G.R. No.

L-2009 April 30, 1949

SUNRIPE COCONUT PRODUCTS CO., INC petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and SUNSHINE COCONUT WORKERS' UNION
(CLO), respondents.

Paredes Diaz & Poblador for petitioner.

Juan R. Maralit for respondents.

PARAS, J.:

This is an appeal from a decision of the Court of Industrial Relation holding that the parers and "shellers" of the
petitioner Sunshine Coconut Products Co., Inc., are its laborers entitled to twelve days sick leave (one day for
each month of service), notwithstanding the fact that they are piece-workers under the pakiao system. The
contention of the petitioner is that said "parer" and "shellers" are independent contractors and do not fall within
the category of employees or laborers.

The Court of Industrial Relation has relied upon the rule laid down in the case of Philadelphia Record
Company, 69 N.L.R.B., 1232 (1946), to the effect that when a worker possesses some attributes of an employee
and others off an independent contractor which make him fall within an intermediate area he may be classified
under the category off an employee when the economic factsof the relation make it more nearly one of
employment than one of independent business enterprise with to the ends sought to be accomplished. Counsel
for the petitioner does not dispute the correctness or applicability of the rule but it is vigorously contended that
in the case at bar the economic facts characteristic of the independent contractor far outweigh the economic
facts indicative of an employee. We are not called upon to rule on the accuracyof petitioner's contention since
the conclusion of the Court of Industrial relation on the matter is binding this Court. In other word the ruling
that the "parers" and "shellers" have the status of employee or laborers carries the factual verdict that economic
facts showing such status outweigh those indicative of an independent contractor. Some facts expressly invoked
by the Court of Industrial Relations are: That the "parers" and "shellers" work under some degree of control or
supervision of the company if not under its absolute direction; that said " parers" and "shellers" form stable
groups composed of matured men and women who regularly work at shelling and paring nuts that for the most
part they depend on their work in the Sunripe Coconut Products Co., Inc. For their livelihood; that they are
admittedly working in the factory of said company alongside person who are indisputably employed by said
company. As already stated whether these specific facts are outweighed as contended by the petitioner by facts
demonstrative of the status of an independent contractor is a question decided adversely to the petitioner when
the Court of Industrial Relations held that the "parers" and "shellers" are laborers or employees.

It is also pretended for the petitioner for the petitioner that the Court of Industrial Relations departed from the
definition of the word "employee" or "laborer" found in the Workmen's Compensation Law namely: " 'Laborer'
is used as a synonym off employee,' and it means every person who has entered the employment of or works
under a service or apprenticeship contract for an employer. . . ." (Section 39 [b], Workmen's Compensation Law
as amended.) The Court of Industrial relation of course adverted to the following definition; "An employee is
any person in the service of another under a contract for hire express or implied oral or written. " (Section 7,
Labor Union by Dangle and Scriber, p. 7, citing McDermott's Case, 283 Mass. 74; Werner vs. Industrial
Comm., 212 Wis., 76) In essence however the ruling of the Court of Industrial Relation does not run counter to
the definition given in the Workmen's Compensation Law.

Counsel for the petitioner have stressed the argument that the principal test in determining whether a worker is
an employee or an independent contractor is the employer's right of control over the work and not merely the
right to control the result it being intimated that the "parers" and shellers" are controlled by the petitioner only
to the extent "that the nut are pared whole or that there is not much meat wasted." Even under the criterion
adopted by the petitioner it would not be amiss to state thatthe requirement imposed on the "parers" and
"shellers" to the effect that the nuts are pared whole or that there is not much meat wasted," in effect limits or
that there is not much meat wasted," in effect limits or controls the means or details by which said workers are
to accomplish their services.It is inconceivable that the "parers " and "shellers" in order to meet the requirement
of the petitioners would not follow a uniform standard in the performance of their work.

Petitioner also insists that the "parers" and "shellers" are piece-workers under the "pakiao" system. In answer,
suffice it to observe that Commonwealth Act No. 103, as amended expressly provides that "A minimum wage
or share shall be determined and fixed for laborers working by the hour day or month or by piece-work and for
tenants sharing in the crop or paid by measurement unit. . . ." (Section 5.) The organic law of the Court of
1
Industrial Relation therefore even orders that laborers may be paid by piece-work; and the facts that the "parers"
and shellers" are paid a fixed amount for a fixed number of nuts pared or shelled does not certainly take them
out of the purview of Commonwealth Act No. 103.

It is unnecessary to discuss at length the other facts pointed out by the petitioner in support of the proposition
that said "parers" and shellers" are independent contractors, because a ruling on the matter would necessarily
involve a factual inquiry which we are not authorized to makeEven so we would undertake to advance the
general remark that inn cases of this kind wherein laborers are usually compelled to work under condition and
term dictated by the employer a reasonably wide latitude of action and judgment should be given to the Court of
Industrial Relations with a view to settling industrial disputes conformably to the intents and purposes of its
organic law. Without in the least intimating that the relation between the "parers" and "shellers" on the one hand
and the petitioner on the other as planned out by the latter was conceived knowingly to deprive said workersof
the benefits accruing to workers who are admittedly employees or laborersunder Commonwealth Act No. 103
or the Workmen's Compensation law it is not difficult to surmise that a contrary decision is likely to set a
precedent that may tend to encourage the adoption of a similar scheme by many other or even all employers.

The appealed decision of the Court of Industrial Relations is therefore affirmed with costs against the petitioner.
So ordered.

LAGADAN and FILOMENA PIGA G.R. No. L-8967. May 31, 1956

FACTS:

The fishing sailboat “Magkapatid”,owned by Anastacio Viana, had a collision with a U.S. Navy vessel and sunk
to the waters. Alejandro Al-
Lagadan, a member of the crew of the former disappeared with the craft. Workmen’s Compensation Commissio
n ordered Anastacio Viana to pay the claimants, Alejo Al-
Lagadan and Filomena Piga. Petioner said, however, that this case does not fall within the purview of Act No. 3
428, because Alejandro Al-
Lagadan was, at the time of his death, industrial partner, not his employee. He further contended that they were
in a share basis— owner of the vessel, on one hand receives one-
half of the earnings of the sailboat, the other half is divided pro rata among the members of the crew. The trial r
eferee said, as well as the Workmen’s Compensation Commission that there was an employer-
employee relation between the Respondent and the deceased, Alejandro Al-
Lagadan, and the share which the deceased received at the end of each trip was in the nature of ‘wages’ which is
defined under section 39 of the Compensation Act. This is so because such share could be reckoned in terms of
money. In other words, there existed the relation of employer and employee between the Respondent and Alejan
dro Al-Lagadan at the time of the latter’s death.

ISSUE:

Whether or not the mere fact that a person’s share in the understanding “could be reckoned in terms of money”,
sufficed to characterize him as an employee of another.

HELD:

No, the Court did not share with the Trial Referee and Commission’s view. However, petitioner’s theory to the
effect that the deceased was his partner, not an employee, simply because he (the deceased) shared in the profit
s, not in the losses cannot be accepted. In determining the existence of employer-
employee relationship, the following elements are generally considered, namely:(1) the selection and engageme
nt of the employee; (2) the payment of wages; (3) the power of dismissal;(4) the power to control the employees
’ conduct —
although the latter is the most important element (35 Am. Jur. 445). Assuming that the share received by the de
2
ceased could partake of the nature of wages and that the second element, therefore, exists in the case at bar, the r
ecord does not contain any specific data regarding the third and fourth elements.

Furthermore, the report contained that the patron selects and engages the crew, and also, that the members there
of are subject to his control and may be dismissed by him. To put it differently, the literal import of said report i
s open to the conclusion that the crew has a contractual relation, not with the owner of the vessel, but with the p
atron, and that the latter, not the former, is either their employer or their partner.

The case was remanded to the Workmen’s Compensation Commission, for further proceedings in conformity w
ith the decision of the Supreme Court.

LVN PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild (FFW) & COURT OFINDUSTRIAL
RELATIONS SAMPAGUITA PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild (FFW) &
COURT OF INDUSTRIALRELATIONS

FACTS: Respondent Philippine Musicians Guild (FFW) is a duly registered legitimate labor organization. LVN
Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under
the Philippine laws, engaged in the making of motion pictures and in the processing and distribution thereof.
Petitioner companies employ musicians for the purpose of making music recordings for title music, background
music, musical numbers, finale music and other incidental music, without which a motion picture is incomplete.
Ninety-five (95%) percent of all the musicians playing for the musical recordings of said companies are
members of the Guild. The Guild has no knowledge of the existence of any other legitimate labor organization
representing musicians in said companies. Premised upon these allegations, the Guild prayed that it be certified
as the sole and exclusive bargaining agency for all musicians working in the aforementioned companies. In their
respective answers, the latter denied that they have any musicians as employees, and alleged that the musical
numbers in the filing of the companies are furnished by independent contractors. The lower court sustained the
Guild’s theory. A reconsideration of the order complained of having been denied by the Court en banc,LVN
Pictures, inc., and Sampaguita Pictures, Inc., filed these petitions for review for certiorari. ISSUE: Whether the
musicians in question(Guild members) are “employees “of the petitioner film companies. RULING: YES The
Court agreed with the lower court’s decision, to wit: Lower court resorted to apply R.A. 875 and US Laws and
jurisprudence from which said Act was patterned after. (Since statutes are to be construed in the light of
purposes achieved and the evils sought to be remedied). It ruled that the work of the musical director and
musicians is a functional and integral part of the enterprise performed at the same studio substantially under the
direction and control of the company. In other words, to determine whether a person who performs work for
another is the latter's employee or an independent contractor, the National Labor Relations relies on 'the right to
control' test . Under this test an employer-employee relationship exist where the person for whom the services
are performed reserves the right to control not only the end to be achieved, but also the manner and means to be
used in reaching the end. (United InsuranceCompany, 108, NLRB No. 115.). Notwithstanding that the
employees are called independent contractors', the Board will hold them to be employees under the Act where
the extent of the employer's control over them indicates that the relationship is in reality one of employment.
(John Hancock Insurance Co., 2375-D, 1940, Teller, Labor Dispute Collective Bargaining, Vol.). The right of
control of the film company over the musicians is shown (1) by calling the musicians through 'call slips' in 'the
name of the company; (2) by arranging schedules in its studio for recording sessions; (3) by furnishing
transportation and meals to musicians; and(4) by supervising and directing in detail, through the motion picture
director, the performance of the musicians before the camera, in order to suit the music they are playing to the
picture which is being flashed on the screen. The “musical directors” have no such control over the musicians
involved in the present case. Said musical directors control neither the music to be played, nor the musicians
playing it. The Premier Production did not appeal the decision of the Court en banc (that’s why it’s not one of
the petitioners in the case) film companies summon the musicians to work, through the musical directors. The
film companies, through the musical directors, fix the date, the time and the place of work. The film companies,
not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at
dinner time. It is well settled that "an employer-employee relationship exists . . .where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be used
3
in reaching such end . . . ." The decisive nature of said control over the "means to be used", is illustrated in the
case of Gilchrist Timber Co., et al., in which, by reason of said control, the employeremployee relationship was
held to exist between the management and the workers, notwithstanding the intervention of an alleged
independent contractor, who had, and exercise, the power to hire and fire said workers . The aforementioned
control over the means to be used" in reading the desired end is possessed andexercised by the film companies
over the musicians in the cases before us. WHEREFORE, the order appealed from is hereby affirmed, with
costs against petitioners herein. It is so ordered

MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CABANA, LOPITO
SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR ARANES, ELY BORROMEO,
DANIEL BACOLON, MATIAS PAJIMULA, RESTITUTO PAYABYAB, MELCHOR BOSE,
TEOFILO ANTOLIN, ROBERT ASPURIA, JUSTINO BOTOR, ALFREDO FABROS, AGAPITO
TABIOS, BENARDO ALFON, BENIGNO BARCENA, BERNARDO NAVARRO, MOISES
LABRADOR, ERNESTO DELA CRUZ, EDUARDO ESPIRITU, IGNACIO PAGTAMA, BAYANI
PEREZ, SIMPLICIO PUASO, EDWIN VELARDE, BEATO ABOGADO, DANILO SAN ANTONIO,
BERMESI BORROMEO, and JOSE BORROMEO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND
CONSTRUCTION CORPORATION, respondents.

Banzuela, Flores, Mirrales, Rañeses, Sy, Taquio and Associates for petitioners.

Carlos L. Galarrita for private respondent.

MELO, J.:

The petition for certiorari before us seeks to annul and to set aside the decision of the National Labor Relations
Commission (Second Division) dated July 12, 1986 which affirmed that of Labor Arbiter Fernando V. Cinco
declaring illegal the strike staged by petitioners and terminating the employment of the individual petitioners.

The Master Iron Works Construction Corporation (Corporation for brevity) is a duly organized corporate entity
engaged in steel fabrication and other related business activities. Sometime in February 1987, the Master Iron
Labor Union (MILU) entered into a collective barganing agreement (CBA) with the Corporation for the three-
year period between December 1, 1986 and November 30, 1989 (Rollo, p. 7). Pertinent provisions of the CBA
state:

Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown of work, or any other
interference with any of the operation of the COMPANY during the term of this AGREEMENT,
unless allowed and permitted by law.

Sec. 2. Service Allowance — The COMPANY agrees to continue the granting of service
allowance of workers assigned to work outside the company plant, in addition to his daily salary,
as follows:

(a) For those assigned to work outside the plant within Metro Manila, the service
allowance shall be P12.00;

(b) For those assigned to work outside Metro Manila, the service allowance shall
be P25.00/day;

(c) The present practice of conveying to and from jobsites of workers assigned to
work outside of the company plant shall be maintained.

Right after the signing of the CBA, the Corporation subcontracted outside workers to do the usual jobs done by
its regular workers including those done outside of the company plant. As a result, the regular workers were
scheduled by the management to work on a rotation basis allegedly to prevent financial losses thereby allowing

4
the workers only ten (10) working days a month (Rollo, p. 8). Thus, MILU requested implementation of the
grievance procedure which had also been agreed upon in the CBA, but the Corporation ignored the request.

Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,

p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE, through one Atty.
Bobot Hernandez, the Corporation and MILU reached an agreement whereby the Corporation acceded to give
back the usual work to its regular employees who are members of MILU (Rollo, p. 55).

Notwithstanding said agreement, the Corporation continued the practice of hiring outside workers. When the
MILU president, Wilfredo Abulencia, insisted in doing his regular work of cutting steel bars which was being
done by casual workers, a supervisor reprimanded him, charged him with insubordination and suspended him
for three (3) days (Rollo, pp. 9 & 51-52). Upon the request of MILU, Francisco Jose of the DOLE called for
conciliation conferences. The Corporation, however, insisted that the hiring of casual workers was a
management prerogative. It later ignored subsequent scheduled conciliation conferences (Rollo, pp. 51-52 & 57-
58).

Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a) violation of CBA; (b)
discrimination; (c) unreasonable suspension of union officials; and (d) unreasonable refusal to entertain
grievance (Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road leading to the
Corporation's plant entrance and premises.

At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been summoned by the
Corporation's counsel, came and arrested the picketers. They were brought to Camp Karingal and, the following
day, to the Caloocan City jail. Charges for illegal possession of firearms and deadly weapons were lodged
against them. Later, however, those charges were dismissed for failure of the arresting CAPCOM soldiers to
appear at the investigation (Rollo, p. 10). The dispersal of the picketlines by the CAPCOM also resulted in the
temporary lifting of the strike.

On August 4, 1987, the Corporation filed with the NLRC National Capital Region arbitration branch a petition
to declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng Manggagawa sa Valenzuela
(AMVA), re-staged the strike. Consequently, the Corporation filed a petition for injunction before the NLRC
which, on September 24, 1987, issued an order directing the workers to remove the barricades and other
obstructions which prevented ingress to and egress from the company premises. The workers obliged on
October 1, 1987 (Rollo, p. 25). On October 22, 1987, through its president, MILU offered to return to work in a
letter which states:

22 Okt. 1987

Mr. Elieze Hao

Master Iron Works & Construction Corp.

790 Bagbagin, Caloocan City

Dear Sir:

Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi, nagsusuhestiyon o nag-

oofer sa inyong pangasiwaan ng aming kahilingan na bumalik na sa trabaho dahilan din lang sa
kalagayan na tuloy tuloy ang ating pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto
naming manatili ang ating magandang pagtitinginan bilang magkasangga para sa ika-uunlad ng
ating kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.

Gumagalang,

(Sgd.)

WILFREDO ABULENCIA
Pangulo

(Rollo, p. 590)
5
On October 30, 1987, MILU filed a position paper with counter-complaint before the NLRC. In said counter-
complaint, the workers charged the Corporation with unfair labor practice for subcontracting work that was
normally done by its regular workers thereby causing the reduction of the latter's workdays; illegal suspension
of Abulencia without any investigation; discrimination for hiring casual workers in violation of the CBA, and
illegal dispersal of the picket lines by CAPCOM agents (Rollo, pp. 26-27).

In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter Fernando Cinco declaring illegal
the strike staged by MILU. The dispositive portion of the decision reads:

WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered, as follows:

1. Declaring the strike by the respondents illegal and unlawful;

2. Ordering the cancellation of the registered permit of respondent union MILU for having
committed an illegal strike;

3. Ordering the termination of employment status of the individual respondents, including the
forfeiture of whatever benefits are due them under the law, for having actively participated in an
illegal strike, namely: Wilfredo Abulencia, President; Rogelio Cabana, Vice-President; Lopito
Saranilla, Secretary; Jesus Moises, Treasurer; Basilio dela Cruz, Auditor; as Members of the
Board: Edgar Aranes, Melchor Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and
Ely Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria, Justino Botor, Alfredo
Fabros, Agapito Tabios, Bernardo Alfon, Benigno Barcena, Bernardo Navaro, Moises Labrador,
Ernesto dela Cruz, Eduardo Espiritu, Ignacio Pagtama, Bayani Perez, Simplicio Puaso, Edwin
Velarde, Beato Abogado, Danila San Antonio, Bermes Borromeo and Jose Borromeo.

The respondents as appearing in Annex "A" of the Petition, but not included as among those
whose employment status were not terminated as above-mentioned, are given priority of
reinstatement, without backwages, in the event petitioner starts its normal operations, or shall be
paid their separation pay according to law.

4. Ordering the respondents to cease and desist from further committing the illegal acts
complained of;

5. Ordering Respondent Union to pay the amount of P10,000.00 to Petitioner's Counsel as

attorney's fees;

6. Ordering the dismissal of the claim for damages for lack of merit; and

7. Ordering the dismissal of the counter-complaint in view of the filing of a separate complaint
by the respondents.

SO ORDERED. (pp. 35-36, Rollo.)

On appeal to the NLRC, MILU and the individual officers and workers named in Labor Arbiter Cinco's
decision alleged that said labor arbiter gravely abused his discretion and exhibited bias in favor of the
Corporation in disallowing their request to cross-examine the Corporation's witnesses, namely, Corporate
Secretary Eleazar Hao, worker Daniel Ignacio and foreman Marcial Barcelon, who all testified on the manner in
which the strike was staged and on the coercion and intimidation allegedly perpetrated by the strikers (Rollo,
p. 151).

The Second Division of the NLRC affirmed with modifications the decision of the labor arbiter. The decision,
which was promulgated on July 12, 1989 with Commissioners Domingo H. Zapanta and Oscar N. Abella
concurring and Commissioner Daniel M. Lucas, Jr. dissenting, disagreed with the labor arbiter on the "summary
execution of the life of Master Iron Labor Union (MILU)" on the grounds that the Corporation did not
specifically pray for the cancellation of MILU's registration and that pursuant to Articles 239 and 240 of the
Labor Code, only the Bureau of Labor Relations may cancel MILU's license or certificate of registration. It also
deleted the award of P10,000.00 as attorney's fees for lack of sufficient basis but it affirmed the labor arbiter
with regard to the declaration of illegality of the strike and the termination of employment of certain employees
and the rest of the dispositive portion of the labor arbiter's decision (Rollo, pp. 48-49).

6
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the decision appealed from, and
remanding of the case to the labor arbiter of origin, considering the respondent's countercharge or complaint for
unfair labor practice was not resolved on the merits" (Rollo, p. 49).

MILU filed a motion for the reconsideration but the same was denied by the NLRC for lack of merit in its
Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant petition. 1

Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike they staged was legal
because the reasons therefor are non-economic in nature. They assert that the NLRC abused its discretion in
holding that there was "failure to exhaust the provision on grievance procedure" in view of the fact that they
themselves sought grievance meetings but the Corporation ignored such requests. They charge the NLRC with
bias in failing to give weight to the fact that the criminal charges against the individual petitioners were
dismissed for failure of the CAPCOM soldiers to testify while the same individual strikers boldly faced the
charges against them. Lastly, they aver that the NLRC abused its discretion in holding that the workers' offer to
return to work was conditional.

In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout provision of the CBA
aforequoted. As this Court has held in Philippine Metal Foundries, Inc. vs. CIR (90 SCRA 135 [1979]), a no-
strike clause in a CBA is applicable only to economic strikes. Corollarily, if the strike is founded on an unfair
labor practice of the employer, a strike declared by the union cannot be considered a violation of the no-strike
clause.

An economic strike is defined as one which is to force wage or other concessions from the employer which he is
not required by law to grant (Consolidated Labor Association of the Philippines vs. Marsman & Co., Inc., 11
SCRA 589 [1964]). In this case, petitioners enumerated in their notice of strike the following grounds: violation
of the CBA or the Corporation's practice of subcontracting workers; discrimination; coercion of employees;
unreasonable suspension of union officials, and unreasonable refusal to entertain grievance.

Private respondent contends that petitioner's clamor for the implementation of Section 2, Article VIII of the
CBA on service allowances granted to workers who are assigned outside the company premises is an economic
issue (Rollo, p. 70). On the contrary, petitioners decry the violation of the CBA, specifically the provision
granting them service allowances. Petitioners are not, therefore, already asking for an economic benefit not
already agreed upon, but are merely asking for the implementation of the same. They aver that the Corporation's
practice of hiring subcontractors to do jobs outside of the company premises was a way "to dodge paying
service allowance to the workers" (Rollo, pp. 61 & 70).

Much more than an economic issue, the said practice of the Corporation was a blatant violation of the CBA —
and unfair labor practice on the part of the employer under Article 248(i) of the Labor Code. Although the end
result, should the Corporation be required to observe the CBA, may be economic in nature because the workers
would then be given their regular working hours and therefore their just pay, not one of the said grounds is an
economic demand within the meaning of the law on labor strikes. Professor Perfecto Fernandez, in his
book Law on Strikes, Picketing and Lockouts (1981 edition, pp. 144-145), states that an economic strike
involves issues relating to demands for higher wages, higher pension or overtime rates, pensions, profit sharing,
shorter working hours, fewer work days for the same pay, elimination of night work, lower retirement age, more
healthful working conditions, better health services, better sanitation and more safety appliances. The demands
of the petitioners, being covered by the CBA, are definitely within the power of the Corporation to grant and
therefore the strike was not an economic strike.

The other grounds, i.e., discrimination, unreasonable suspension of union officials and unreasonable refusal to
entertain grievance, had been ventilated before the Labor Arbiter. They are clearly unfair labor practices as
defined in Article 248 of the Labor Code. 2 The subsequent withdrawal of petitioners' complaint for unfair labor
practice (NLRC-NCR Case No. 00-11-04132-87) which was granted by Labor Arbiter Ceferina Diosana who
also considered the case closed and terminated (Rollo, pp. 97 & 109) may not, therefore, be considered as
having converted their other grievance into economic demands.

Moreover, petitioners staged the strike only after the Corporation had failed to abide by the agreement forged
between the parties upon the intervention of no less than the DOLE after the union had complained of the
Corporation's unabated subcontracting of workers who performed the usual work of the regular workers. The
Corporation's insistence that the hiring of casual employees is a management prerogative betrays its attempt to
coat with legality the illicit curtailment of its employees' rights to work under the terms of the contract of
employment and to a fair implementation of the CBA.

7
While it is true that an employer's exercise of management prerogatives, with or without reason, does not per
se constitute unjust discrimination, such exercise, if clearly shown to be in grave abuse of discretion, may be
looked into by the courts (National Federation of Labor Unions vs. NLRC, 202 SCRA 346 [1991]). Indeed, the
hiring, firing, transfer, demotion, and promotion of employees are traditionally identified as management
prerogatives. However, they are not absolute prerogatives. They are subject to limitations found in law, a
collective bargaining agreement, or general principles of fair play and justice (University of Sto. Tomas vs.
NLRC, 190 SCRA 758 [1990] citing Abbott Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The
Corporation's assertion that it was exercising a management prerogative in hiring outside workers being
contrary to the contract of employment which, of necessity, states the expected wages of the workers, as well as
the CBA, is therefore untenable.

Private respondent's failure to traverse petitioners' allegations that the NLRC abused its discretion in holding
that the provision on grievance procedure had not been exhausted clearly sustains such allegation and upholds
the petitioners' contention that the Corporation refused to undergo said procedure. It should be remembered that
a grievance procedure is part of the continuous process of collective bargaining (Republic Savings Bank. vs.
CIR, et al., 21 SCRA 226 [1967]). It is intended to promote a friendly dialogue between labor and management
as a means of maintaining industrial peace. The Corporation's refusal to heed petitioners' request to undergo the
grievance procedure clearly demonstrated its lack of intent to abide by the terms of the CBA.

Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a cursory reading of the
letter aforequoted would reveal that no conditions had been set by petitioners. It is incongruous to consider as a
"condition" the statement therein that the parties would continue talks for a peaceful working relationship
("tuloy tuloy ang ating pag-uusap sa ikatitiwasay ng ating relasyon"). Conferences form part of the grievance
procedure and their mere mention in Abulencia's letter did not make the same "conditional".

In the same manner, the following findings of the Labor Arbiter showed the illegal breakup of the picket lines
by the CAPCOM:

d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at the picket line of
respondents and searches were made on reported deadly weapons and firearms in the possession
of the strikers. Several bladed weapons and firearms in the possession of the strikers were
confiscated by the CAPCOM soldiers, as a result of which, the apprehended strikers were
brought to Camp Tomas Karingal in Quezon City for proper investigation and filing of the
appropriate criminal charges against them. The strikers who were charged of illegal possession
of deadly weapon and firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz,
Beato Abogado, Lopito Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana.
Criminal informations were filed by Inquest Fiscal, marked as Exhibits "E", "E-1 to E-8". These
strikers were jailed for sometime until they were ordered release after putting up the required bail
bond. Other strikers were also arrested and brought to Camp Tomas Karingal, and after proper
investigation as to their involvement in the offense charged, they were released for lack of prima
facie evidence. They were Edwin Velarde, Bayani Perez, Daniel Bacolon, Jesus Moises, Robert
Aspurias and Benigno Barcena.

After the strikers who were arrested were brought to Camp Tomas Karingal on 28 July 1987, the
rest of the strikers removed voluntarily their human and material barricades which were placed
and posted at the road leading to the premises of the Company. (Rollo, p. 32)

The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak of violence,
was clearly in violation of the following prohibited activity under Article 264 of the Labor Code:

(d) No public official or employee, including officers and personnel of the New Armed Forces of
the Philippines or the Integrated National Police, or armed person, shall bring in, introduce or
escort in any manner any individual who seeks to replace strikers in entering or leaving the
premises of a strike area, or work in place of the strikers. The police force shall keep out of the
picket lines unless actual violence or other criminal acts occur therein; Provided, That nothing
herein shall be interpreted to prevent any public officer from taking any measure necessary to
maintain peace and order, protect life and property, and/or enforce the law and legal order.
(Emphasis supplied.)

As the Labor Arbiter himself found, no pervasive or widespread coercion or violence were perpetrated by the
petitioners as to warrant the presence of the CAPCOM soldiers in the picket lines. In this regard, worth quoting
is the following excerpt of the decision in Shell Oil Workers' Union vs. Shell Company of the Philippines, Ltd.,
8
39 SCRA 276 [1971], which was decided by the Court under the old Industrial Peace Act but which excerpt still
holds true:

. . . What is clearly within the law is the concerted activity of cessation of work in order that . . .
employer cease and desist from an unfair labor practice. That the law recognizes as a right. There
is though a disapproval of the utilization of force to attain such an objective. For implicit in the
very concept of the legal order is the maintenance of peaceful ways. A strike otherwise valid, if
violent in character, may be placed beyond the pale. Care is to be taken, however, especially
where an unfair labor practice is involved, to avoid stamping it with illegality just because it is
tainted with such acts. To avoid rendering illusory the recognition of the right to strike,
responsibility in such a case should be individual and not collective. A different conclusion
would be called for, of course, if the existence of force while the strike lasts is pervasive and
widespread, consistently and deliberately resorted to as a matter of policy. It could be reasonably
concluded then that even if justified as to ends, it becomes illegal because of the means
employed. (at p. 292.)

All told, the strike staged by the petitioners was a legal one even though it may have been called to offset what
the strikers believed in good faith to be unfair labor practices on the part of the employer (Ferrer, et al. vs. Court
of Industrial Relations, et al., 17 SCRA 352 [1966]). Verily, such presumption of legality prevails even if the
allegations of unfair labor practices are subsequently found out to be untrue (People's Industrial and
Commercial Employees and Workers Org. [FFW] vs. People's Industrial and Commercial Corporation, 112
SCRA 440 [1982]). Consonant with these jurisprudential pronouncements, is Article 263 of the Labor Code
which clearly states "the policy of the State to encourage free trade unionism and free collective bargaining".
Paragraph (b) of the same article guarantees the workers' "right to engage in concerted activities for purposes of
collective bargaining or for their mutual benefit and protection" and recognizes the "right of legitimate labor
organizations to strike and picket and of employers to lockout" so long as these actions are "consistent with the
national interest" and the grounds therefor do not involve inter-union and intra-union disputes.

The strike being legal, the NLRC gravely abused its discretion in terminating the employment of the individual
petitioners, who, by operation of law, are entitled to reinstatement with three years backwages. Republic Act
No. 6715 which amended Art. 279 of the Labor Code by giving "full backwages inclusive of allowances" to
reinstated employees, took effect fifteen days from the publication of the law on March 21, 1989. The decision
of the Labor Arbiter having been promulgated on March 16, 1988, the law is not applicable in this case.

WHEREFORE, the questioned decision and resolution of the NLRC as well as the decision of the Labor Arbiter
are hereby SET ASIDE and the individual petitioners are reinstated to their positions, with three years
backwages and without loss of seniority rights and other privileges. Further, respondent corporation is ordered
to desist from subcontracting work usually performed by its regular workers.

SO ORDERED.

Reynaldo Bautista vs. Hon. Amado Inciong G.R. No. L-52824, March 16, 1988

FACTS:

Petitioner was employed by Associated Labor Unions(ALU) as organizer. Bautista went on leave and when he
went back to work, he was informed that he was already terminated. The Director ruled in favor of Bautista. Th
e Deputy Minister of Labor, however, set aside the order of the Director finding that his membership coverage
with the SSS which shows that respondent ALU is the one paying the employer’s share in the premiums is not c
onclusive proof that respondent is the petitioner’s employer because such payments were performed by the resp
ondent as a favor for all those who were performing full time union activities with it to entitle them to SSS bene
fits. He then ruled that there was no emplore-
employee relationship between ALU and Bautista by the fact that ALU is not an entity for profit but a duly regis
tered labor union whose sole purpose is the representation of its bonafide organization units.

ISSUE:

Whether or not there can be employer-employee relationship between a labor union and its member.

HELD:
9
Yes, the mere fact that the respondent is a labor union does not mean that it cannot be considered an employer o
f the persons who work for it.

Moreover, the four elements in determining the existence of an employer-

employee relationship was present in the case at bar. The Regional Director correctly found that the petitioner w
as an employee of the respondent union as reflected in the latter’s individual payroll sheets and shown by the pe
titioner’s membership with the Social Security System (SSS) and the respondent union’s share of remittances in
the petitioner’s favor. Bautista was selected and hired by the union. ALU had the power to dismiss him as indee
d it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its organizers

ORLANDO FARMS GROWERS ASSOCIATION/GLICERIO AÑOVER, petitioner,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION),
ANTONIO PAQUIT, ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO, REBECCA
MOREN, MARCELINA HONTIVEROS, MARTIN ORDONO, TITO ORDONO, FE ORDONO,
ERNIE COLON, EUSTIQUIO GELDO, DANNY SAM, JOEL PIAMONTE, FEDERICO
PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN, JR. and
BERNARDO OPERIO, respondents.

ROMERO, J.:

It is a settled doctrine that an employer-employee relationship can be deduced from the existence of the
following elements: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employee's conduct.

The principal issue to be resolved in the instant petition is whether or not an unregistered association may be an
employer independent of the respective members it represents.

The evidence reveals the ensuing facts:

Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Añover as its President, is an
association of landowners engaged in the production of export quality bananas located in Kinamayan, Sto.
Tomas, Davao del Norte, established for the sole purpose of dealing collectively with Stanfilco on matters
concerning technical services, canal maintenance, irrigation and pest control, among others. Respondents, on
the other hand, were hired as farm workers by several member-landowners but; nonetheless, were made to
perform functions as packers and harvesters in the plantation of petitioner association.

After respondents were dismissed on various dates from January 8, 1993 to July 30, 1994, several complaints
were filed against petitioner for illegal dismissal and monetary benefits. Based on similar grounds, the same
were consolidated in the office of Labor Arbiter Newton R. Sancho who, in a decision dated September 6, 1995,
ordered their reinstatement, viz:

WHEREFORE, judgment is hereby rendered declaring the dismissal of the 20 above-named

complainants ILLEGAL, and ordering respondents Orlando Farms Growers Association/Glicerio
Anover to REINSTATE them immediately to their former or equivalent positions, and to PAY
individual complainants their respective backwages and other benefits (wage differentials, 13th
month pay and holiday pay) appearing opposite their names above set forth, including moral
damages and attorney's fees, in the total amount of P1,047,720.92 only.

All other claims are dismissed for lack of merit.

As becoming a collective association, respondents liabilities to complainants are joint and

solidary, with its responsible officers.

The case of Loran Paquit and Lovilla Dorlones 1 is dropped for having been amicably settled.

In case of appeal, backwages and other benefits shall accrue but in no case exceeding 3 years,
without any qualification or deduction.

10
 SO ORDERED. 2

On appeal, the National Labor Relations Commission (NLRC) affirmed the same in toto in a decision dated
December 26, 1996. Its motion for reconsideration having been denied on February 25, 1997, petitioner filed
the instant petition for certiorari.

Petitioner alleged that the NLRC erred in finding that respondents were its employees and not of the individual
landowners which fact can easily be deduced from the payments made by the latter of respondent's Social
Security System (SSS) contributions. Moreover, it could have never exercised the power of control over them
with regard to the manner and method by which the work was to be accomplished, which authority remain
vested with the landowners despite becoming members thereof.

The arguments adduced before us do not warrant the nullification of the findings made by the Labor Arbiter and
the NLRC as the determination of the existence of an employer-employee relationship between the party-
litigants, being a question of fact, is amply supported by substantial evidence, as can be gathered from a
perfunctory reading, not only of the pleadings submitted, but from the assailed decision, as well. Thus, the
authority of this Court to review the findings of the NLRC is limited to allegations of lack of jurisdiction or
grave abuse of discretion.

The contention that petitioner, being an unregistered association and having been formed solely to serve as an
effective medium for dealing collectively with Stanfilco, does not exist in law and, therefore, cannot be
considered an employer, is misleading. This assertion can easily be dismissed by reference to Article 212 (e) of
the Labor Code, as amended, which defines an employer as any person acting in the interest of an employer,
directly or indirectly. Following a careful scrutiny of the said provision, the Court concludes that the law does
not require an employer to be registered before he may come within the purview of the Labor Code, consistent
with the established rule in statutory construction that when the law does not distinguish, we should not
distinguish. To do otherwise would bring about a situation whereby employees are denied, not only redress of
their grievances, but, more importantly, the protection and benefits accorded to them by law if their employer
happens to be an unregistered association.

To reiterate, as held in the case of Filipinas Broadcasting Network, Inc. v. NLRC, 3 the following are generally
considered in the determination of the existence of an employer-employee relationship; (1) the manner of
selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and
(4) the presence or absence of the power of control; of these four, the last one being the most important.

In the instant case, the following circumstances which support the existence of employer-employee relations
cannot be denied. During the subsistence of the association, several circulars and memoranda were issued
concerning, among other things, absences without formal request, loitering in the work area and disciplinary
measures with which every worker is enjoined to comply. Furthermore, the employees were issued
identification cards which the Court, in the case of Domasig v. NLRC, 4 construed, not only as a security
measure but mainly to identify the holder as a bonafide employee of the firm. However, what makes the
relationship explicit is the power of the petitioner to enter into compromise agreements involving money claims
filed by three of its employees, namely: Lorna Paquit, Lovella Dorlones and Jasmine Espanola. If petitioner's
disclaimer were to be believed, what benefit would accrue to it in settling an employer-employee dispute to
which it allegedly lay no claim?

In spite of the overwhelming evidence sufficient to justify a conclusion that respondents were indeed employees
of petitioner, the latter, nevertheless, maintain the preposterous claim that the ID card, circulars and memoranda
were issued merely to facilitate the efficient use of common resources, as well as to promote uniform rules in
the work establishment. On this score, we defer to the observations made by the NLRC when it ruled that, while
the original purpose of the formation of the association was merely to provide the landowners a unified voice in
dealing with Stanfilco, petitioner however exceeded its avowed intentions when its subsequent actions
reenforced only too clearly its admitted role of employer. As reiterated all too often, factual findings of the
NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect, even finality, and
will not be disturbed for as long as such findings are supported by substantial evidence. 5

Prescinding from the foregoing, we now address the issue of whether or not petitioner had a valid ground to
dismiss respondents from their respective employment.

It is settled that in termination disputes, the employer bears the burden of proving that the dismissal is for just
cause, failing which it would mean that the dismissal is not justified and the employer is entitled to
reinstatement. 6The dismissal of employees must be made within the parameters of the law and pursuant to the
11
basic tenets of equity, justice and fair play. 7 In Brahm Industries, Inc. v. NLRC, 8 the Court explained that there
are two (2) facets of valid termination of employment; (a) the legality of the act of dismissal, i.e., the dismissal
must be under any of the just causes provided under Art. 282 9 of the Labor Code; and (b) the legality of the
manner of dismissal, which means that there must be observance of the requirements of due process, otherwise
known as the two-notice rule. Thus, "the employer is required to furnish the employee with a written notice
containing a statement of the cause for termination and to afford said employee ample opportunity to be heard
and to defend himself with the assistance of his representative, if he so desires. The employer is also required to
notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore." 10

In the instant case, petitioner severed employment relations when it whimsically dismissed the respondents in
utter disregard of the safeguards underscored in the Constitution, as well as in the Labor Code. Petitioner failed
to controvert the allegation that it was responsible for the dismissal of the employees. Instead of denying the
same or otherwise imputing liability on its member-landowner by naming the employees allegedly in his
employ, petitioner was silent on the issue and harped on the non-existence of employer-employee relationship
between the parties, which contention we find to be tangential. However related the issue might seem, it would
have been more relevant for the petitioner to have presented ample evidence before the NLRC and this Court to
justify its exoneration from liability. Having failed in this respect, we deem it fatal to its defense.

For having been dismissed without a valid cause and for non-observance of the due process requirement,
respondents, consistent with recent jurisprudence laid down in the case of Bustamante v. NLRC, 11 are entitled
to receive full backwages from the date of their dismissal up to the time of their reinstatement. The order,
therefore, of the labor arbiter limiting backwages to a period of three (3) years in the event of an appeal, is
erroneous.

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the National
Labor Relations Commission dated September 6, 1995 is AFFIRMED subject to the deletion of the award of
moral damages and attorney's fees. The Court, however, is remanding this case to Labor Arbiter Newton R.
Sancho to specify in the dispositive portion of his decision the names of the respondents and the amount that
each is entitled to.

SO ORDERED.

Malayang Samahan ng mga Manggagawa sa M. Greenfield vs Cresencio Ramos

In February 1990, M. Greenfield, Inc. (MGI), through its officers Saul Tawil, Carlos Javelosa, and Renato
Puangco began terminating employees. The corporation closed down one of their plants and so they said they
have to retrench the number of employees. Consequently, the Malayang Samahan ng mga Manggagawa sa M.
Greenfield (MSMG-UWP) filed an illegal dismissal case against MGI. The National Labor Relations
Commission, chaired by Cresencio Ramos, ruled against the union. But on appeal, the decision of the NLRC
was reversed and the corporation was ordered, among others, to pay the employees’ backwages. The union
further appealed as they contend that the officers of the corporation should be held solidarily liable.
ISSUE: Whether or not the officers of the corporation should be held solidarily liable.
HELD: No. A corporation is a juridical entity with legal personality separate and distinct from those acting for
and in its behalf and, in general from the people comprising it. The rule is that obligations incurred by the
corporation, acting through its directors, officers and employees are its sole liabilities. There is no question that
MGI is guilty of illegal dismissal but the officers cannot be held solidarily liable.
It’s true that there’s a plethora of illegal dismissal cases where the SC made corporate officers personally liable
but these cases usually involve corporate officers who acted in bad faith in illegally dismissing employees.
Corporate directors and officers may be solidarily liable with the corporation for the termination of employment
of corporate employees if the same is done with malice or in bad faith

EVELYN TOLOSA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, QWANA KAIUN (through its resident-agent,
FUMIO NAKAGAWA), ASIA BULK TRANSPORT PHILS. INC., PEDRO GARATE and MARIO
ASIS, respondents.
12
PANGANIBAN, J.:

As a rule, labor arbiters and the National Labor Relations Commission have no power or authority to grant
reliefs from claims that do not arise from employer-employee relations. They have no jurisdiction over torts that
have no reasonable causal connection to any of the claims provided for in the Labor Code, other labor statutes,
or collective bargaining agreements.

The Case

The Petition for Review before us assails the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-GR
SP No. 57660, as well as the April 17, 2001 CA Resolution2 denying petitioner's Motion for Reconsideration.
The dispositive portion of the challenged Decision reads as follows:

"WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED and
accordingly DISMISSED, without prejudice to the right of herein petitioner to file a suit before the
proper court, if she so desires. No pronouncement as to costs."3

The Facts

The appellate court narrated the facts of the case in this manner:

"Evelyn Tolosa (hereafter EVELYN), was the widow of Captain Virgilio Tolosa (hereafter CAPT.
TOLOSA) who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk Transport Phils. Inc.,
(ASIA BULK for brevity), to be the master of the Vessel named M/V Lady Dona. CAPT. TOLOSA had
a monthly compensation of US$1700, plus US$400.00 monthly overtime allowance. 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.

"According to Pedro Garate, Chief Mate of the Vessel, in his statement submitted to the U.S. Coast
Guard on November 23, 1992 upon arrival in Long Beach, California CAPT. TOLOSA experienced
high fever between November 11-15, 1992 and suffered from loose bowel movement (LBM) beginning
November 9, 1992. By November 11, 1992, his temperature was 39.5 although his LBM had 'slightly'
stopped. The next day, his temperature rose to 39.8 and had lost his appetite. In the evening of that day,
November 13, 1992, he slipped in the toilet and suffered scratches at the back of his waist. First aid was
applied and CAPT. TOLOSA was henceforth confined to his quarters with an able seaman to watch him
24 hours a day until November 15, 1992, when his conditioned worsened.

"On the same day, November 15, 1992, the Chief Engineer initiated the move and contacted ASIA
BULK which left CAPT. TOLOSA's fate in the hands of Pedro Garate and Mario Asis, Second Mate of
the same vessel who was in-charge of the primary medical care of its officers and crew. Contact with the
U.S. Coast Guard in Honolulu, Hawaii (USCGHH) was likewise initiated to seek medical advice.

"On November 17, 1992, CAPT. TOLOSA was 'losing resistance' and his 'condition was getting
serious.' At 2215 GMT, a telex was sent to ASIA BULK requesting for the immediate evacuation of
CAPT. TOLOSA and thereafter an airlift was set on November 19, 1992. However, on November 18,
1992, at 0753 GMT, CAPT. TOLOSA was officially recorded as having breathed his last.

"Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a Complaint/Position
Paper before the POEA (POEA Case No. 93-06-1080) against Qwana-Kaiun, thru its resident-agent, Mr.
Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as respondents.

"After initial hearings and submissions of pleadings, the case was however transferred to the Department
of Labor and Employment, National Labor Relations Commission (NLRC), when the amendatory
legislation expanding its jurisdiction, and removing overseas employment related claims from the ambit
of POEA jurisdiction. The case was then raffled to Labor Arbiter, Vladimir Sampang.
13
 xxx xxx xxx

"After considering the pleadings and evidences, on July 8, 1997, the Labor Arbiter Vladimir P. L.
Sampang, in conformity with petitioner's plea to hold respondents solidarily liable, granted all the
damages, (plus legal interest), as prayed for by the petitioner. The dispositive portion of his Decision
reads:

'WHEREFORE, premises considered, the respondents are hereby ordered to jointly and
solidarily pay complainants the following:

1. US$176,400.00 (US$2,100.00 x 12 months x 7 years) or P4,586,400.00 (at P26.00 per

US$1.00) by way of lost income;

2. interest at the legal rate of six percent (6%) per annum or P1,238,328.00 (from November
1992 to May 1997 or 4 ½ years);

3. moral damages of P200,000.00;

4. exemplary damages of P100,000.00; and

5. 10% of the total award, or P612,472.80, as attorney's fees.'

xxx xxx xxx

"On appeal, private respondents raised before the National Labor Relations Commission (NLRC) the
following grounds:

(a) the action before the Arbiter, as he himself concedes, is a complaint based on torts due to
negligence. It is the regular courts of law which have jurisdiction over the action;

(b) Labor Arbiters have jurisdiction over claims for damages arising from employer-employee
relationship (Art. 217, Section (a) (3));

(c) In this case, gross negligence is imputed to respondents Garate and Asis, who have no
employer-employee relationship with the late Capt. Virgilio Tolosa;

(d) The labor arbiter has no jurisdiction over the controversy;

xxx xxx xxx

"Despite other peripheral issues raised by the parties in their respective pleadings, the NLRC on
September 10, 1998, vacated the appealed decision dated July 8, 1997 of the Labor Arbiter and
dismissed petitioner's case for lack of jurisdiction over the subject matter of the action pursuant to the
provisions of the Labor Code, as amended."4 (Citations omitted)

Ruling of the Court of Appeals

Sustaining the NLRC, the CA ruled that the labor commission had no jurisdiction over the subject matter of the
action filed by petitioner. Her cause did not arise from an employer-employee relation, but from a quasi delict
or tort. Further, there is no reasonable causal connection between her suit for damages and her claim under
Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an employer-employee
relation.

Hence, this Petition.5

Issues

Petitioner raises the following issues for our consideration:

"I

"Whether or not the NLRC has jurisdiction over the case.

14
 "II

"Whether or not Evelyn is entitled to the monetary awards granted by the labor arbiter."6

After reviewing petitioner's Memorandum, we find that we are specifically being asked to determine 1) whether
the labor arbiter and the NLRC had jurisdiction over petitioner's action, and 2) whether the monetary award
granted by the labor arbiter has already reached finality.

The Court's Ruling

The Petition has no merit.

First Issue:
Jurisdiction over the 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)7 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,8 she insists that a reasonable causal connection between the claim asserted and
the employer-employee 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.9

We disagree. 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.10

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.11 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. Specifically, the paper alleges the
following tortious acts:

"x x x [R]espondent Asis was the medical officer of the Vessel, who failed to regularly monitor Capt.
Tolosa's condition, and who needed the USCG to prod him to take the latter's vital signs. In fact, he
failed to keep a medical record, like a patient's card or folder, of Capt. Tolosa's illness."12

"Respondents, however, failed Capt. Tolosa because Garate never initiated actions to save him. x x x In
fact, Garate rarely checked personally on Capt. Tolosa's condition, to wit:"13

"x x x Noticeably, the History (Annex "D") fails to mention any instance when Garate consulted the
other officers, much less Capt. Tolosa, regarding the possibility of deviation. To save Capt. Tolosa's life
was surely a just cause for the change in course, which the other officers would have concurred in had
they been consulted by respondent Garate – which he grossly neglected to do.

"Garate's poor judgement, since he was the officer effectively in command of the vessel, prevented him
from undertaking these emergency measures, the neglect of which resulted in Capt. Tolosa's untimely
demise."14
15
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."15

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:16

"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."17

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.

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,19 these reliefs must still he based on an action that has a
reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements.20

The central issue is determined essentially from the relief sought in the complaint. In San Miguel Corporation v.
NLRC,21 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."22

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.

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."23In 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.24 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.

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.25 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 courts26 -- not with the NLRC
or the labor arbiters.

Second Issue:
Finality of the Monetary Award

16
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.27 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.28

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.29

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs
against petitioner.

SO ORDERED.

G.R. No. 162420 April 22, 2008

JAGUAR SECURITY and INVESTIGATION AGENCY, petitioner,

vs.
RODOLFO A. SALES, JAIME L. MORON, MELVIN R. TAMAYO, JESUS B. SILVA, JR., DIONISIO
C. CARANYAGAN, DANETH FETALVERO and DELTA MILLING INDUSTRIES, INC., respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Assailed in the present Petition for Review on Certiorari is the Court of Appeals (CA) Decision1 dated October
21, 2002 and Resolution2 dated February 13, 2004, dismissing the petition filed by Jaguar Security and
Investigation Agency (petitioner) and affirming the National Labor Relations Commission (NLRC) Resolutions
dated September 19, 2000 and November 9, 2001.

The facts of the case, as narrated by the CA, are undisputed:

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 guard-employees, 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.

xxxx

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
17
 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) wage differentials

b) overtime pay differentials (4 hours a day)

c) rest day pay

d) holiday pay

e) holiday premium pay

f) 13th month pay differentials

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, 2001.3

Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21,
20024and Resolution dated February 13, 2004,5 dismissed the petition for lack of merit.

In the present petition, the following error is set forth as a ground for the modification of the assailed Decision
and Resolution:

WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN NOT RESOLVING
PETITIONER'S CROSS-CLAIM AGAINST PRIVATE RESPONDENT DELTA MILLING
INDUSTRIES, INC.6

Petitioner insists that its cross-claim should have been ruled upon in the labor case as the filing of a cross-claim
is allowed under Section 3 of the NLRC Rules of Procedure which provides for the suppletory application of the
Rules of Court. Petitioner argues that the claim arose out of the transaction or occurrence that is the subject
matter of the original action. Petitioner further argues that as principal, Delta Milling Industries, Inc. (Delta
Milling) is liable for the awarded wage increases, pursuant to Wage Order Nos. NCR-04, NCR-05 and NCR-06;
and in line with the ruling in Eagle Security Agency, Inc. v. National Labor Relations Commission,7 petitioner
should be reimbursed of any payments to be made.

18
There is no question as regards the respective liabilities of petitioner and Delta Milling. Under Articles 106, 107
and 109 of the Labor Code, the joint and several liability of the contractor and the principal is mandated to
assure compliance of the provisions therein including the statutory minimum wage. The contractor, petitioner in
this case, is made liable by virtue of his status as direct employer. On the other hand, Delta Milling, as principal,
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.8

However, in the event that petitioner pays his obligation to the guard employees pursuant to the Decision of the
Labor Arbiter, as affirmed by the NLRC and CA, petitioner has the right of reimbursement from Delta Milling
under Article 1217 of the Civil Code, which provides:

Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more
solidary debtors offer to pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the share which corresponds to each,
with the interest for the payment already made. If the payment is made before the debt is due, no interest
for the intervening period may be demanded.

xxxx

The question that now arises is whether petitioner may claim reimbursement from Delta Milling through a
cross-claim filed with the labor court.

This question has already been decisively resolved in Lapanday Agricultural Development Corporation v.
Court of Appeals,9 to wit:

We resolve first the issue of jurisdiction. We agree with the respondent that the RTC has jurisdiction
over the subject matter of the present case. It is well-settled in law and jurisprudence that where no
employer-employee relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it
is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any
relief under the Labor Code but seeks payment of a sum of money and damages on account of
petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the
realm of civil law hence jurisdiction over the case belongs to the regular courts. While the
resolution of the issue involves the application of labor laws, reference to the labor code was only
for the determination of the solidary liability of the petitioner to the respondent where no
employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor
arbiters exclusive original jurisdiction only over the following:

1. Unfair labor practices;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral exemplary and other forms of damages arising from employer-
employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving
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 exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite; and

there is none in this case.10 (Emphasis supplied)

19
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
cross-claim, 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 cross-claim 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.11 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.12 In this case, it appears
that petitioner has yet to pay the guard employees. As stated in Lapanday:

However, it is not disputed that the private respondent has not actually paid the security guards the wage
increases granted under the Wage Orders in question. Neither is it alleged that there is an extant claim
for such wage adjustments from the security guards concerned, whose services have already been
terminated by the contractor. Accordingly, private respondent has no cause of action against petitioner to
recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the
laborers and the contractor may not assert a claim against the principal for salary wage adjustments that
it has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be unduly
enriching itself by recovering wage increases, for its own benefit.13

Consequently, the CA did not commit any error in dismissing the petition and in affirming the NLRC
Resolutions dated September 19, 2000 and November 9, 2001.

WHEREFORE, the petition is DENIED.

Double costs against petitioner.

SO ORDERED.

20