NATIONAL POWER CORPORATION V COURT OF APPEALS JOEB M.
ALIVIADO V PROCTER & GAMBLE PHILS INC & PROMM-GEM
FACTS
On 15 November 1973, the Office of the President of the Philippines issued
Memorandum Order No. 398 instructing the NPC to build the Agus Regulation
Dam at the mouth of Agus River in Lanao del Sur, at a normal maximum water
level of Lake Lanao at 702 meters elevation. Pursuant thereto, petitioner built
and operated the said dam in 1978. Private respondents Hadji Abdul Carim
Abdullah, Caris Abdullah, Hadji Ali Langco and Diamael Pangcatan own
fishponds along the Lake Lanao shore. In October and November of 1986, all
the improvements were washed away when the water level of the lake
escalated and the subject lakeshore area was flooded. Private respondents
blamed the inundation on the Agus Regulation Dam built and operated by the
NPC in 1978. They theorized that NPC failed to increase the outflow of water
even as the water level of the lake rose due to the heavy rains.
ISSUE
Whether or not the Court of Appeals erred in affirming the trial court’s verdict
that petitioner was legally answerable for the damages endured by the private
respondents
RULING
Memorandum Order No. 398 clothes the NPC with the power to build the Agus
Regulation Dam and to operate it for the purpose of generating energy. Twin
to such power are the duties: (1) to maintain the normal maximum lake
elevation at 702 meters, and (2) to build benchmarks to warn the inhabitants
in the area that cultivation of land below said elevation is forbidden. With
respect to its job to maintain the normal maximum level of the lake at 702
meters, the Court of Appeals, echoing the trial court, observed with alacrity
that when the water level rises due to the rainy season, the NPC ought to
release more water to the Agus River to avoid flooding and prevent the water
from going over the maximum level. And yet, petitioner failed to do so, resulting
in the inundation of the nearby estates. Consequently, even assuming that the
fishponds were erected below the 702-meter level, NPC must, nonetheless,
bear the brunt for such damages inasmuch as it has the duty to erect and
maintain the benchmarks precisely to warn the owners of the neighboring
properties not to build fishponds below these marks. Without such points of
reference, the inhabitants in said areas are clueless whether or not their
improvements are within the prohibited area. Conversely, without such
benchmarks, NPC has no way of telling if the fishponds, subject matter of the
present controversy, are indeed below the prescribed maximum level of
elevation. Due to NPC’s negligence in the performance of its duties, it shall be
held liable for the resulting damages suffered by private respondents.
INC.
FACTS
Petitioners worked as merchandisers of P&G from various dates, allegedly
starting as early as 1982 or as late as June 1991, to either May 5, 1992 or
March 11, 1993, more specifically as follows: They all individually signed
employment contracts with either Promm-Gem or SAPS for periods of more or
less five months at a time. They were assigned at different outlets,
supermarkets and stores where they handled all the products of P&G. They
received their wages from Promm-Gem or SAPS. SAPS and Promm-Gem
imposed disciplinary measures on erring merchandisers for reasons such as
habitual absenteeism, dishonesty or changing day-off without prior notice.
P&G is principally engaged in the manufacture and production of different
consumer and health products, which it sells on a wholesale basis to various
supermarkets and distributors. To enhance consumer awareness and
acceptance of the products, P&G entered into contracts with Promm-Gem and
SAPS for the promotion and merchandising of its products. In December 1991,
petitioners filed a complaint against P&G for regularization, service incentive
leave pay and other benefits with damages. The complaint was later amended
to include the matter of their subsequent dismissal.
On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of
merit and ruled that there was no employer-employee relationship between
petitioners and P&G. He found that the selection and engagement of the
petitioners, the payment of their wages, the power of dismissal and control with
respect to the means and methods by which their work was accomplished,
were all done and exercised by Promm-Gem/SAPS. He further found that
Promm-Gem and SAPS were legitimate independent job contractors.
NLRC affirmed the appealed decision. Petitioners filed a motion for
reconsideration but the motion was denied. Petitioners then filed a petition
forcertiorariwith 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. Hence, this petition.
ISSUE
Whether P&G is the employer of petitioners;
Whether petitioners were illegally dismissed
HELD
The decision of the Court of Appeals is sustained.
LABOR LAW
In the instant case, the financial statementsof Promm-Gem show that it has
authorized capital stock ofP1 million and a paid-in capital, or capital available
for operations, ofP500,000.00 as of 1990.It also has long term assets
worthP432,895.28 and current assets ofP719,042.32. Promm-Gem has also
proven that it maintained its own warehouse and office space with a floor area
of 870 square meters.It also had under its name three registered vehicles
which were used for its promotional/merchandising business. Promm-Gem
also has other clientsaside 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 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 ofcontractualemployees. 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
onlyP31,250.00. There is no other evidence presented to show how much its
working capital and assets are. Furthermore, there is no showing of substantial
investment in tools, equipment or other assets.
Where labor-only contracting exists, the Labor Code itself establishes an
employer-employee relationship between the employer and the employees of
the labor-only contractor.The statute establishes this relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the
latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer.
LABOR LAW
Loss of trust and confidence, as a ground for dismissal, must be based on the
wilful breach of the trust reposed in the employee by his employer. Ordinary
breach will not suffice. A breach of trust is wilful if it is done intentionally,
knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust
and confidence, as a cause for termination of employment, is premised on the
fact that the employee concerned holds a position of responsibility or of trust
and confidence. As such, he must be invested with confidence on delicate
matters, such as custody, handling or care and protection of the property and
assets of the employer. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and must show that the employee
is unfit to continue to work for the employer.In the instant case, the petitioners-
employees of Promm-Gem have not been shown to be occupying positions of
responsibility or of trust and confidence. Neither is there any evidence to show
that they are unfit to continue to work as merchandisers for Promm-Gem.
PAL v. NLRC
FACTS
Private respondent Dr. Fabros was employed as flight surgeon at petitioner
company. He was assigned at the PAL Medical Clinic and was on duty from
4:00 in the afternoon until 12:00 midnight. On Feb.17, 1994, at around 7:00 in
the evening, Dr. FAbros left the clinic to have his dinner at his residence, which
was abou t5-minute drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its employeeshad
suffered a heart attack. The nurse on duty, Mr. Eusebio, called private
respondent at home to inform him of the emergency. The patient arrived at the
clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the
hospital. When Dr. Fabros reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient to the hospital. The patient died
the following day. Upon learning about the incident, PAL Medical Director
ordered the Chief Flight Surgeon to conduct an investigation. In his
explanation, Dr. Fabros asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr.
Eusebio about the emergency and he arrived at the clinic a few minutes later;
that Mr. Eusebio panicked and brought the patient to the hospital without
waiting for him. Finding private respondent’s explanation unacceptable, the
management charged private respondent with abandonment of post while on
duty. He denied that he abandoned his post on February 17, 1994. He said
that he only left the clinic to have his dinner at home. In fact, he returned to the
clinic at 7:51 in the evening upon being informed of the emergency. After
evaluating the charge as well as the answer of private respondent, he was
given a suspension for three months effective December 16, 1994. Private
respondent filed a complaint for illegal suspension against petitioner. On July
16, 1996, the Labor Arbiter rendered a decision declaring the suspension of
private respondent illegal. It also ordered petitioner to pay private respondent
the amount equivalent to all the benefits he should have received during his
period of suspension plus P500,000.00 moral damages. Petitioner appealed
to the NLRC. The NLRC, however, dismissed the appeal after finding that the
decision of the Labor Arbiter is supported by the facts on record and the law
on the matter. The NLRC likewise denied petitioner’s motion for
reconsideration. Hence, this petition.
ISSUE
WON the nullifying of the 3-month suspension by the NLRC erroneous
WON the awarding of moral damages is proper.
HELD
The petition is PARTIALLY GRANTED. The portion of the assailed decision
awarding moral damages to private respondent is DELETED. All other aspects
of the decision are AFFIRMED
1. The legality of private respondent’s suspension: Dr. Fabros left the clinic
that night only to have his dinner at his house, which was only a few minutes’
drive away from the clinic. His whereabouts were known to the nurse on duty
so that he could be easily reached in case of emergency. Upon being informed
of Mr. Acosta’s condition, private respondent immediately left his home and
returned to the clinic. These facts belie petitioner’s claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged
to stay in the company premises for not less than eight (8) hours. Hence, he
may not leave the company premises during such time, even to take his meals.
We are not impressed. Art. 83 and 85 of the Labor Code read: Art. 83. Normal
hours of work. — The normal hours of work of any employee shall not exceed
eight (8) hours a day. Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals and clinics with a
bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals,
except where the exigencies of the service require that such personnel work
for six (6) days or forty-eight (48) hours, in which case they shall be entitled to
an additional compensation of at least thirty per cent (30%) of their regular
wage for work on the sixth day. For purposes of this Article, “health personnel”
shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists,
social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic personnel.
(emphasis supplied) Art. 85. Meal periods. — Subject to such regulations as
the Secretary of Labor may prescribe, it shall be the duty of every employer to
give his employees not less than sixty (60) minutes time-off for their regular
meals. Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor
Code further states: Sec. 7. Meal and Rest Periods. — Every employer shall
give his employees, regardless of sex, not less than one (1) hour time-off for
regular meals, except in the following cases when a meal period of not less
than twenty (20) minutes may be given by the employer provided that such
shorter meal period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous
physical exertion; (b) Where the establishment regularly operates not less than
sixteen hours a day; (c) In cases of actual or impending emergencies or there
is urgent work to be performed on machineries, equipment or installations to
avoid serious loss which the employer would otherwise suffer; and (d) Where
the work is necessary to prevent serious loss of perishable goods. Rest
periods or coffee breaks running from five (5) to twenty (20) minutes shall be
considered as compensable working time. Thus, the eight-hour work period
does not include the meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company premises. Employees
are not prohibited from going out of the premises as long as they return to their
posts on time. Private respondent’s act, therefore, of going home to take his
dinner does not constitute abandonment.
2. The award of moral damages: Not every employee who is illegally dismissed
or suspended is entitled to damages. As a rule, moral damages are
recoverable only where the dismissal or suspension of the 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 In the case
at bar, there is no showing that the management of petitioner company was
moved by some evil motive in suspending private respondent. It suspended
private respondent on an honest, albeit erroneous, belief that private
respondent’s act of leaving the company premises to take his meal at home
constituted abandonment of post which warrants the penalty of suspension.
Under the circumstances, we hold that private respondent is not entitled to
moral damages.
SAN MIGUEL CORP. V SEMILLANO
FACTS
AMPCO hired the services of Vicente et al. [Vicente Semillano, Nelson
Mondejar, Jovito Remada and Alex Hawod, respondents herein]They
rendered service with SMC for more than 6 months. Subsequently, SMC
entered into a Contract of Services with AMPCO designating the latter as the
employer of Vicente, et al. As a result, Vicente et al. failed to claim the rights
and benefits ordinarily accorded a regular employee of SMC. In fact, they were
not paid their 13th month pay. On June 6, 1995, they were not allowed to enter
the premises of SMC. The project manager of AMPCO, Merlyn Polidario, told
them to wait for further instructions from the SMCs supervisor. Vicente et al.
waited for one month, unfortunately, they never heard a word from SMC.
Consequently, Vicente et al., as complainants, filed a COMPLAINT FOR
ILLEGAL DISMISSAL with the Labor Arbiter against respondents. Labor
Arbiter (LA) rendered his decision declaring herein complainants as regular
employees of San Miguel Corporation. Petitioner appealed the LA Decision to
the NLRC. Initially, the NLRC Fourth Division affirmed with modifications the
findings of the LA.
Petitioner SMC moved for a reconsideration of the foregoing decision. NLRC
acted on the motion and reversed its earlier ruling. It absolved petitioner from
liability and instead held AMPCO, as employer of respondents, liable to pay
for respondents backwages, accrued salaries, allowances, and attorneys fees.
In holding that AMPCO was an independent contractor, NLRC was of the view
that the law only required substantial capital or investment. Since AMPCO had
"substantial capital of nearly one (1) million" then it qualified as an independent
contractor. The NLRC added that even under the control test, AMPCO would
be the real employer of the respondents, since it had assumed the entire
charge and control of respondents services. Hence, an employer-employee
relationship existed between AMPCO and the respondents.
Respondents timely filed their motion for reconsideration of the NLRC
resolution but it was denied. Feeling aggrieved over the turnaround by the
NLRC, the respondents filed a petition for review on certiorari under Rule 65
with the Court of Appeals (CA), which favorably acted on it.
In overturning the commission’s ruling, the Court of Appeals ironically applied
the same control test that the NLRC used to resolve the issue of who the actual
employer was. The CA, however, found that petitioner SMC wielded (i) the
power of control over respondent, as SMC personnel supervised respondents
performance of loading and unloading of beer bottles, and (ii) the power of
dismissal, as respondents were refused entry by SMC to its premises and were
instructed by the AMPCO manager "to wait for further instructions from the
SMCs supervisor." The CA added that AMPCO was a labor-only contractor
since "a capital of nearly one million pesos" was insufficient for it to qualify as
an independent contractor.
ISSUE
Whether or not AMPCO is a legitimate job contractor
HELD
LABOR LAW
The test to determine the existence of independent contractorship is whether
or not the 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. The existence of an
independent and permissible contractor relationship is generally established
by the following criteria: 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 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.
Despite the fact that the service contracts contain stipulations which are
earmarks of independent contractorship, they do not make it legally so. The
language of a contract is neither determinative nor conclusive of the
relationship between the parties. Petitioner SMC and AMPCO cannot dictate,
by a declaration in a contract, the character of AMPCOs business, that is,
whether as labor-only contractor, or job contractor. AMPCOs character should
be measured in terms of, and determined by, the criteria set by statute. At a
closer look, AMPCOs actual status and participation regarding respondents
employment clearly belie the contents of the written service contract. Petitioner
cannot rely either on AMPCOs Certificate of Registration as an Independent
Contractor issued by the proper Regional Office of the DOLE to prove its claim.
It is not conclusive evidence of such status. The fact of registration simply
prevents the legal presumption of being a mere labor-only contractor from
arising. In distinguishing between permissible job contracting and prohibited
labor-only contracting, the totality of the facts and the surrounding
circumstances of the case are to be considered.
Petitioner also argues that among the permissible contracting arrangements
include "work or services not directly related or not integral to the main
business or operation of the principal including work related to manufacturing
processes of manufacturing establishments." The Court is not persuaded. The
evidence is clear that respondents performed activities which were directly
related to petitioners main line of business. Petitioner is primarily engaged in
manufacturing and marketing of beer products, and respondents work of
segregating and cleaning bottles is unarguably an important part of its
manufacturing and marketing process.
Petitioner claims that the present case is outside the jurisdiction of the labor
tribunals because respondent Vicente Semillano is a member of AMPCO, not
SMC. Precisely, he has joined the others in filing this complaint because it is
his position that petitioner SMC is his true employer and liable for all his claims
under the Labor Code.
Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO,
the labor-only contractor, for all the rightful claims of respondents. Under this
set-up, AMPCO, as the "labor-only" contractor, is deemed an agent of the
principal (SMC). The law makes the principal responsible over the employees
of the "labor-only" contractor as if the principal itself directly hired the
employees.
CELEBES JAPAN FOODS CORPORATION vs YERMO
JENNY M. AGABON and G.R. No. 158693 VIRGILIO C. AGABON VS
CARPIO
FACTS
Private respondent Riviera Home Improvements, Inc. is engaged in the
business of selling and installing ornamental and construction materials. It
employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and
cornice installers on January 2, 1992 until February 23, 1999 when they were
dismissed for abandonment of work. Petitioners then filed a complaint for
illegal dismissal and payment of money claims and on December 28, 1999,
the Labor Arbiter rendered a decision declaring the dismissals illegal and
ordered private respondent to pay the monetary claims.
ISSUE
Whether or not respondent’s dismissal is illegal and if not, entitles them
benefits
HELD
The Court ruled that the dismissal is legal and entitles them of payment of
benefits. Dismissals based on just causes contemplate acts or omissions
attributable to the employee while dismissals based on authorized causes
involve grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal,
reinstatement and full back wages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust, separation
pay may be granted. Procedurally, (1) if the dismissal is based on a just cause
under Article 282, the employer must give the employee two written notices
and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing
or opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and
Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the
dismissal is for a just cause under Article 282 of the Labor Code, for an
authorized cause under Article 283, or for health reasons under Article 284,
and due process was observed; (2) the dismissal is without just or authorized
cause but due process was observed; (3) the dismissal is without just or
authorized cause and there was no due process; and (4) the dismissal is for
just or authorized cause but due process was not observed. In the fourth
situation, the dismissal should be upheld. While the procedural infirmity cannot
be cured, it should not invalidate the dismissal. However, the employer should
be held liable for noncompliance with the procedural requirements of due
process. The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that
sending notices to the last known addresses would have been useless
because they did not reside there anymore. Unfortunately for the private
respondent, this is not a valid excuse because the law mandates the twin
notice requirements to the employee’s last known address. Thus, it should be
held liable for noncompliance with the procedural requirements of due
process. The Court ruled that respondent is liable for petitioners’ holiday pay,
service incentive leave pay and 13th month pay without deductions. The
evident intention of Presidential Decree No. 851 is to grant an additional
income in the form of the 13th month pay to employees not already receiving
the same so as “to further protect the level of real wages from the ravages of
worldwide inflation.” Clearly, as additional income, the 13th month pay is
included in the definition of wage under Article 97(f) of the Labor Code. An
employer is prohibited under Article 113 of the same Code from making any
deductions without the employee’s knowledge and consent.
GUICO VS QUISUMBING
NAPOCOR vs. CA
FACTS
NPC’s 4 dump trucks left Marawi City for Iligan City when one of its trucks,
RFT-9-6-673, DRIVEN BY Ilumba figured in a head- on- collision with a Toyota
Tamaraw. The incident resulted in the death of 3 persons riding in the Toyota,
as well as physical injuries to 17 other passengers. PHESCO claimed that it
was not the dump trucks’ owner and that they were owned by NPC. IT further
said that it was merely NPC’s contractor with the main duty of supplying
workers and technicians for the latter’s projects. NPC, meantime, denied such
liability and countered that the driver of the dump truck was PHESCO’s
employee
ISSUE
Whether or not PHESCO was engaged in labor-only contracting
HELD
PHESCO was engaged in ‘labor only’ contracting vis-à-vis NPC and as such,
it is considered merely as NPC’s agent. In such cases, an ER-EE relationship
between the principal employer and the employees of the ’labor-only’
contractor is created. Accordingly, the principal employer is responsible to the
employees of the “’labor only’ contractor as if such employees have been
directly employed by the principal employer. Since PHESCO is only a ‘labor
only’ contractor, the workers it supplied to NPC, including the truck driver,
should be considered as NPC’s employees.
 BATONG BUHAY V DELA SERNA
FACTS
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
and5, 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 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 insufficiency 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.
COCA COLA V DELA CRUZ
FACTS
Respondents filed two separate complaints for regularization with money
claims against Coca-Cola Bottlers Philippines, Inc. Before the Labor Arbiter,
the respondents alleged that they are route helpers assigned to work in the
petitioner’s trucks. They go from the Coca-Cola sales offices or plants to
customer outlets; they were hired either directly by the petitioner or by its
contractors, but they do not enjoy the full remuneration, benefits and privileges
granted to the petitioner’s regular sales force. They argued that the services
they render are necessary and desirable in the regular business of the
petitioner. In defense, the petitioner contended that it entered into contracts of
services with Peerless and Excellent Partners Cooperative, Inc. (Excellent) to
provide allied services; under these contracts, Peerless and Excellent retained
the right to select, hire, dismiss, supervise, control and discipline and pay the
salaries of all personnel they assign to the petitioner; in return for these
services, Peerless and Excellent were paid a stipulated fee. The petitioner
posited that there is no employer-employee relationship between the company
and the respondents and the complaints should be dismissed for lack of
jurisdiction on the part of the NLRC. In reply, the respondents countered that
they worked under the control and supervision of the company’s supervisors
who prepared their work schedules and assignments. Peerless and Excellent,
too, did not have sufficient capital or investment to provide services to the
petitioner. The respondents thus argued that the petitioner’s contracts of
services with Peerless and Excellent are in the nature of "labor-only" contracts
prohibited by law.
ISSUE
Whether or not there is a labor-only contracting
RULING
Yes. The contract between the principal and the contractor is not the final word
on how the contracted workers relate to the principal and the purported
contractor; the relationships must be tested on the basis of how they actually
operate. The legitimate job contractor must have the capitalization and
equipment to undertake the sale and distribution of the manufacturer’s
products, and must do it on its own using its own means and selling methods.
Even before going into the realities of workplace operations, the Court of
Appeals found that the service contracts themselves provide ample leads into
the relationship between the company, on the one hand, and Peerless and
Excellent, on the other. The Court of Appeals noted that both the Peerless and
the Excellent contracts show that their obligation was solely to provide the
company with “the services of contractual employees,” and nothing more.
These contracted services were for the handling and delivery of the company’s
products and allied services. Following D.O. 18-02 and the contracts that
spoke purely of the supply of labor, the Court of Appeals concluded that
Peerless and Excellent were labor-only contractors unless they could prove
that they had the required capitalization and the right of control over their
contracted workers. The contractors were not independently selling and
distributing company products, using their own equipment, means and
methods of selling and distribution; they only supplied the manpower that
helped the company in the handing of products for sale and distribution. In the
context of D.O. 18-02, the contracting for sale and distribution as an
independent and self-contained operation is a legitimate contract, but the pure
supply of manpower with the task of assisting in sales and distribution
controlled by a principal falls within prohibited labor-only contracting.
Consequently, the contracted personnel, engaged in component functions in
the main business of the company under the latter’s supervision and control,
cannot but be regular company employees.
PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS.,
INC.) V THE SECRETARY OF THE DEPARTMENT OF LABOR
AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION
VII, and JANDELEON JUEZAN
FACTS : Private respondent Jandeleon Juezan filed a complaint
against petitioner with the Department of Labor and Employment
(DOLE). for illegal deduction, nonpayment of service incentive
leave, 13th month pay, premium pay for holiday and rest day and
illegal diminution of benefits, delayed payment of wages and
noncoverage of SSS, PAG-IBIG and Philhealth. The DOLE
Regional Director found that private respondent was an employee
of petitioner, and was entitled to his money claims.
When the matter was brought before the CA, where petitioner
(Bombo Radyo) claimed that it had been denied due process, it
was held that petitioner was accorded due process as it had been
given the opportunity to be heard, and that the DOLE Secretary
had jurisdiction over the matter.
In the Decision of this Court, the CA Decision was reversed and
set aside, and the complaint against petitioner was dismissed. The
National Labor Relations Commission (NLRC) was held to be the
primary agency in determining the existence of an employer-
employee relationship. This was the interpretation of the Court of
the clause "in cases where the relationship of employer-employee
still exists" in Art. 128(b).
From this Decision, the Public Attorney’s Office (PAO) filed a
Motion for Clarification of Decision (with Leave of Court). The PAO
sought to clarify as to when the visitorial and enforcement power
of the DOLE be not considered as co-extensive with the power to
determine the existence of an employer-employee relationship
ISSUE: Under Art. 128(b) of the Labor Code, as amended by RA
7730, it is clear and beyond debate that an employer-employee
relationship must exist for the exercise of the visitorial and
enforcement power of the DOLE. The question now arises, may
the DOLE make a determination of whether or not an employer-
employee relationship exists, and if so, to what extent?
HELD: The previous conclusion must be revisited. No limitation in
the law was placed upon the power of the DOLE to determine the
existence of an employer-employee relationship. No procedure
was laid down where the DOLE would only make a preliminary
finding, that the power was primarily held by the NLRC. The law
did not say that the DOLE would first seek the NLRC’s
determination of the existence of an employer-employee
relationship, or that should the existence of the employer-
employee relationship be disputed, the DOLE would refer the
matter to the NLRC.

The DOLE, in determining the existence of an employer-employee

relationship, has a ready set of guidelines to follow, the same
guide the courts themselves use. The elements to determine the
existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; (4) the employer’s power to control the
employee’s conduct.9 The use of this test is not solely limited to
the NLRC

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the

DOLE is fully empowered to make a determination as to the
existence of an employer-employee relationship in the exercise of
its visitorial and enforcement power, subject to judicial review, not
review by the NLRC.

WHEREFORE, the Decision of this Court in G.R. No. 179652 is

hereby AFFIRMED, with the MODIFICATION that in the exercise of
the DOLE’s visitorial and enforcement power, the Labor Secretary
or the latter’s authorized representative shall have the power to
determine the existence of an employer-employee relationship, to
the exclusion of the NLRC.