Labor Relations.docx

LABOR RELATIONS INTRODUCTION Constitutional & Statutory Basis 1.) 1987 Constitution = Article 2, 3 & 13 2.) Labor Code = Article 211 3.) Civil Code = Article 1700, 1701 & 1702

Constitution: Art 2. State Policies =

Sections 9-14, 18 & 20

Art 2. Sec 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Art 2. Sec 10. The State shall promote social justice in all phases of national development. Art 2. Sec 11. The State values the dignity of every human person and guarantees full respect for human rights. Art 2. Sec 12. The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous social institution. It shall equally protect the life of the mother and the life of the unborn from conception. The natural and primary right and duty of parents in the rearing of the youth for civic efficiency and the development of moral character shall receive the support of the Government. Art 2. Sec 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Art 2. Sec 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Art 2. Sec 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Art 2. Sec 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. CAPITAL VS. LABOR = SOCIAL JUSTICE *Case to Case basis *In favor of Labor but not to oppress capital/private sectors

Art 3. Bill of Rights =

Sec 10 & 18

Art 3. Sec 10 No law impairing the obligation of contracts shall be passed. *When there is an existing contract, new laws amending it shall not affect the contract *Though not all legislation is for impairment Art 3. Sec 18 (1) No person shall be detained solely by reason of his political beliefs and aspirations. (2) No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted. *Service must be compensated

Art 13 Social Justice and Human Rights = Sec 3 Art 13 Sec 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

Labor Code

= Art 211

Article 211. Declaration of Policy. It is the policy of the State: To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes; To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development; To foster the free and voluntary organization of a strong and united labor movement; To promote the enlightenment of workers concerning their rights and obligations as union members and as employees; To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes; To ensure a stable but dynamic and just industrial peace; and To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code. (As amended by Section 3, Republic Act No. 6715, March 21, 1989) Civil Code = 1700, 1701 & 1702 Article 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects. Article 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public. Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Article 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be valid.

General Principles of Labor Law 1.Existence of ER-EE relationship *needs to be determined for the application of labor laws a.Employment is not merely a contractual relationship *CAPITOL MEDICAL CENTER vs MERIS CMC hired Dr. Meris. After 18 years of service, CMC terminated his services for the extinction of demand/abolition of his dept but hired another doctor. Dr. Meris filed for illegal dismissal. Illegal dismissal? YES. Not a valid management prerogative in closing an undertaking. Not in GF. Although employers have management prerogatives, including the right to close the operation of an establishment or undertaking, they must comply with the legal requirements and not offend the protected rights of labor. Requisites: (a) done in good faith to advance the company’s interest; and (b) not for the purpose of defeating or circumventing the rights of employees under the law. b.WHO has the Initial burden of proving ER-EE relationship? *JAVIER vs FLYACE CORP *Whoever claims entitlement to the benefits should establish his or her right. Javier alleged that he reported for work from Monday to Saturday 7-5pm with no ID, payslip. Later he was not allowed to enter/work, terminated w/o notice. Fly Ace denied the existence of ER-EE relationship as Javier is only called for work when the contracted hauler is unavailable. Series of reversal in LA, NLRC & CA decisions. SC: When confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received, subject only to the requirement that their decision must be supported by substantial evidence. Javier needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal dismissal. In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. Javier failed to adduce substantial evidence as a basis for the grant of his claims. *4 TESTS to determine ER-EE : (SPPP) (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. (*most important criterion) *TENAZAS vs VILLEGAS TAXI Tenazas, Francisco and Endraca were taxi drivers of Villegas’ Taxi and were fired without the benefit of procedural due process. The burden of proof rests upon the party who asserts the affirmative of an issue. Corollarily, as Francisco was claiming to be an employee of the respondents, it is incumbent upon him to proffer evidence to prove the existence of said relationship. Francisco failed to present documentary evidence like attendance logbook, payroll, SSS record or any personnel file. Also failed to establish the Power to Control of employer. 4 TESTS re ER-EE: There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security registration, appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee status. *The quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. *Burden of proof upon employer to show validity of the exercise of its prerogatives (2 requisites) 2.Only Substantial Evidence is required in admin proceedings *quantum of proof = SUBSTATIAL EVIDENCE *ALILEM CREDIT CORP vs BANDIOLA Bandiola was employed by Alilem Corp as bookkeeper. Bandiola was accused of having immoral conduct and unbecoming behavior by having an illicit relationship. an act that brings discredit to the cooperative organization and a cause for termination per Coop Policy. Illegal dismissal? NO.

Employer’s evidence consists of sworn statements of direct personal knowledge of the illicit relationship. While Bandiola’s affair may be considered personal to him and does not directly affect his bookkeeping but the act was specifically provided for by petitioner’s Personnel Policy as one of the grounds for termination of employment and the Board received numerous complaints and petitions from the cooperative members themselves asking for his removal. Procedural DUE Process? YES. Valid Termination: 2 notices (to explain & notice of termination after investigation) Bandiola was afforded the opportunity to defend himself 3. In case of doubt or ambiguity, liberal interpretation is required in administrative proceedings *PRICE vs INNODATA *ART 280 of Labor Code = Regular & Casual Employment Price et. al are employed as formatter by Innodata with contract named as “Contract of Employment for a fixed period” for 1year. On the last day, Innodata informed them of their last day of work.Price et al claimed that they should be considered as regular employees. Illegal Dismissal? YES. The employment status of a person is defined and prescribed by law and not by what the parties say it should be. Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good. Thus, provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other. Art 280 provides: regular status: (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, regardless of the length of their employment; and (2) those who were initially hired as casual employees, but have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. PRICE falls under the necessary or desirable engagement in the usual business of ER. Ambiguous Employment Contract? YES. (hired on Feb; rehired on Sept with tampered dates) where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. *BPI vs BPI EE’s Union *Art 1702 of Civil Code= in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer. BPI EE’s Union & BPI have an existing CBA which provides for loan benefits & low interests. However, BPI issued a “no Negative data bank policy” a prerequisite not contemplated in CBA. SC: Invalid policy since it was not stipulated and at some points, unreasonable to the employees. The welfare of the laborers stands supreme. *Phil Journalist Inc(PJI) vs Journal EE’s Union = *if the CBA is silent about it, is to be construed as similar to the meaning that contemporaneous social legislations have set. This is because the terms of such social legislations are deemed incorporated by the CBA. Alfante worked with PJI and he received a memorandum regarding his excessive tardiness & later dismissed. He questioned the non-adjustment of longevity pay and burial aid of PJI. There was a conflict on the definition of the term legal dependent. PJI: SSS Law & the CBA definition.(wrong!) SC: Social legislations contemporaneous with the execution of the CBA should be followed. Statutory definitions says that the civil status of the employee as either married or single is not the controlling consideration to qualify as the employee’s legal dependent. Controlling is the fact that the spouse, child, or parent is actually dependent for support upon the employee *NUWHRAIN vs Phil Plaza Holdings *StatCon: if the terms of the CBA are plain, clear and leave no doubt on the intention of the contracting parties, the literal meaning of its stipulations, as they appear on the face of the contract, shall prevail. Only when the words used are ambiguous and doubtful or leading to several interpretations of the parties’ agreement that a resort to interpretation and construction is called for. LITERAL MEANING of the STIPULATION SHALL PREVAIL. The CBA provided the collection by the PPH of 10% service charge on food, beverage, transportation, laundry and rooms except on negotiated contracts and special rates. Union claimed uncollected service charges. PPH denied and said they were exempted. Union: CBA exception of "Negotiated Contracts" as applicable to airline contracts only. SC: NO! CBA did not define “Nego Contracts” to apply only to airlines.

*Mitsubishi EE’s Union vs Mitsubishi CBA provides that company shoulder the hospitalization. Employees pay part of the hospitalization insurance premium through monthly salary deduction while the company, upon hospitalization of the covered employees' dependents, shall pay the hospitalization expenses incurred for the same. Members filed for reimbursement that under the CBA, they are entitled to hospital benefits to the full amount which should not be reduced by the MEDIcard. Mitsu denied contending double insurance. The Voluntary Arbitrator held that the employees may demand simultaneous payment from both the CBA and their separate health insurance without resulting to double insurance, since separate premiums were paid for each contract. He also noted that the CBA does not prohibit reimbursement in case there are other health insurers.

Issue: Whether the interpretation of the Voluntary Arbitrator of the CBA provision was correct Ruling: No. The Voluntary Arbitrator erred applying the view that the covered employees are entitled to full payment of the hospital expenses incurred by their dependents, including the amounts already paid by other health insurance companies based on the theory of collateral source rule. The conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability only to actual expenses incurred by the employees’ dependents, that is, excluding the amounts paid by dependents’ other health insurance providers. The Voluntary Arbitrator ruled that the CBA has no express provision barring claims for hospitalization expenses already paid by other insurers. Hence, the covered employees can recover from both. The CA did not agree, saying that the conditions set forth in the CBA implied an intention of the parties to limit MMPC’s liability only to the extent of the expenses actually incurred by their dependents which excludes the amounts shouldered by other health insurance companies. The condition that payment should be direct to the hospital and doctor implies that MMPC is only liable to pay medical expenses actually shouldered by the employees’ dependents. It follows that MMPC’s liability is limited, that is, it does not include the amounts paid by other health insurance providers. This condition is obviously intended to thwart not only fraudulent claims but also double claims for the same loss of the dependents of covered employees. It is well to note at this point that the CBA constitutes a contract between the parties and as such, it should be strictly construed for the purpose of limiting the amount of the employer’s liability. The terms of the subject provision are clear and provide no room for any other interpretation. As there is no ambiguity, the terms must be taken in their plain, ordinary and popular sense. Consequently, MMPSEU cannot rely on the rule that a contract of insurance is to be liberally construed in favor of the insured. Neither can it rely on the theory that any doubt must be resolved in favor of labor. The CBA has provided for MMPC’s limited liability which extends only up to the amount to be paid to the hospital and doctor by the employees’ dependents, excluding those paid by other insurers. Consequently, the covered employees will not receive more than what is due them; neither is MMPC under any obligation to give more than what is due under the CBA. Moreover, since the subject CBA provision is an insurance contract, the rights and obligations of the parties must be determined in accordance with the general principles of insurance law. Being in the nature of a non-life insurance contract and essentially a contract of indemnity, the CBA provision obligates MMPC to indemnify the covered employees’ medical expenses incurred by their dependents but only up to the extent of the expenses actually incurred. 2.5 But Management rights likewise protected G.R.

No.

191281

BEST WEAR GARMENTS and/or vs. ADELAIDA B. DE LEMOS and CECILE M. OCUBILLO, Respondents. VILLARAMA, J.:

December WARREN

5, PARDILLA,

2012 Petitioners,

Facts: Best Wear Garments, the petitioner, is a sole proprietorship represented by its General Manager Alex Sitosta. While Cecile M. Ocubillo and Adelaida B. De Lemos, the respondents were hired as sewers on piece-rate basis by Best Wear Garments. In May 20, 2004, De Lemos filed a complaint for illegal dismissal with prayer for backwages and other accrued benefits among others. A similar complaint was filed by Ocubillo in June 10, 2004. Both alleged that Sitosta arbitrarily transferred them to other areas of operation of the garments company, which they claimed to be constructive dismissal as it resulted in less earnings for them. De Lemos claims that her transfer was because of her refusal to render overtime work up to 7pm. Meanwhile, Ocubillo was due to her incurred excessive absences since 2001 which was due to her sickly father and his untimely demise. After which she also became very sickly. She claimed that Sitosta assigned her to different machines “whichever is available” and that there were times where she could not earn anything because there were no available machines to work for. Issue: Whether the respondents were illegally/constructively dismissed from employment and are entitled to separation pay.

Ruling: No. The respondents are not illegally/constructively dismissed and are not entitled to separation pay. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. Thus, an employer may transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. In

Blue

Dairy

Corporation

v.

NLRC,

the

SC

held

that:

x x x. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment. Being piece-rate workers assigned to individual sewing machines, respondents’ earnings depended on the quality and quantity of finished products. That their work output might have been affected by the change in their specific work assignments does not necessarily imply that any resulting reduction in pay is tantamount to constructive dismissal. Workers under piece-rate employment have no fixed salaries and their compensation is computed on the basis of accomplished tasks. As admitted by respondent De Lemos, some garments or byproducts took a longer time to finish so they could not earn as much as before. Also,the type of sewing jobs available would depend on the specifications made by the clients of petitioner company. Under these circumstances, it cannot be said that the transfer was unreasonable, inconvenient or prejudicial to the respondents. Such deployment of sewers to work on different types of garments as dictated by present business necessity is within the ambit of management prerogative which, in the absence of bad faith, ill motive or discrimination, should not be interfered with by the courts. The records are bereft of any showing of clear discrimination, insensibility or disdain on the part of petitioners in transferring respondents to perform a different type of sewing job. It is unfair to charge petitioners with constructive dismissal simply because the respondents insist that their transfer to a new work assignment was against their will. We have long stated that "the objection to the transfer being grounded on solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer." That respondents eventually discontinued reporting for work after their plea to be returned to their former work assignment was their personal decision, for which the petitioners should not be held liable particularly as the latter did not, in fact, dismiss them. Indeed, there was no evidence that respondents were dismissed from employment. In fact, petitioners expressed willingness to accept them back to work. There being no termination of employment by the employer, the award of backwages cannot be sustained. It is well settled that backwages may be granted only when there is a finding of illegal dismissal. In cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages. The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights which are entitled to respect and enforcement in the interest of simple fair play. Thus, where management prerogative to transfer employees is validly exercised, as in this case, courts will decline to interfere. G.R. Nos. 158786 & 158789

October 19, 2007

TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION (TMPCWA) et al. v. NATIONAL LABOR RELATIONS COMMISSION et al. VELASCO, JR., J.: FACTS: Toyota Motor Philippines Corporation Workers Association (Union) is a legitimate labor organization duly registered with the Department of Labor and Employment (DOLE) and is the sole and exclusive bargaining agent of all Toyota rank and file employees. Toyota Motor Philippines Corporation (Toyota) on the other hand, is a domestic corporation engaged in the assembly and sale of vehicles and parts. The Union filed a petition for certification election among the Toyota rank and file employees with the National Conciliation and Mediation Board (NCMB). Med-Arbiter Ma. Zosima C. Lameyra denied the petition, but, on appeal, the DOLE Secretary granted the Union’s prayer, and, directed the immediate holding of the certification election. After Toyota’s plea for reconsideration was denied, the certification election was conducted. Med-Arbiter Lameyra’s Order certified the Union as the sole and exclusive bargaining agent of all the Toyota rank and file employees. Toyota challenged said Order via an appeal to the DOLE Secretary. In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) proposals to Toyota, but the latter refused to negotiate in view of its pending appeal. Consequently, the Union filed a notice of strike on with the NCMB, based on Toyota’s refusal to bargain. In connection with Toyota’s appeal, Toyota and the Union were required to attend a hearing before the Bureau of Labor Relations (BLR) in relation to the exclusion of the votes of alleged supervisory employees from the votes cast during the certification election. On February 21, 2001, 135 Union officers and members failed to render the required overtime work, and instead marched to and staged a picket in front of the BLR office in Intramuros, Manila. The Union, in a letter of the same date, also requested that its members be allowed to be absent on February 22, 2001 to attend the hearing and instead work on their next scheduled rest day. This request however was denied by Toyota.

Despite denial of the Union’s request, more than 200 employees staged mass actions on February 22 and 23, 2001 in front of the BLR and the DOLE offices, to protest the partisan and anti-union stance of Toyota. Due to the deliberate absence of a considerable number of employees on February 22 to 23, 2001, Toyota experienced acute lack of manpower in its manufacturing and production lines, and was unable to meet its uproduction goals resulting in huge losses of PhP 53,849,991. Soon thereafter, on February 27, 2001, Toyota sent individual letters to some 360 employees requiring them to explain within 24 hours why they should not be dismissed for their obstinate defiance of the company’s directive to render overtime work on February 21, 2001, for their failure to report for work on February 22 and 23, 2001, and for their participation in the concerted actions which severely disrupted and paralyzed the plant’s operations. The Union filed with the NCMB another notice of strike for union busting amounting to unfair labor practice. The Union nonetheless submitted an explanation in compliance with the February 27, 2001 notices sent by Toyota to the erring employees. The Union members explained that their refusal to work on their scheduled work time for two consecutive days was simply an exercise of their constitutional right to peaceably assemble and to petition the government for redress of grievances. On March 16, 2001, Toyota terminated the employment of 227 employees for participation in concerted actions in violation of its Code of Conduct and for misconduct under Article 282 of the Labor Code. In reaction to the dismissal of its union members and officers, the Union went on strike on March 17, 2001. Subsequently, from March 28, 2001 to April 12, 2001, the Union intensified its strike by barricading the gates of Toyota’s Bicutan and Sta. Rosa plants. The strikers prevented workers who reported for work from entering the plants. Toyota filed a petition to declare the strike illegal with the NLRC arbitration branch, and prayed that the erring Union officers, directors, and members be dismissed. The DOLE Secretary assumed jurisdiction over the labor dispute and issued an Order directing all striking workers to return to work at their regular shifts by April 16, 2001. On the other hand, it ordered Toyota to accept the returning employees under the same terms and conditions obtaining prior to the strike or at its option, put them under payroll reinstatement. The parties were also enjoined from committing acts that may worsen the situation. The Union ended the strike on April 12, 2001. The union members and officers tried to return to work on April 16, 2001 but were told that Toyota opted for payroll-reinstatement authorized by the Order of the DOLE Secretary. In the meantime, the Union filed a motion for reconsideration of the DOLE certification Order, which, however, was denied by the DOLE Secretary. Consequently, a petition for certiorari was filed before the CA. Meanwhile, on May 23, 2001, despite the issuance of the DOLE Secretary’s certification Order, several payroll-reinstated members of the Union staged a protest rally in front of Toyota’s Bicutan Plant. The NLRC declared the strikes staged by the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as illegal. However, the Company is ordered to pay the 227 Union members, who participated in the illegal strike severance compensation in an amount equivalent to one month salary for every year of service, as an alternative relief to continued employment. Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC denied. Consequently, both parties questioned the Decision and Resolution of the NLRC in separate petitions for certiorari filed with the CA. The CA affirmed the assailed NLRC Decision and Resolution with a modification, however, of deleting the award of severance compensation to the dismissed Union members. In justifying the recall of the severance compensation, the CA considered the participation in illegal strikes as serious misconduct. However, the CA modified its Decision by reinstating severance compensation to the dismissed employees based on social justice. ISSUES:

(1) Whether the mass actions committed by the Union on different occasions are illegal strikes; (2) Whether separation pay should be awarded to the Union members who participated in the illegal strikes.

RULING: 1.) YES, the alleged protest rallies in front of the offices of BLR and DOLE Secretary and at the Toyota plants constituted illegal strikes. When is a strike illegal? Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz: (1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing governmental functions; or (2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the requisites of a valid strike]; or (3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or (4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or (5) [when it] is declared in violation of an existing injunction [, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or (6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause. A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. The term "strike" has been elucidated to encompass not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy, or sabotage plant equipment and facilities, and similar activities. A labor dispute, in turn, includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of the employer and the employee.

The protest actions undertaken by the Union officials and members on February 21 to 23, 2001 are not valid and proper exercises of their right to assemble and ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. It is obvious that the February 21 to 23, 2001 concerted actions were undertaken without satisfying the prerequisites for a valid strike under Art. 263 of the Labor Code. The Union failed to comply with the following requirements: (1) a notice of strike filed with the DOLE 30 days before the intended date of strike, or 15 days in case of unfair labor practice; (2) strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (3) notice given to the DOLE of the results of the voting at least seven days before the intended strike. These requirements are mandatory and the failure of a union to comply with them renders the strike illegal. As they failed to conform to the law, the strikes on February 21, 22, and 23, 2001 were illegal. With respect to the strikes committed from March 17 to April 12, 2001, those were initially legal as the legal requirements were met. However, on March 28 to April 12, 2001, the Union barricaded the gates of the Bicutan and Sta. Rosa plants and blocked the free ingress to and egress from the company premises. Toyota employees, customers, and other people having business with the company were intimidated and were refused entry to the plants. As earlier explained, these strikes were illegal because unlawful means were employed. The acts of the Union officers and members are in palpable violation of Art. 264(e), which proscribes acts of violence, coercion, or intimidation, or which obstruct the free ingress to and egress from the company premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal. It is explicit from the directive of the DOLE Secretary that the Union and its members shall refrain from engaging in any activity that might exacerbate the tense labor situation in Toyota, which certainly includes concerted actions. However, this was not heeded by the Union and the individual respondents who staged illegal concerted actions on May 23 and 28, 2001 in contravention of the Order of the DOLE Secretary that no acts should be undertaken by them to aggravate the "already deteriorated situation." 2.) NO, the Union members who participated in the illegal strikes are NOT entitled to separation pay. The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor Code exist, the employee is not entitled to separation pay. As in any rule, there are exceptions. One exception where separation pay is given even though an employee is validly dismissed is when the court finds justification in applying the principle of social justice well entrenched in the 1987 Constitution. However, severance compensation shall be allowed only when the cause of the dismissal is other than serious misconduct or that which reflects adversely on the employee’s moral character. Therefore, separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. The constitutional guarantee on social justice is not intended only for the poor but for the rich as well. It is a policy of fairness to both labor and management. In the instant case, the CA concluded that the illegal strikes committed by the Union members constituted serious misconduct. Considering that the dismissal of the employees was due to their participation in the illegal strikes as well as violation of the Code of Conduct of the company, the same constitutes serious misconduct. A serious misconduct is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. There can be no good faith in intentionally incurring absences in a collective fashion from work on February 22 and 23, 2001 just to attend the DOLE hearings. The Union’s strategy was plainly to cripple the operations and bring Toyota to its knees by inflicting substantial financial damage to the latter to compel union recognition. The Union officials and members are supposed to know through common sense that huge losses would befall the company by the abandonment of their regular work. It was not disputed that Toyota lost more than PhP 50 million because of the willful desertion of company operations in February 2001 by the dismissed union members. In addition, further damage was experienced by Toyota when the Union again resorted to illegal strikes from March 28 to April 12, 2001, when the gates of Toyota were blocked and barricaded, and the company officials, employees, and customers were intimidated and harassed. Moreover, they were fully aware of the company rule on prohibition against concerted action inimical to the interests of the company and hence, their resort to mass actions on several occasions in clear violation of the company regulation cannot be excused nor justified. Lastly, they blatantly violated the assumption/certification Order of the DOLE Secretary, exhibiting their lack of obeisance to the rule of law. These acts indeed constituted serious misconduct. One last point to consider—it is high time that employer and employee cease to view each other as adversaries and instead recognize that theirs is a symbiotic relationship, wherein they must rely on each other to ensure the success of the business. When they consider only their own self-interests, and when they act only with their own benefit in mind, both parties suffer from short-sightedness, failing to realize that they both have a stake in the business. The employer wants the business to succeed, considering the investment that has been made. The employee in turn, also wants the business to succeed, as continued employment means a living, and the chance to better one’s lot in life. It is clear then that they both have the same goal, even if the benefit that results may be greater for one party than the other. If this becomes a source of conflict, there are various, more amicable means of settling disputes and of balancing interests that do not add fuel to the fire, and instead open avenues for understanding and cooperation between the employer and the employee. Even though strikes and lockouts have been recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as they only provide short-term solutions by forcing concessions from one party; but staging such strikes would damage the working relationship between employers and employees, thus endangering the business that they both want to succeed. The more progressive and truly effective means of dispute resolution lies in mediation, conciliation, and arbitration, which do not increase tension but instead provide relief from them. In the end, an atmosphere of trust and understanding has much more to offer a business relationship than the traditional enmity that has long divided the employer and the employee.

G.R. No. 169712 January 20, 2009 MA. WENELITA S. TIRAZONA v. PHILIPPINE EDS TECHNO- SERVICE INC. (PET INC.) CHICO-NAZARIO, J.: SUMMARY: Petitioner Tirazona was dismissed from service by Respondent PET, Inc. for her willful breach of trust reposed upon her by her employer. The NLRC, CA, and SC all found her dismissal as justified. In her 2 Motion for Reconsideration, she prayed for the invalidation of her dismissal and for the award of separation pay for just causes on the basis of equity. The SC denied her petition for lack of merit. nd

DOCTRINE: Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.

FACTS: Tirazona, being the Administrative Manager of Philippine EDS Techno-Service, Inc. (PET), was a managerial employee who held a position of trust and confidence. After PET officers/directors called her attention to her improper handling of a situation involving a rank-and-file employee, she claimed that she was denied due process for which she demanded ₱2,000,000.00 indemnity from PET and its officers/directors. She admitted to reading a confidential letter addressed to PET officers/directors containing the legal opinion of the counsel of PET regarding her case. She was terminated from her employment on the ground that she willfully breached the trust and confidence reposed in her by her employer. The NLRC ruled that Tirazona was validly terminated, and said decision was affirmed by the CA and thereafter by the Supreme Court. Tirazona moved for reconsideration. She argued that the Court failed to consider the length of her service to PET in affirming her termination from employment. She prayed that her dismissal be declared illegal. Alternatively, should the Court uphold the legality of her dismissal, Tirazona pleaded that she be awarded separation pay and retirement benefits, out of humanitarian considerations. ISSUE:

Whether Tirazona is entitled to the award of separation pay.

RULING:

NO. Tirazona is not entitled to the award of separation pay.

As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to separation pay. In Sy v. Metropolitan Bank & Trust Company, the Court declared that only unjustly dismissed employees are entitled to retirement benefits and other privileges including reinstatement and backwages. Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be [a] refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.

Contrary to her exaggerated claims, Tirazona was not just "gracelessly expelled" or "simply terminated" from the company on 22 April 2002. She was found to have violated the trust and confidence reposed in her by her employer when she arrogantly and unreasonably demanded from PET and its officers/directors the exorbitant amount of ₱2,000,000.00 in damages, coupled with a threat of a lawsuit if the same was not promptly paid within five days. This unwarranted imposition on PET and its officers/directors was made after the company sent Tirazona a letter, finding her handling of the situation involving a rank-and-file employee to be less than ideal, and merely reminding her to be more circumspect when dealing with the more delicate concerns of their employees. To aggravate the situation, Tirazona adamantly and continually refused to cooperate with PET’s investigation of her case and to provide an adequate explanation for her actions. Verily, the actions of Tirazona reflected an obdurate character that is arrogant, uncompromising, and hostile. By immediately and unreasonably adopting an adverse stance against PET, she sought to impose her will on the company and placed her own interests above those of her employer. Her motive for her actions was rendered even more questionable by her exorbitant and arbitrary demand for ₱2,000,000.00 payable within five days from demand. Her attitude towards her employer was clearly inconsistent with her position of trust and confidence. Her poor character became even more evident when she read what was supposed to be a confidential letter of the legal counsel of PET to PET officers/directors expressing his legal opinion on Tirazona’s administrative case. PET was, therefore, fully justified in terminating Tirazona’s employment for loss of trust and confidence.

REYNALDO HAYAN MOYA vs. FIRST SOLID RUBBER INDUSTRIES, INC. GR No. 184011 September 18, 2013 PEREZ, J.: FACTS: First Solid is a business engaged in manufacturing of tires and rubbers allegedly terminated Moya. First Solid denied the illegal dismissal and maintained that Moya’s severance from the company was due to a valid exercise of management prerogative. They countered that Moya failed to exercise the diligence required of him to see to it that the machine operator properly operated the machine. Moya was found to have failed to disclose the real situation that the operator was at fault as admitted in his letter but denied any willful intention to conceal the truth or cover up the mistake of his employee. Procedural due process, through issuance of twin notices, was complied with by the company. Moya was informed of the charges through a memorandum indicating his violation and was given an opportunity to answer or rebut the charges. A notice was sent informing him of the management’s decision of his dismissal and termination from services based on serious misconduct, gross and habitual neglect of duty and willful breach of trust reposed upon him by the company. Labor Arbiter rendered a judgment finding sufficient and valid grounds to dismiss Moya however, it ruled that the dismissal from service of the complainant was too harsh as a penalty since it was a first offense and there was no willful and malicious intention on his part to cause damage. First Solid Rubber Industrial, Inc. and Edward Lee Sumulong were ordered to jointly and severally pay complainant separation pay in lieu of reinstatement. Other claims for damages/backwages were dismissed. The NLRC affirmed the Decision of the Labor Arbiter in its entirety citing primarily his length of service and years of contribution to the profitable business operation of the company. It also noted that this transgression was the first mistake of Moya in the performance of his

functions. Finally, it cited as justification the Court’s ruling in St. Michael’s Institute v. Santos, wherein the Court held that "even when an employee is found to have transgressed the employer’s rules, in the actual imposition of penalties upon the erring employee, due consideration must still be given to his length of service and the number of violations committed during his employment." On appeal, CA ruled in favor of the company and reversed the decisions of the labor tribunals. ISSUE: Whether or not petitioner employee is entitled to separation pay based on his length of service. RULING: No. Moya is not entitled to separation pay. Payment of separation pay cannot be justified by his length of service. Moya’s dismissal is based on one of the grounds under Art. 282 of the Labor Code which is willful breach by the employee of the trust reposed in him by his employer. Also, he is outside the protective mantle of the principle of social justice as his act of concealing the truth from the company is clear disloyalty to the company which has long employed him. Indeed, Moya’s length of service should be taken against him. Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service.

Legal basis: An employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code, including breach of trust, is not entitled to separation pay. This is further bolstered by Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code which provides that: Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an employee shall be those provided in Article 282 of the Code. The separation from work of an employee for a just cause does not entitle him to the termination pay provided in the Code, without prejudice, however, to whatever rights, benefits and privileges he may have under the applicable individual or collective agreement with the employer or voluntary employer policy or practice. General Rule: (right of an employer to exercise its management prerogative) It is a general principle of labor law to discourage interference with an employer’s judgment in the conduct of his business. As already noted, even as the law is solicitous of the welfare of the employees, it also recognizes employer’s exercise of management prerogatives. As long as the company’s exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld. The foregoing as viewpoint, the right of First Solid to handle its own affairs in managing its business must be respected. The clear consequence is the denial of the grant of separation pay in favor of Moya. Exception: However, this Court also provides exceptions to the rule based on "social justice" or on "equitable grounds" following the ruling in Philippine Long Distance Telephone Co. v. NLRC, stating that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. 3.2d Control Test Republic of the Phils vs. Asiapro Cooperative, Gr No 172101, Nov. 23, 2007 LUCKY MEE REPUBLIC

V.

ASIAPRO

COOPERATIVE

(G.R.

NO.

172101)

Facts: Respondent Asiapro Cooperative is composed of owners-members with primary objectives of providing them savings and credit facilities and livelihood services. In discharge of said objectives, Asiapro entered into several service contracts with Stanfilco. Sometime later, the cooperative owners-members requested Stanfilco’s help in registering them with SSS and remitting their contributions. Petitioner SSS informed Asiapro that being actually a manpower contractor supplying employees to Stanfilco, it must be the one to register itself with SSS as an employer and remit the contributions. Respondent continuously ignoring the demand of SSS the latter filed before the SSC. Asiapro alleges that there exists no employer-employee relationship between it and its owners-members. SSC ruled in favor of SSS. On appeal, CA reversed the decision. Issue: Whether Ruling:

or

not

there

is

employer-employee

relationship

between

Asiapro

and

its

owners-members. YES.

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of dismissal; and (4) the power to control the worker‘s conduct, with the latter assuming primacy in the overall consideration. All the aforesaid elements are present in this case. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish. The power of control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the employer has the right to wield that power. First. It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive discretion in the selection and engagement of the owners-members as well as its team leaders who will be assigned at Stanfilco.

Second. It cannot be doubted then that those stipends or shares in the service surplus are indeed wages, because these are given to the owners-members as compensation in rendering services to respondent cooperative‘s client, Stanfilco. Third. It is also stated in the above-mentioned Service Contracts that it is the respondent cooperative which has the power to investigate, discipline and remove the owners-members and its team leaders who were rendering services at Stanfilco. Control: Fourth. In the case at bar, it is the respondent cooperative which has the sole control over the manner and means of performing the services under the Service Contracts with Stanfilco as well as the means and methods of work. Also, the respondent cooperative is solely and entirely responsible for its owners-members, team leaders and other representatives at Stanfilco. All these clearly prove that, indeed, there is an employer-employee relationship between the respondent cooperative and its owners-members. In the present case, it is not disputed that the respondent cooperative had registered itself with the Cooperative Development Authority, as evidenced by its Certificate of Registration No. 0-623-2460. In its by-laws, its Board of Directors directs, controls, and supervises the business and manages the property of the respondent cooperative. Clearly then, the management of the affairs of the respondent cooperative is vested in its Board of Directors and not in its owners-members as a whole. Therefore, it is completely logical that the respondent cooperative, as a juridical person represented by its Board of Directors, can enter into an employment with its ownersmembers. In sum, having declared that there is an employer-employee relationship between the respondent cooperative and its owners-member, we conclude that the petitioner SSC has jurisdiction over the petition-complaint filed before it by the petitioner SSS. This being our conclusion, it is no longer necessary to discuss the issue of whether the respondent cooperative was estopped from assailing the jurisdiction of the petitioner SSC when it filed its Answer with Motion to Dismiss.

G.R. No. 153511

July 18, 2012

LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON NAPUD, in his capacity as the President of Petitioner Corporation, Petitioner, vs. HERNANI S. REALUYO, also known as JOEY ROA, Respondent. Facts: Respondent Pianist, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive leave pay, and 13th month pay. He prayed for attorney's fees, moral and exemplary damages. Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night that was given to him after each night’s performance; that his rate had increased to P750.00/night; and that during his employment, he could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. Respondent pianist’s arguments that his work is under the CONTROL of petitioner hotel: He added that the Legend Hotel’s restaurant manager had required him to conform with the venue’s motif; that he had been subjected to the rules on employees’ representation checks and chits, a privilege granted to other employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss of his employment made him bring his complaint. In its defense, petitioner denied the existence of an employer-employee relationship with respondent, insisting that he had been only a talent engaged to provide live music at Legend Hotel’s Madison Coffee Shop for three hours/day on two days each week; and stated that the economic crisis that had hit the country constrained management to dispense with his services. LA: Dismissed the labor complaint and ruled in favor of Legend Hotel; did not find the existence of the EE relationship. NLRC: Affirmed the decision of the LA; ruled in favor of Legend Hotel, still not finding the existence of the EE Relationship. CA: Reversed the decision of the NLRC, and ruled in favor of respondent pianist, holding that: Public respondent failed to take into consideration that in petitioner’s line of work, he was supervised and controlled by respondent’s restaurant manager who at certain times would require him to perform only tagalog songs or music, or wear barong tagalog to conform with Filipiniana motif of the place and the time of his performance is fixed by the respondents from 7:00 pm to 10:00 pm, three to six times a week. Petitioner could not choose the time of his performance.

Issue: Whether or not respondent pianist Joey Roa is an employee of petitioner Legend Hotel? Held: YES. A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He was undeniably employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant from September 1992 until his services were terminated on July 9, 1999. First of all, petitioner actually wielded the power of selection at the time it entered into the service contract dated September 1, 1992 with respondent. Secondly, petitioner was paying respondent wages. Petitioner’s argument that the remuneration denominated as ‘talent fees’ is not wages must fail. Thirdly, the power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This is the so-called control test, and is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end.

A review of the records shows, however, that respondent performed his work as a pianist under petitioner’s supervision and control. Specifically, petitioner’s control of both the end achieved and the manner and means used to achieve that end was demonstrated by the following, to wit: a. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week; b. He could not choose the place of his performance; c. The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and d. He was subjected to the rules on employees’ representation check and chits, a privilege granted to other employees.

Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties by the employee, for it sufficed that the employer has the right to wield that power. Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject to its Code of Discipline, and that the power to terminate the working relationship was mutually vested in the parties, in that either party might terminate at will, with or without cause. The claim is contrary to the records. Indeed, the memorandum informing respondent of the discontinuance of his service because of the present business or financial condition of petitioner showed that the latter had the power to dismiss him from employment.

3.3 Who has jurisdiction to determine ER-EE relationship: Secretary of Labor or the NLRC G.R. No. 179652

May 8, 2009

PEOPLE'S BROADCASTING (BOMBO RADYO PHILS., INC.), Petitioner, vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents. Facts: Jandeleon Juezan (respondent) filed against People’s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) a complaint for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City. DOLE Regional Office: Ruled in favor of private respondent. DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting to ₱203,726.30. DOLE Secretary: Affirmed previous decision. On appeal to the DOLE Secretary, petitioner denied once more the existence of employeremployee relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit CA: Ruled in favor of private respondent. The Court of Appeals held that petitioner was not deprived of due process as the essence thereof is only an opportunity to be heard, which petitioner had when it filed a motion for reconsideration with the DOLE Secretary. Hence this petition. Petitioner argues that the National Labor Relations Commission (NLRC), and not the DOLE Secretary, has jurisdiction over respondent’s claim, in view of Articles 217 and 128 of the Labor Code. Issue: Whether or not the Secretary of Labor has the power to determine the existence of an employer-employee relationship? Held: NO. Article 128 (b) of the Labor Code, as amended by Republic Act 7730 reads: Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection xxx

The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only "in cases when the relationship of employer-employee still exists." It also underscores the avowed objective underlying the grant of power to the DOLE which is "to give effect to the labor standard provision of this Code and other labor legislation." Of course, a person’s entitlement to labor standard benefits under the labor laws presupposes the existence of employer-employee relationship in the first place. Necessarily, the DOLE’s power does not apply in two instances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such relationship has ever existed.

The first situation (a) is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of Labor Standards Cases15 issued by the DOLE Secretary. It reads: Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE INSPECTION Sec. 3. Complaints where no employer-employee relationship actually exists. Where employer-employee relationship no longer exists by reason of the fact that it has already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employer-employee relationship no longer exists, the case, whether accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the appropriate branch of the National Labor Relations Commission (NLRC).

In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the termination of the employer-employee relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of employer-employee relationship between the evidentiary parties from the start. Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all. In the second situation (b) especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationship demand that the level of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found in the employer’s office are the primary source materials, what may prove decisive are factors related to the history of the employer’s business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. Guidelines for the Jurisdiction of DOLE Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire. A mere assertion of absence of employer-employee relationship does not deprive the DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power. Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its employee. Certainly, a preliminary determination, based on the evidence offered, and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer respondent to the NLRC for the proper dispensation of his claims.

G.R. No. 171275, July 13, 2009 Meteoro et al v. Creative Creatures YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ. Digested by: Gretchen B. Canedo FACTS: Respondent is a domestic corporation engaged in the business of producing, providing, or procuring the production of set designs and set construction services for television exhibitions, concerts, theatrical performances, motion pictures and the like. On the other hand, petitioners were hired by respondent on various dates as artists, carpenters and welders. Sometime in February and March 1999, petitioners filed their respective complaints for non-payment of salaries and benefits against respondent, before the Department of Labor and Employment (DOLE, NCR), During inspection, the labor inspector noted that the records were not made available at the time of the inspection and that respondent claimed that petitioners were contractual employees and/or independent talent workers. They further argued that the DOLE-NCR had no jurisdiction over the complaint of the petitioners because of the absence of an employer-employee relationship. Petitioners maintained that they are employees of the respondents and subsequently filed a complaint for illegal dismissal against petitioner on April 12, 1999.

The Regional Director sustained petitioners claim on the existence of an employer-employee relationship using the determinants set forth by the Labor Code and upheld the DOLE-NCRs jurisdiction to hear and determine cases in violation of labor standards law. On appeal, then DOLE Secretary Patricia A. Sto. Tomas affirmed the findings of the DOLE Regional Director and upheld the jurisdiction of the DOLE pursuant to Article 128 of the Labor Code , as amended by Republic Act (R.A.) No. 7730. Respondent elevated the matter to the Court of Appeals. The appellate court declared the order of the Secretary of Labor NULL and VOID for lack of jurisdiction. ISSUE: Which body/tribunal has jurisdiction over petitioners money claims? HELD: The Supreme Court sustained the appellate court’s conclusion that the instant case falls within the exclusive jurisdiction of the NLRC. The power of the Regional Director to hear and decide the monetary claims of employees is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the exception clause, provides an instance when the Regional Director or his representatives may be divested of jurisdiction over a labor standards case. Art. 128. Visitorial and Enforcement Power (a) The Secretary of Labor or his duly authorized representatives, including labor regulation officers, shall have access to employers records and premises at anytime of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. (b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee relation still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution, to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

Under prevailing jurisprudence, the so-called exception clause has the following elements, all of which must concur: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. In the present case, the CA aptly applied the exception clause. At the earliest opportunity, respondent registered its objection to the findings of the labor inspector. The labor inspector, in fact, noted in its report that respondent alleged that petitioners were contractual workers and/or independent and talent workers without control or supervision and also supplied with tools and apparatus pertaining to their job. In its position paper, respondent again insisted that petitioners were not its employees. It then questioned the Regional Directors jurisdiction to entertain the matter before it, primarily because of the absence of an employer-employee relationship. Finally, it raised the same arguments before the Secretary of Labor and the appellate court. It is, therefore, clear that respondent contested and continues to contest the findings and conclusions of the labor inspector. The key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters be not verifiable in the course of inspection. Whether or not petitioners were independent contractors/project employees/freelance workers is a question of fact that necessitates the examination of evidentiary matters not verifiable in the normal course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the employer, the Regional Director, and later the DOLE Secretary, may still examine it; and these officers are not divested of jurisdiction to decide the case. In sum, respondent contested the findings of the labor inspector during and after the inspection and raised issues the resolution of which necessitated the examination of evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional Director was divested of jurisdiction and should have endorsed the case to the appropriate Arbitration Branch of the NLRC. 3.4 Reasonable Causal Connection G.R. No. 171212, August 4, 2014 Indophil Textile Mills v. Adviento D E C I S I O N, PERALTA, J.: Digested by: Gretchen B. Canedo FACTS: Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of manufacturing thread for weaving. On August 21, 1990, petitioner hired respondent Engr. Salvador Adviento as Civil Engineer to maintain its facilities in Lambakin, Marilao, Bulacan.

On August 7, 2002, respondent consulted a physician due to recurring weakness and dizziness. Few days later, he was diagnosed with Chronic Poly Sinusitis, and thereafter, with moderate, severe and persistent Allergic Rhinitis.6 Accordingly, respondent was advised by his doctor to totally avoid house dust mite and textile dust as it will transmute into health problems. Distressed, respondent filed a complaint against petitioner with the National Labor Relations Commission (NLRC), San Fernando, Pampanga, for alleged illegal dismissal and for the payment of backwages, separation pay, actual damages and attorney’s fees. The said case, docketed as NLRC Case No. RAB-III-05-5834-03, is still pending resolution with the NLRC at the time the instant petition was filed. Subsequently, respondent filed another Complaint with the Regional Trial Court (RTC) of Aparri, Cagayan, alleging that he contracted such occupational disease by reason of the gross negligence of petitioner to provide him with a safe, healthy and workable environment. In reply, petitioner filed a Motion to Dismiss on the ground that: (1) the RTC has no jurisdiction over the subject matter of the complaint because the same falls under the original and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217(a)(4) of the Labor Code; and (2) there is another action pending with the Regional Arbitration Branch III of the NLRC in San Fernando City, Pampanga, involving the same parties for the same cause. On December 29, 2003, the RTC issued a Resolution denying the aforesaid Motion and sustaining its jurisdiction over the instant case. It held that petitioner’s alleged failure to provide its employees with a safe, healthy and workable environment is an act of negligence, a case of quasi-delict. As such, it is not within the jurisdiction of the LA under Article 217 of the Labor Code. On the matter of dismissal based on litis pendencia, the RTC ruled that the complaint before the NLRC has a different cause of action which is for illegal dismissal and prayer for back wages, actual damages, attorney’s fees and separation pay due to illegal dismissal while in the present case, the cause of action is for quasi-delict.24 ISSUES: 1. Which court has jurisdiction? 2. Is there a reasonable causal connection between the case filed in the RTC and that with the NLRC? HELD: 1. The Regular Courts have jurisdiction. The Supreme court held that jurisdiction rests on the regular courts. The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code, as amended by Section 9 of Republic Act (R.A.) No. 6715. ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 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 the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (₱5,000.00) regardless of whether accompanied with a claim for reinstatement. While the SC upholds the present trend to refer worker-employer controversies to labor courts in light of the aforequoted provision, it has also recognized that not all claims involving employees can be resolved solely by our labor courts, specifically when the law provides otherwise. For this reason, the "reasonable causal connection rule," had been formulated, wherein if there is a reasonable causal connection between the claim asserted and the employer-employee relations, then the case is within the jurisdiction of the labor courts; and in the absence thereof, it is the regular courts that have jurisdiction. The pivotal question to the mind of the Court is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary. It is obvious from the complaint that the plaintiff did not allege any unfair labor practice. His is a simple action for damages for tortious acts allegedly committed by the defendant. Such being the case, the governing statute is the Civil Code and not the Labor Code. It is a basic tenet that jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim asserted therein, which is a matter resolved only after and as a result of a trial. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or motion to dismiss. In this case, a perusal of the complaint would reveal that the subject matter is one of claim for damages arising from quasi-delict, which is within the ambit of the regular court's jurisdiction. 2. No, there is NO REASONABLE CONNECTION. Claims for damages under Article 217(a)(4) of the Labor Code, to be cognizable by the LA, must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other claims can a claim for damages be considered as arising from employer-employee relations. In the case at bench, we find that such connection is nil. True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the acts complained of appear to constitute matters involving employee-employer relations since respondent used to be the Civil Engineer of petitioner. However, it should

be stressed that respondent’s claim for damages is specifically grounded on petitioner’s gross negligence to provide a safe, healthy and workable environment for its employees −a case of quasi-delict. This is easily ascertained from a plain and cursory reading of the Complaint. When, as here, the cause of action is based on a quasi-delictor tort, which has no reasonable causal connection with any of the claims provided for in Article 217, jurisdiction over the action is with the regular courts. QUASI-DELICT REQUISITES To sustain a claim liability under quasi-delict, the following requisites must concur: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff. G.R. No. 92598 May 20, 1994 PURIFICACION Y. MANLIGUEZ, ANTONINA Y. LUIS and BENJAMIN C. YBANEZ vs. THE COURT OF APPEALS, ET AL., FACTS: The case at bench finds its roots in the Decision of the Department of Labor and Employment (Region VII), ordering Inductocast Cebu to pay its former employees a total of P232,908.00. As a consequence of the judgment, the labor department's regional sheriff levied the buildings and improvements standing on Lot 109, Plan 11-5121-Amd., at Tipolo, Mandaue City. The levied properties (hereinafter referred to as the "Tipolo properties") were subsequently sold at public auction to said employees. Petitioners filed with the RTC a Complaint which sought the lifting of the levy over, and annulment of the sale of, the Tipolo properties. The Complaint was docketed as Civil Case No. Ceb-6917. Petitioners therein alleged that: they are the owners of the Lot 109; they entered into a lease agreement with Inductocast Cebu over Lot 109; the lease contract provided that, except for machineries and equipment, all improvements introduced in the leased premises shall automatically be owned by the Lessor (petitioners) upon the expiration/termination of the contract; the lease agreement was terminated by petitioners in November, 1980 due to non-payment of rentals by Inductocast Cebu; thereafter, petitioners took actual possession of and occupied the Tipolo properties. Atty. Danilo Pilapil filed a motion to dismiss on the ground that the trial court had no jurisdiction over the case. The buyers of the Tipolo properties, as intervenors, also filed a motion to dismiss on the same ground. The trial court granted the motion and dismissed Civil Case No. Ceb-6917. It held it had no jurisdiction over the case since the levy and sale "are connected with the case within the exclusive jurisdiction of the Department of Labor and Employment." Petitioners questioned the dismissal of their Complaint to the respondent Court of Appeals. The appellate court denied the petition, as it held that he Department of Labor is the agency upon which devolves the jurisdiction over disputes emanating from and in relation with labor controversies to the exclusion of the regular courts. ISSUE: RULING:

Whether the regular courts have jurisdiction over the case filed by the petitioners. YES. The regular courts have jurisdiction over the case filed by the petitioners.

Respondent court erred in holding that the trial court does not have jurisdiction over the case filed by petitioners. It is at once evident that the Civil Case No. Ceb-6917 is not a labor case. No employer-employee relationship exists between petitioners and the other parties, and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes, or any collective bargaining agreement. Neither can we characterize petitioner's action before the trial court as arising out of a labor dispute. It was not brought to reverse or modify the judgment of the Department of Labor and Employment (DOLE). Neither did it question the validity of, or pray for, the quashal of the writ of execution against Inductocast. What is to be litigated in Civil Case No. Ceb-6917 is the issue of ownership over the Tipolo properties. Clearly, it is the RTC and not the labor department which can take cognizance of the case, as provided by B.P. Blg. 129 ("An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and For Other Purposes"), thus: Sec. 19. Jurisdiction in civil case. — Regional Trial Courts shall exercise exclusive original jurisdiction: xxx xxx xxx (2) In all civil actions which involve the title to, or possession of real property, or any interest therein, except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; xxx xxx xxx The action taken by petitioners before the RTC asserting their ownership over the levied properties is mandated by Section 17, Rule 39 of the Revised Rules of Court. Time and again, we have held that: Under Section 17, Rule 39, a third person who claims property levied upon on execution may vindicate such claim by action. . . . The right of a person who claims to be the owner of property levied upon on execution to file a third-party claim with the sheriff is not exclusive, and he may file an action to vindicate his claim even if the judgment creditor files an indemnity bond in favor of the sheriff to answer for any damages that may be suffered by the third-party claimant. By "action", as stated in the Rule, what is meant is a separate and independent action. G.R. No. 109272 August 10, 1994 GEORG GROTJAHN GMBH & CO. vs. HON. LUCIA VIOLAGO ISNANI, Presiding Judge, Regional Trial Court, Makati, Br. 59; ROMANA R. LANCHINEBRE; and TEOFILO A. LANCHINEBRE

FACTS: Private respondent Romana R. Lanchinebre was a sales representative of petitioner GEORG GROTJAHN GMBH & CO. from 1983 to mid-1992. On March 12, 1992, she secured a loan of twenty-five thousand pesos (P25,000.00) from petitioner. On March 26 and June 10, 1992, she made additional cash advances in the sum of ten thousand pesos (P10,000.00). Of the total amount, twelve thousand one hundred seventy pesos and thirty-seven centavos (P12,170.37) remained unpaid. Despite demand, private respondent Romana failed to settle her obligation with petitioner. Private respondent Romana Lanchinebre filed with the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila, a Complaint for illegal suspension, dismissal and non-payment of commissions against petitioner. Petitioner in turn filed against private respondent a Complaint for damages amounting to one hundred twenty thousand pesos (P120,000.00) also with the NLRC Arbitration Branch (Manila). Petitioner filed another Complaint for collection of sum of money against private respondents spouses Romana and Teofilo Lanchinebre which was docketed as Civil Case No. 92-2486 and raffled to the sala of respondent judge. Private respondents moved to dismiss the Complaint. Respondent judge granted the motion to dismiss. The respondent judge ruled that the said cash advances were made pursuant to the employer-employee relationship between the (petitioner) and the said (private respondent) and as such, within the original and exclusive jurisdiction of the National Labor Relations Commission. ISSUE:

Whether the regular courts have jurisdiction over the case filed by the petitioner.

RULING:

YES. The regular courts have jurisdiction over the case filed by the petitioner.

The trial court should not have held itself without jurisdiction over Civil Case No. 92-2486. It is true that the loan and cash advances sought to be recovered by petitioner were contracted by private respondent Romana Lanchinebre while she was still in the employ of petitioner. Nonetheless, it does not follow that Article 217 of the Labor Code covers their relationship. 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. Although a controversy is between an employer and an employee, the Labor Arbiters have no jurisdiction if the Labor Code is not involved. Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolutions of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. Civil Case No. 92-2486 is a simple collection of a sum of money brought by petitioner, as creditor, against private respondent Romana Lanchinebre, as debtor. The fact that they were employer and employee at the time of the transaction does not negate the civil jurisdiction of the trial court. The case does not involve adjudication of a labor dispute but recovery of a sum of money based on our civil laws on obligation and contract.

EDUARDO G. EVIOTA vs CA G.R. No. 152121. July 29, 2003 Facts: Sometime on January 26, 1998, the respondent Standard Chartered Bank and petitioner Eduardo G. Eviota executed a contract of employment under which the petitioner was employed by the respondent bank as Compensation and Benefits Manager, VP (M21). However, the petitioner abruptly resigned from the respondent bank barely a month after his employment and rejoined his former employer. On June 19, 1998, the respondent bank filed a complaint against the petitioner with the RTC. That Eviota indicated his conformity with the Banks Offer of Employment by signing a written copy of such in an Employment Contract and the Bank promptly proceeded to carry out the terms of the Employment Contract as well as to facilitate his integration into the workforce. The Bank: (a) renovated and refurbished the room which was to serve as Eviotas office; (b) purchased a 1998 Honda CR-V for Eviotas use; (c) purchased a desktop IBM computer for Eviotas use; (d) arranged the takeout of Eviotas loans with Eviotas former employer; (e) released Eviotas signing bonus in the net amount of P300,000.00; (f) booked Eviotas participation in a Singapore conference on Y2K project scheduled on March 10 and 11, 1998; and (g) introduced Eviota to the local and regional staff and officers of the Bank via personal introductions and electronic mail. In addition, the Bank allowed Eviota access to certain sensitive and confidential information and documents concerning the Banks operations. After leading the Bank to believe that he had come to stay, Eviota suddenly resigned his employment with immediate effect to re-join his previous employer. His resignation, which did not comply with the 30-day prior notice rule under the law and under the Employment Contract, was so unexpected that it disrupted plans already in the pipeline. Standard alleged that assuming arguendo that Eviota had the right to terminate his employment with the Bank for no reason, the manner in and circumstances under which he exercised the same are clearly abusive and contrary to the rules governing human relations, governed by the Civil Code. Further, Standard alleged that petitioner also violated the Labor Code when he terminated his employment without one (1) notice in advance. This stipulation was also provided in the employment contract of Eviota with Standard, which would also constitute breach of contract.

ISSUE:

Which court has the jurisdiction of the case? RULING: The SC held that the RTC has jurisdiction. Case law has it that the nature of an action and the subject matter thereof, as well as which court has jurisdiction over the same, are determined by the material allegations of the complaint and the reliefs prayed for in relation to the law involved. Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a “reasonable causal connection” between the claim asserted and employee-employer relation. Absent such a link, the complaint will be cognizable by the regular courts of justice. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court. The jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code of the Philippines, other labor laws or their collective bargaining agreements. Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations. In this case, the private respondent’s first cause of action for damages is anchored on the petitioner’s employment of deceit and of making the private respondent believe that he would fulfill his obligation under the employment contract with assiduousness and earnestness. The petitioner volte face when, without the requisite thirty-day notice under the contract and the Labor Code of the Philippines, as amended, he abandoned his office and rejoined his former employer; thus, forcing the private respondent to hire a replacement. The private respondent was left in a lurch, and its corporate plans and program in jeopardy and disarray. Moreover, the petitioner took off with the private respondent’s computer diskette, papers and documents containing confidential information on employee compensation and other bank matters. On its second cause of action, the petitioner simply walked away from his employment with the private respondent sans any written notice, to the prejudice of the private respondent, its banking operations and the conduct of its business. Anent its third cause of action, the petitioner made false and derogatory statements that the private respondent reneged on its obligations under their contract of employment; thus, depicting the private respondent as unworthy of trust. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute. It is evident that the causes of action of the private respondent against the petitioner do not involve the provisions of the Labor Code of the Philippines and other labor laws but the New Civil Code. Thus, the said causes of action are intrinsically civil. There is no causal relationship between the causes of action of the private respondent’s causes of action against the petitioner and their employeremployee relationship. The fact that the private respondent was the erstwhile employer of the petitioner under an existing employment contract before the latter abandoned his employment is merely incidental.

3.5 Corporate Officer or Employee?

G.R. No. 141093. February 20, 2001 PRUDENTIAL BANK and TRUST COMPANY, petitioner, vs. CLARITA T. REYES, respondent. Doctrine: An employee is regular because of the nature of the work and the length of service, not because of the mode or even the reason for hiring him. Facts: Clarita Tan Reyes filed a complaint for illegal suspension and illegal dismissal against Prudential Bank and Trust Company (the Bank) before the labor arbiter. Prior to her dismissal, private respondent Reyes held the position of Assistant Vice President in the foreign department of the Bank, tasked with the duties, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. Prudential Bank: Reyes’ ground of dismissal was when she deliberately held the clearing of Checks of Hongkong and Shanghai Banking Corporation in the total amount of US$224,650.00 by giving instructions to the collection clerk not to send the checks for collection. And when the said checks were finally sent to clearing after the lapse of 15 months from receipt of said checks, they were returned for the reason ‘Account closed.’ To date, the value of said checks have not been paid. Labor Arbiter: found that the dismissal of Reyes was without factual and legal basis. It ordered the respondent bank to pay her back wages for three (3) years, and pay her separation pay. Issue: Whether or not the amount of backwages and separation pay was awarded properly

Held: Yes because contrary to the the bank’s contention that she merely holds an elective position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. The Supreme Court held that an employee is regular because of the nature of the work and the length of service, not because of the mode or even the reason for hiring him. It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position she rose to become supervisor. Then in 1982, she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19, 1991. The bank’s contention that she merely holds an elective position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. As earlier stated, she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. As Assistant Vice President of the Foreign Department of the Bank, she is tasked, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. It has been stated that “the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. Additionally, “an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them.” As Assistant Vice-President of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. In fine, as a regular employee, she is entitled to security of tenure; that is, her services may be terminated only for a just or authorized cause. This being in truth a case of illegal dismissal, it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but, as will be discussed later, to no avail.

G.R. No. 127598 February 22, 2000 MANILA ELECTRIC COMPANY, petitioner, vs. Hon. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES and WORKERS ASSOCIATION (MEWA), respondent. RESOLUTION YNARES-SANTIAGO, J.: |MISHING ALABA| Facts: In January 27, 1999, the SC promulgated a decision directing the parties to execute a CBA which provided for increase in wages and retroactive application of arbitral awards. Meralco filed this petition arguing that an increase in wages will result in higher rates of electricity which will be passed to the consumers. The union asked for reconsideration in so far as the 1999 decision denied them the benefit of being granted loans to set up a cooperative. The union also questioned the right given to Mercalco in contracting out jobs without need to consult the union. Issue: W/N contracting out of services is an exercise of management prerogative Ruling: YES The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or more has been rejected by the Court. Suffice it to say that the employer is allowed to contract out services for six months or more. However, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of employees, and in treating the latter, the employer should see to it that its employees are at least properly informed of its decision or modes of action in order to attain a harmonious labor-management relationship and enlighten the workers concerning their rights. Hiring of workers is within the employer's inherent freedom to regulate and is a valid exercise of its management prerogative subject only to special laws and agreements on the matter and the fair standards of justice. The management cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. It has the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what management decides. Contracting out of services is an exercise of business judgment or management prerogative. Absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. As mentioned in the January 27, 1999 Decision, the law already sufficiently regulates this matter. Jurisprudence also provides adequate limitations, such that the employer must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious or arbitrary actions. These are matters that may be categorically determined only when an actual suit on the matter arises. OTHER ISSUES: Issue: Whether or not increase in wages will result in higher prices of electricity Ruling: This is a non sequitur. The Court cannot be threatened with such a misleading argument. An increase in the prices of electric current needs the approval of the appropriate regulatory government agency and does not automatically result from a mere increase in the wages of petitioner's employees. Issue on the retroactivity of the CBA arbitral award

CBA Arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees of their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA. · Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent [Secretary of Labor] is deemed vested with plenary and discretionary powers to determine the effectivity thereof. Issue on the allegation concerning the grant of loan to a cooperative. · There is no merit in the union's claim that it is no different from housing loans granted by the employer. The award of loans for housing is justified because it pertains to a basic necessity of life. It is part of a privilege recognized by the employer and allowed by law. · In contrast, providing seed money for the establishment of the employee's cooperative is a matter in which the employer has no business interest or legal obligation. Courts should not be utilized as a tool to compel any person to grant loans to another nor to force parties to undertake an obligation without justification. On the contrary, it is the government that has the obligation to render financial assistance to cooperatives and the Cooperative Code does not make it an obligation of the employer or any private individual. G.R. No. 160506 June 6, 2011 ALIVIADO et. al. vs. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC., Respondents. DEL CASTILLO, J.: |MISHING ALABA| Principle: Labor laws expressly prohibit "labor-only" contracting. To prevent its circumvention, the Labor Code establishes an employeremployee relationship between the employer and the employees of the ‘labor-only’ contractor. Facts: Petitioners worked as merchandisers of P&G from various dates. 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. 5

6

7

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. 8

9

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. 10

11

Rulings of the LA, NLRC and CA [same]: There was no employer-employee relationship between petitioners and P&G. 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. Promm-Gem and SAPS were legitimate independent job contractors. CONTENTIONS: Petitioners assert that Promm-Gem and SAPS are labor-only contractors providing services of manpower to their client. They claim that the contractors have neither substantial capital nor tools and equipment to undertake independent labor contracting. Petitioners insist that since they had been engaged to perform activities which are necessary or desirable in the usual business or trade of P&G, then they are its regular employees. On the other hand, P&G argues that there is no employment relationship between it and petitioners. It was Promm-Gem or SAPS that (1) selected petitioners and engaged their services; (2) paid their salaries; (3) wielded the power of dismissal; and (4) had the power of control over their conduct of work. 20

P&G also contends that the Labor Code neither defines nor limits which services or activities may be validly outsourced. Thus, an employer can farm out any of its activities to an independent contractor, regardless of whether such activity is peripheral or core in nature. It insists that the determination of whether to engage the services of a job contractor or to engage in direct hiring is within the ambit of management prerogative. Issues 1. Whether P&G is the employer of petitioners - YES 2. Whether petitioners were illegally dismissed - YES 3. Whether petitioners are entitled for payment of actual, moral and exemplary damages as well as litigation costs and attorney’s fees.[see ruling] RULING: The petition has merit. 1 Issue: Labor-only contracting and job contracting st

In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (Emphasis and underscoring supplied.) To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or 25

ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. (Underscoring supplied) Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor. "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. 40

Consequently, the following petitioners, having been recruited and supplied by SAPS -- which engaged in labor-only contracting -- are considered as the employees of P&G and Promm-Gem. 41

2 Issue: Termination of services nd

In cases of regular employment, the employer shall not terminate the services of an employee except for a just or authorized cause. 43

44

In the instant case, the termination letters given by Promm-Gem to its employees uniformly specified the cause of dismissal as grave misconduct and breach of trust. Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. 46

47

It is equally important and required that the act or conduct must have been performed with wrongful intent. In the instant case, petitionersemployees of Promm-Gem may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such, we find them guilty of only simple misconduct for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis for dismissing an employee. Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. 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. 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. 48

All told, we find no valid cause for the dismissal of petitioners-employees of Promm-Gem. While Promm-Gem had complied with the procedural aspect of due process in terminating the employment of petitioners-employees, i.e., giving two notices and in between such notices, an opportunity for the employees to answer and rebut the charges against them, it failed to comply with the substantive aspect of due process as the acts complained of neither constitute serious misconduct nor breach of trust. Hence, the dismissal is illegal. It must be emphasized that the onus probandi to prove the lawfulness of the dismissal rests with the employer. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause. In the instant case, P&G failed to discharge the burden of proving the legality and validity of the dismissals of those petitioners who are considered its employees. Hence, the dismissals necessarily were not justified and are therefore illegal. 53

54

3 issue: Damages With regard to the employees of Promm-Gem, there being no evidence of bad faith, fraud or any oppressive act on the part of the latter, we find no support for the award of damages. rd

As for P&G, the records show that it dismissed its employees through SAPS in a manner oppressive to labor. The sudden and peremptory barring of the concerned petitioners from work, and from admission to the work place, after just a one-day verbal notice, and for no valid cause bellows oppression and utter disregard of the right to due process of the concerned petitioners. Hence, an award of moral damages is called for. Attorney’s fees may likewise be awarded to the concerned petitioners who were illegally dismissed in bad faith and were compelled to litigate or incur expenses to protect their rights by reason of the oppressive acts of P&G. 56

Lastly, under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, inclusive of allowances, and other benefits or their monetary equivalent from the time the compensation was withheld up to the time of actual reinstatement. Hence, all the petitioners, having been illegally dismissed are entitled to reinstatement without loss of seniority rights and with full back wages and other benefits from the time of their illegal dismissal up to the time of their actual reinstatement. 57