests above their moral and social obligations, and chose to secure and insulate themselves from the perceived responsibility of having to answer for and indemnify Jasmins heirs for her death. Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and Overseas Filipinos Act of 1995, [22] the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant workers, in particular. The State shall provide adequate and timely social, economic and legal services to Filipino migrant workers. The rights and interest of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded. Becmen and White Falcon, as licensed local recruitment agencies, miserably failed to abide by the provisions of R.A. 8042. Recruitment agencies are expected to extend assistance to their deployed OFWs, especially those in distress. Instead, they abandoned Jasmins case and allowed it to remain unsolved to further their interests and avoid anticipated liability which parents or relatives of Jasmin would certainly exact from them. They willfully Ma. Cecelia Timbal LlB 2 Rm 402

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refused to protect and tend to the welfare of the deceased Jasmin, treating her case as just one of those unsolved crimes that is not worth wasting their time and resources on. The evidence does not even show that Becmen and Rajab lifted a finger to provide legal representation and seek an investigation of Jasmins case. Worst of all, they unnecessarily trampled upon the person and dignity of Jasmin by standing pat on the argument that Jasmin committed suicide, which is a grave accusation given its un-Christian nature. Clearly, Rajab, Becmen and White Falcons acts and omissions are against public policy because they undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full protection under the law. They set an awful example of how foreign employers and recruitment agencies should treat and act with respect to their distressed employees and workers abroad. Their shabby and callous treatment of Jasmins case; their uncaring attitude; their unjustified failure and refusal to assist in the determination of the true circumstances surrounding her mysterious death, and instead finding satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently avoid pecuniary liability; placing their own corporate interests above of the welfare of their employees all these are contrary to morals, good customs and public policy, and constitute taking advantage of the poor employee and her familys ignorance, helplessness, indigence and lack of power and resources to seek the truth and obtain justice for the death of a loved one. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers.

Ma. Cecelia Timbal

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