LAW 113: LABOR STANDARDS LAW__________________________________________________________________________________________________________________

INTRODUCTION TO LABOR LAW1. LABOR: Concept

a. In its general sense: Labor -- work; toil; service; continued exertion, of the more onerous and inferior kind, usually and chiefly consisting in the protracted expenditure of muscular force, adapted to the accomplishment of specific useful ends (Black’s Law Dictionary)

1) Labor of the poor is the exercise of their skill and the employment of their strength in the culture of land and the workshops to trade (Pope Leo XIII, Rerum Novarum)

2) Labor is the physical toil although it does not necessarily exclude the application of skill, thus there is skilled and unskilled labor

i. Skill is the familiar knowledge of any art or science, united with readiness and dexterity in execution or performance or in the application of the art or sciences to practical purposes

b. In its technical sense: Labor as the workforce

1) “Worker” means any member of the labor force, whether employed or unemployed (Art. 13(a))

2. LABOR LAW

a. DefinitionLabor law consists of statutes, regulations and jurisprudence governing the relations between capital and labor, by providing for certain employment standards and a legal framework for negotiating, adjusting, and administering those standards and other incidents of employment (Azucena)

b. Inherent inequality in the employer-employee relations: Labor law does not impair the equality of rights. There is labor legislation to level the playing field/equalize opportunities, because capital already has the upper hand/full control of resources – that’s why worker’s rights should be protected.

LEGEND HOTEL (MANILA) v HERNANI REALUYO (July 18. 2012; J. Del Castillo)

SUMMARY: Hernani Realuyo (a.k.a. Joey Roa) worked as a pianist at Legend Hotel’s Tanglaw Restaurant, three to six times a week from 7-10 pm. Legend Hotel discontinued his services due to cost-cutting measures. Roa filed a complaint for unlawful termination and unfair labor practice. Legend Hotel averred there was no employer-employee relationship between the two of them, as Realuyo was not an employee but a mere talent. The Court held that there was employer-employee

relationship, as all the elements---power of selection, power of dismissal, payment of wages, and power of control--were satisfied. The Court also ruled that the retrenchment was not validly justified.

DOCTRINE: The law affords protection to an employee, and does not countenance any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer utilizes the stipulation to deprive the employee of his security of tenure. The inequality that characterizes employer-employee relationship generally tips the scales in favor of the employer, such that the employee is often scarcely provided real and better options.

c. Justification1) Social Justice

1987 Constitution, Art. II, Section 10. The State shall promote social justice in all phases of national development.

1987 Constitution, Art. XIII, Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.

1987 Constitution, Art. XIII, Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.

1987 Constitution, Art. XIII, Section 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 to investments, and to expansion and growth.

i. When to/not to tilt the scales of justice as a measure of equity and compassionate social justice

JEROME M. DAABAY v COCA-COLA BOTTLERS PHIL., INC. (August 19. 2013; J. Reyes)

SUMMARY: Jerome Daabay, a Sales Logistics Checker, was dismissed from work due to pilferage, serious misconduct, and loss of benefits. He filed a labor complaint against the Coca-Cola, and the NLRC, albeit finding Daabay at fault, granted him retirement benefits. Coca-Cola appealed the said award to the CA, who ruled that the award of retirement benefits lacked legal basis. The SC affirmed the CA and ruled that Daabay was not entitled to retirement benefits.

DOCTRINE: Retirement benefits, which is akin to financial assistance or separation pay, shall only be allowed as a measure of equity and social justice where instances show that the employee is validly dismissed for causes other than serious misconduct or those reflecting his moral character.

While there is a need “to humanize the severe effects of dismissal and tilt the scale of justice in favor of labor as a measure of equity and compassionate social justice”, dismissal due to serious misconduct or moral turpitude does not entitle the employee to such benefits. To allow in the contrary will have the effect of rewarding, rather than punishing the erring employee for his offense. This kind of misplaced compassion will not do labor any good as it will encourage infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.

MA. WENELITA TIRAZONA v PHIL. EDS TECHNO-SERVICE INC. (January 20. 2009; J. Del Castillo)

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 2nd 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. Petitioner is not entitled to the award of separation pay for violating the trust and confidence reposed in her by her employer

DOCTRINE: The general rule is that an employee who has been dismissed for any of the just causes enumerated under Art. 282 of the Labor Code is not entitled to separation pay. Only unjustly dismissed employees are entitled to retirement benefits and other privileges including reinstatement and backwages.

An exception, however, is that separation pay or other financial assistance may be allowed to an employee dismissed for just causes on the basis of equity. This 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.

HA YUAN RESTAURANT v NLRC and JUVY SORIA (January 27. 2006; J. Austria Martinez)

SUMMARY: Respondent Juvy Soria was dismissed from her work after assaulting her co-worker. NLRC rendered a decision awarding her separation pay, which the CA affirmed. SC deleted the award of separation pay because her cause of dismissal amounted to serious misconduct.

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. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. 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.

2) Foundation or basis: Police power of the state

ST. LUKE’s MEDICAL CENTER EMPLOYEE’S ASSOCIATION-AFW and MARIBEL SANTOS v NLRC (May 7. 2007; J. Azcuna)

SUMMARY: Lacking the certificate of registration required to work as a radiology technologist, Maribel Santos was dismissed from her job at St. Luke's. Contrary to Santos' claim of illegal dismissal, her termination from her job was a valid and just exercise of the State's police power to regulate the health profession.

DOCTRINE: While the right of the workers is guaranteed by the Constitution, its exercise may be reasonably regulated pursuant to the police power of the State to safeguard health, morals, peace, education, order, safety, and the general welfare of the people. It should be noted that the police power embraces the power to prescribe regulations to promote the health, morals, education, good order, safety, or general welfare of the people. The State is therefore justified in prescribing specific requirements to certain professions connected with the health and safety of its citizens.

3) Ultimate goal: Industrial PeaceArticle XIII, Sec. 3 (par. 3). supra

CALALANG v WILLIAMS (December 2, 1940; J. Laurel)

SUMMARY: Rules and regulations regarding the traffic situation in Manila were promulgated by the Public Works and Communications Department, pursuant to the authorization given by CA 548. Calalang contends that this is unconstitutional and that such rules do not promote social justice.

DOCTRINE: Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all people, the adoption by the Government of measures calculated to insure

economic stability of all the competent elements of society, through the maintenance of proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex.

4) Management prerogative/state regulation

Art. II, Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.

Art. XIII, Section 3 (pars. 3 and 4). Supra

ST. LUKE’S MEDICAL CENTER, INC. v MA. THERESA SANCHEZ (March 11. 2015;)

SUMMARY: Maria Theresa Sanchez, a nurse, was caught leaving with a pouch of medical supplies. In a letter to the security office, she admitted to the deed and apologized. However, she eventually averred that the medical supplies were the excess stocks from the medication drawers of discharged patients which the staff members save as backup in case of emergencies, and this practice has been tolerated by the hospital. She was preventively suspended, and eventually she was terminated. The Court ruled that there was a valid dismissal due to her willful disregard and disobedience of the hospital’s Code of Discipline.

DOCTRINE: Employers have the right to regulate all aspect of employment. This ‘management prerogative’, includes the right to prescribe reasonable rules and regulations necessary or proper for conduct of its business or concern, to provide certain disciplinary measures to implement said rules, and to assure that the same would be complied with. Employees, in turn, have the corollary duty to obey all reasonable rules, orders, and instructions of the employer; and willful or intentional disobedience thereto justifies termination of the contract of service and dismissal of employee.

ERNESTO YMBONG v ABS-CBN BROADCASTING CORP. (March 7, 2012;)

SUMMARY: ABS-CBN had a policy that employees who run for office must resign and those who actively campaign must take a leave of absence. Ymbong said he was only going to actively campaign for someone so he only took a leave of absence. Turns out he ran for councilor and when he lost, he wanted his job back. ABS-CBN had already considered him resigned but he insists he had been illegally dismissed. SC ruled Ymbong is considered to have resigned when he ran for office, and company policy is valid because it was the management’s prerogative to aim for a politically independent character.

DOCTRINE: Management prerogative is valid even if they appear to limit the rights of employees as long as there is no showing that management prerogative was exercised in a manner contrary to law. Even as the law is solicitous of the welfare og

the employees, it must also protect he right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

NEGROS SLASHERS, INC. v ALVIN TENG (February 22, 2012;)

SUMMARY: Alvin Teng, a basketball player, was illegally dismissed from his team after its management decided that his act of untying his shoelace and not showing up for a basketball game, when the coaching staff pulled him for a below average performance, constituted serious misconduct and thus are valid grounds for dismissal. However, the SC ruled that such isolated acts of foolishness do not justify the extreme penalty of dismissal from service. Other forms of disciplinary action could have been resorted to.

DOCTRINE: While the employer has the inherent right to discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise of its police power. In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer.

i. Social Justice vis-à-vis Management Prerogative

COCA-COLA EXPORT CORP. v CLARITA P. GACAYNA (June 22. 2011;)

SUMMARY: Gacayan was terminated from employment by Coca-Cola for altering three receipts she submitted for reimbursement of her meal costs. The Court held that there was a valid dismissal, as Gacayan’s act of submitting fraudulent items of expense adversely reflected on her integrity and honesty, which is an ample basis for petitioner-company to lose its trust and confidence in her.

DOCTRINE: While the Constitution is committed to the policy of social justice and the protection to the working class, it should not be expected that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.

ii. Limitation on Management Prerogative

NATHANIEL DONGON v RAPID MOVERS ad FORWARDERS CO., INC. (August 28, 2013;)

SUMMARY: Dongon, a truck helper leadman for Rapid Movers, lebt his ID to their driver Villaluz so they can enter the warehouse and get the delivery. Employer discovered it and Dongon was dismissed. The Court ruled that the dismissal was illegal, stating that there was no willful disregard and disobedience of company rules. Dongon’s conduct was not willful as it was not aimed to beneft him; Rapid Movers was not prejudiced but rather benefited as Dongon’s conduct was to facilitate the loading for the distribution to Rapid Mover’s clients.

DOCTRINE: It is true that an employer is given a wide latitude of discretion in managing its own affairs. But the exercise of a management prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker. The management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor

5) Specific Rights of the Employer

INTERNATIONAL SCHOOL MANILA v ISAE and EVANGELINE SANTOS (February 5, 2014; J. Leonardo-De Cstro)

SUMMARY: Santos was a full time Spanish language teacher since 1978. In 1993, she was given Filipino classes to teach. However, her evaluation showed unsatisfactory performance, so, she was made to undergo a Professional Growth Plan (PGP). Despite this, she failed to meet the criteria for improvement in the PGP and showed substandard performance, thus, her employment was terminated.

DOCTRINE: Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Gross inefficiency is closely related to “gross neglect”, for both involve specific acts of omission on the part of the employee resulting in damage to the employer or to his business.

6) Balancing of InterestsArt. XIII, Section 3 (par. 3 and 4). supra

ELIZABETH GAGUI v SIMEON DEJERO and TEODORO PERMEJO (October 23, 2012; C.J. Sereno)

SUMMARY: The May 1998 decision rendered PRO Agency and Abdul liable to pay the respondents. Due to unsatisfied writs of execution, respondents tried to implead other officers, including Gagui and they were able to garnish from her bank deposit and to levy 2 of her lands. The Court held that she cannot be held solidarily liable since there was no finding that she was remiss in directing the affairs of the company, resulting to the offense. Moreover, the May 1998 decision did not include her name.

DOCTRINE: While labor laws should be construed liberally in favor of labor, we must be able to balance this with the equally important right of petitioner to due process.

HOTEL ENTERPRISES OF THE PHILIPPINES v SAMAHAN NG MGA MANGGAGAWA SA HYATT (June 5, 2009;)

SUMMARY: The Respondent Union filed for unfair labor practices against the Petitioner HEPI because of the latter’s downsizing schemes. The Court held that the Petitioner’s downsizing schemes and subsequent actions were valid business

practices in order to keep the company alive, despite the subsequent termination of its employees.

DOCTRINE: The Constitution affords full protection to labor, but the policy is not to be blindly followed at the expense of capital. Always, the interests of both sides must be balanced in light of the evidence adduced and the peculiar circumstances surrounding each case.

3. CLASSIFICATION

a. Labor Standards – that which sets out the least or basic terms, conditions, and benefits of employment that employers must provide or comply with and to which employees are entitled as a matter of legal right

-- the minimum requirements prescribed by existing rules, laws, and regulations relating to wages, hours of work, cost-of-living allowance, and other monetary and welfare benefits, including occupational, safety, and health standards

b. Labor Relations – that which defines the status, rights, and duties, and the institutional mechanisms that govern the individual and collective interactions of employers, employees or their representatives

c. Welfare Legislation – also social legislation; those laws that provide particular kinds of protection or benefits to society or segments thereof in the furtherance of social justice.

4. BASIS

a. Economic BasisArt. II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.

b. Legal Basis

1) 1987 Constitution: State Mandate to Afford Full Protection to Labor/ to guarantee worker’s seven (7) cardinal rights1987 Constitution, Art. II, Section 5. The maintenance of peace and order, the protection of life, liberty, and property, and promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy.

1987 Constitution, Art. II, Section 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.

1987 Constitution, Art. II, Section 10. supra

1987 Constitution, Art. II, Section 11. The State values the dignity of every human person and guarantees full respect for human rights.

1987 Constitution, Art. II, Section 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.

1987 Constitution, Art. II, Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men.

1987 Constitution, Art. II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.

1987 Constitution, Art, II, Section 20. supra

1987 Constitution, Art. III, Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

1987 Constitution, Art. III, Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances.

1987 Constitution, Art. III, Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.

1987 Constitution, Art. III, Section 18 (2). No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted.

1987 Constitution, Art. XIII, Section 1. supra

1987 Constitution, Art. XIII, Section 2. supra

1987 Constitution, Art. XIII, Section 3. supra

1987 Constitution, Art. XIII, Section 14. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.

1935 Constitution, Art. XIII, SEC. 6. The State shall afford protection to labor, especially to working women and minors, and shall regulate the relations between landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration.

1973 Constitution, Art. II, SEC. 6. The State shall promote social justice to ensure the dignity, welfare, and security of all the people. Towards this end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits.

1973 Constitution, Art. II, SEC. 9. The State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration.

DIAMOND TAXI v FELIPE LLAMAS (March 12, 2014;)

SUMMARY: Diamond Taxi dismissed Llamas who is a taxi cab driver. Llamas filed a complaint for illegal dismissal before the Labor Arbiter which was dismissed. The case was directed to the NLRC which denied the complaint for it lacked the certification of non-forum shopping. The SC said NLRC committed a grave abuse of discretion.

DOCTRINE: The dismissal of an employee’s appeal on purely technical ground is inconsistent with the constitutional mandate on protection to labor. Under the Constitution and the Labor Code, the State is bound to protect labor and assure the rights of workers to security of tenure,--tenurial security being a preferred constitutional right that, under these fundamental guidelines, technical infirmities in labor pleadings cannot defeat.

i. Entitlement of all Filipinos to Constitutional Protection

SAUDI ARABIA AIRLINES AND BRENDA BETIA v MA. JOPETTE M. REBESENCIO (January 14, 2015;)

SUMMARY: Four flight attendants were asked to resign from Saudi Arabia Airlines upon getting pregnant. They filed for an illegal dismissal complaint. Petitioner airlines ask to dismiss the complaint primarily on the grounds that the Philippines does not have jurisdiction over the case. They invoke forum non conveniens. The Court held that forum non conveniens is different from the question of the choice of the governing law. The Court also held that they were constructively dismissed as they were given the option between executing their resignation or forfeiting their benefits, and that Saudia’s policy is glaringly discriminating.

DOCTRINE: Art. II, Section 14 of the 1987 Constitution provides that “[t]he State…shall ensure the fundamental equality before the law of women and men.” Art. III, Sec. 1 states that “[n]o person shall…be denied the equal protection of the laws. This does not only mean that the Philippines shall not countenance nor lend legal recognition and approbation to measures that discriminate on the basis of one’s being male or female. It imposes an obligation to actively engage in securing the fundamental equality of men and women. This is a point so basic and central that all discussions and pronouncements, regardless of whatever averments there may be of foreign law, must proceed form this premise.

Apart from the constitutional policy on the fundamental equality before the law of men and women, it is settled that contracts relating to labor and employment are impressed with public interest. The otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship.

PNB v CABANSAG (June 21, 2005; J. Panganiban)

SUMMARY: While in Singapore on a tourist status, Cabansag was hired as a Credit Officer at the Singapore branch of PNB. She filed a case with the Labor Arbiter after she was suddenly dismissed from her job. PNB argues that Cabansag was “locally hired” and “totally governed by and subject to the laws, common practices and customs of Singapore”—i.e. that she is beyond the jurisdiction of Philippine laws and of the NLRC.

DOCTRINE: Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers.

ii. Overarching Right to Human Dignity1987 Constitution, Art. II, Section 11. supra

1987 Constitution, Art. XIII, Section 1. supra

iii. Right to Security of TenureLC, Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.

1987 Constitution, Art. XIII, Section 3 (par. 2). supra

INNODATA PHILIPPINES, INC. v QUEJADA-LOPEZ (October 12, 2006; C.J. Panganiban)

SUMMARY: Estrella Natividad and Jocelyn Quejada, former formatters of Innodata Philippines filed an action for illegal dismissal, alleging that the contracts they entered into, which stipulates an expiration of one year, are void, following the ruling in Villanueva v NLRC and Servidad v NLRC, where the Court ruled that the nature of employment in Innodata is regular and not on a fixed term basis. The Court ruled that the said contracts are void and that Natividad and Quejada are

regular employees, their work being necessary and desirable in the usual business of the employer.

DOCTRINE: The Court recognizes the validity of fixed-term employment contracts in a number of cases, but when the circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck down for being contrary to law, morals, good customs, public order or public policy.

Contract of employment is impressed with public interest. 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

iv. Right to Humane Conditions at workLC Art. 3. supra

1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS v HON. QUISUMBING (June 1, 2000; J. Kapunan)

SUMMARY: Respondent School hires both foreign and local teachers, with the former enjoying higher wages, among other benefits. Petitioner, a labor union and collective bargaining representative of all faculty members of said school, contend it is discriminatory for foreign-hires to be paid higher wages than local-hires, notwithstanding certain differences in their circumstances. A question also arose as to whether or not both the foreign- and local-hires belonged to the same bargaining unit. The Court found no justification for the point-hire classification used by the school, stating that the practice of according higher salaries to foreign-hires contravenes public policy. Nonetheless, the Court also ruled that foreign-hires should not belong in the same bargaining unit as the local-hires, as such will not assure either group the exercise and enjoyment of their respective collective bargaining rights.

DOCTRINE: That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The “humane conditions of work” mandate in the Constitution extends to the manner by which employers treat their employees. Similar to the constitutional mandate to promote “equality of employment opportunities for all,” the LC provides that the State shall “ensure equal work opportunities regardless of sex, race or creed.”

v. Right to a living wage1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra

1987 Constitution, Art. XV, Sec. 1. The State recognizes the Filipino family as the foundation of the nation. Accordingly, it shall strengthen its solidarity and actively promote its total development.

1987 Constitution, Art. XV, Sec. 3. The State shall defend:(3) The right of the family to a family living wage and income

vi. Right to participate in policy and decision-making processes affecting their rights and benefits1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra

vii. Three Rights pertinent to Labor relations: (a) Rights to Self-organization; (b) Collective Bargaining and Negotiations; and (c) Peaceful concerted activities including the right to strike in accordance with law1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra

2) Civil Code

i. Contract as the law between the parties/freedom to contract

MAYNILAD WATER SUPERVISORS ASSOCIATION v MAYNILAD WATER SERVICES (November 27, 2013; )

SUMMARY: Some members of MWSA seek payment of COLA from their new employer Maynilad, claiming that they were receiving it when they were still employed in MWSS. However, in the new employment contract between such members and Maynilad, there was no stipulation of payment of COLA. The Court held that Maynilad is not bound by the agreement between MWSA members and the MWSS. The employment contracts of the MWSA members with MWSS were terminated prior to their employment with Maynilad. A new employment contract governed the employment of the MWSA members, even though they might be performing the same functions.

DOCTRINE: The rule is that a contract is the law between the parties, and courts have no choice but to enforce such contract so long as it is not contrary to law, morals, good customs or public policy. Otherwise, courts would be interfering with the freedom of contract of the parties. Simply put, courts cannot stipulate for the parties or amend the latter’s agreement, for to do so would be to alter the real intention of the contracting parties when the contrary function of courts is to give force and effect to the intention of the parties

ii. Relations between labor and capital; not merely contractual/impressed with public interest

CC, Art. 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.

CC Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public

CC, Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

CC Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

CC Art. 21. Any person who wilfully causes loss or injury to another in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

SEE AGAIN: INNODATA PHILIPPINES INC. v QUEJADA-LOPEZ

3) Labor Code (PD No. 442) and Omnibus Rules Implementing the Labor Code

4) International Conventions, Recommendations1987 Constitution, Art. II, Sec. 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations.

SEE AGAIN: ISAE v QUISUMBING

5. THE LABOR CODE OF THE PHILIPPINES

a. Brief History 1968: the writing of the Labor Code began under the leadership of then Minister of

Labor, Mr. Blas F. Ople (now called the “Father of the Labor Code)o Objective:

to consolidate the at least sixty pieces of existing labor laws which were passed during and after Commonwealth

Reorient labor legislation to the needs of economic development and justice, in line with the prescribed standards of the Comprehensive Employment Strategy Mission of the International Labor Organization (elevation of real wages, incomes, and living standards as a function of employment generation and economic expansion)

In creating the Code, contributions were gathered from different bureaus of the Department of Labor, the Department of Industry and the Board of Investments, the UP Law Center, Integrated Bar of the Philippines, Personnel Management Association of the Philippines, National Economic and Development Authority, and various trade union centers.

The Labor Code went into seven times of drafting and redrafting April 28, 1973: National Tripartite Congress satisfied the Code, and it was sent to the

President on May 1, 1973, where it underwent to further revisions May 1, 1974: the Labor Code was signed into law as Presidential Decree 442.

b. Name of Decree

LC Art. 1. Name of Decree. This Decree shall be known as the "Labor Code of the Philippines".

c. Date of EffectivityLC Art. 2. Date of effectivity. This Code shall take effect six (6) months after its promulgation.

d. Declaration of Basic PolicyLC Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. Seven underlying Principles of the Labor Code (according to then Minister of Labor Blas

Ople)o Labor relations must be made both responsive and responsible to national

developmento Labor laws or labor relations during a period of national emergency must substitute

rationality for confrontation; therefore, strikes or lockouts should give way to the rational process of arbitration

o Laggard justice in the labor filed is injurious to the workers, the employers, and the public; labor justice can be made expeditious without sacrificing due process

o Manpower development and employment must be regarded as a major dimension of labor policy, for there can be no real equality of bargaining power under conditions of severe mass unemployment

o There is a global labor market available to qualified Filipinos, especially those who are unemployed or those whose employment is tantamount to unemployment because of their very little earnings

o Labor laws must command adequate resources and acquire a capable machinery for effective and sustained implementation; otherwise, they merely breed resentment not only of the workers but also of the employers. When labor laws cannot be enforced, both the employers and the workers are penalized, and only a corrupt few – those who are in charge of implementation – may get the reward they do not deserve

o There should be popular participation in national policy-making through what is now called tripartism

e. Construction in favor of laborLC Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

CC, Art. 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.

HOCHENG PHIL. CORP. v ANTONIO M. FARRALES (March 18, 2015;)

SUMMARY: Farrales mistakenly took a helmet belonging to another employee of the HPC. The company conducted a hearing, and later on issued a notice of termination to Farrales dismissing him for violation of the HPC Code of Discipline. LA and CA ruled that Farrales’ act did not amount to theft. SC then held that Farrales was not validly dismissed.

DOCTRINE: Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof shall be resolved in favor of labor. This is merely in keeping with the spirit of our Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in their favor

MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE v VIRGILIO M. CAGALAWAN (September 2012;)

SUMMARY: Virgilio Cagalawan was an acting head of the disconnection crew of MONESCO. He was transferred to a different sub-office as a disconnection crew member without any reason. He eventually stopped working and filed a complaint for constructive dismissal. MORESCO failed to file their position paper and LA ruled in favor of Virgilio. On appeal, NLRC admitted MORESCO’s evidence of certification showing the transfer was due to an alleged lack of crew members in the sub-office. SC held that the admission of evidence constituted grave abuse of discretion as there was no adequate explanation for the delay. Moreover, the evidence presented was not enough to justify that the transfer was a result of an exigency in MORESCO’s business interest.

DOCTRINE: When there is doubt between the evidence submitted by the employer and that submitted by the employee, the scales of justice must be tilted in favor of the employee. This is consistent with the rule that an employer’s cause could only succeed on the strength of its own evidence and not on the weakness of the employee’s evidence.

DANSART SECURITY FORCE AND ALLIED SERVICES CO. v SG JEAN O. BAGOY (July 2, 2010; J. Peralta)

SUMMARY: Jean Bagoy was a security guard employed by Dansart Security Force. She alleges that she was underpaid and did not receive overtime/holiday/13th mo. pays. Dansart offered certification from DOLE that from its records the petitioner has complied with the prescribed labor standards salaries and had paid due backwages it owed its employees. Dansart heavily relied on these certifications in making its case. SC denies Dansart, holding that the said certifications were insufficient to prove that Bagoy was paid of what is due to her.

DOCTRINE: Any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter.

Moreover, the burden of proving payment of monetary claims rests on the employer. This is because the pertinent documents such personnel files, payrolls,

records, remittances and other similar documents which show that overtime, differentials, service incentive leave, and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer.

f. Labor Arbiter’s jurisdiction over labor casesLC Art. 223. Jurisdiction of the Labor Arbiters and the Commission.

(a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. 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 the employer-employee relations;

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

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989)

RA 8042, Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to de filed by the recruitment/placement agency, as

provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within thirty (30) days from approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker’s salary, the worker shall be entitled to the full reimbursement if his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In case of a final and executory judgement against a foreign employer/principal, it shall be automatically disqualified, without further proceedings, from participating in the Philippine Overseas Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies the judgement award.

Noncompliance with the mandatory periods for resolutions of case provided under this section shall subject the responsible officials to any or all of the following penalties:

(a) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until the said official complies therewith;

(b) Suspension for not more than ninety (90) days; or(c) Dismissal from the service with disqualification to hold any appointive public

office for five (5) years.Provided, however, That the penalties herein provided shall be without prejudice to

any liability which any such official may have incured under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.

MA. MERCEDES L. BARBA v LICEO DE CAGAYAN UNIVERSITY (November 28, 2012; J. Villarama)

SUMMARY: Mercedes was a medical officer/school physician at LDCU who was granted a scholarship grant in exchange for her subsequent return and service to LDCU for a period of 10 years. After the College of Physical Therapy’s ceased operations due to a significant decline in enrollees, she was revoked of her deanship. She went on leave and upon return, she refused to work as professor in the College of Nursing, alleging that it was tantamount to a demotion and that teaching was not covered in the terms of her scholarship. Mercedes filed for illegal dismissal before the LA, and on appeal before the NLRC, LDCU alleges that she is a corporate officer under LDCU’s by-laws, therefore she is not subject under the jurisdiction of the NLRC. SC ruled that Mercedes was not a corporate officer, hence

the LA and the NLRC has jurisdiction over the case. The Court stated that LDCU confused Mercedes’ position as “College Dean” with a “College Director” which is a corporate officer under the by-laws.

DOCTRINE: The LA and NLRC only has jurisdiction over employees, not corporate officers. The Board may create appointive positions other than the position of corporate officers, but the persons occupying such positions are not considered as corporate officers within the meaning of Section 25 of the Corporation Code and are not empowered to exercise functions of the corporate officers.

MA. ANA TAMONTE & EDILBERTO TAMONTE v HONGKONG & SHANGHAI BANKING CORP., LTD. (August 17, 2011;)

SUMMARY: Ana Tamonte applied for a housing loan with HSBC SRP, secured by a mortgage contract and paid through automatic payroll deductions. She was eventually dismissed from service for participating in an illegal strike. The bank made demands for payment of her loan, but she defaulted in payment HSBC SRP foreclosed her mortgaged property. Ana argues that the default which led to the foreclsure was due to her dismissal from service. The Court held that she was already in default in the payment of their loan obligations. Respondents, in foreclosing the mortgaged property, were only enforcing the civil obligation of petitioners under their mortgage contract. There is no labor aspect involved in the enforcement of petitioners’ obligation.

DOCTRINE: Demand for payment of the employees’ amortizations or loans is not a labor, but a civil, dispute. It involves debtor-creditor relations, rather than employee-employer relations. It is not dependent on or related to any labor aspect under which a labor injunction can be issued. Whether or not the debtors remain as employees of the petitioner, there is no escape from their obligation to pay their outstanding accountabilities to the company.

LA DEL VALLE JR. AND SHERIFF v DY (April 16, 2009;)

SUMMARY: Deocariza filed a complaint for illegal dismissal and monetary benefits against Big Mak Burger, who then failed to file a position paper. Labor Arbiter Del Valle ruled in favor of Deocariza, and a writ of execution was issued to satisfy judgment. Big Mak and its owner, Dy then opposed, alleging they were not informed of said decision. LA continued with the execution, and property owned by Dy was levied. Dy filed a complaint for injunction and damages before the trial court, challenging the execution and LA’s finding that Deocariza was Dy’s employee. The Court ruled that the trial court has no jurisdiction over Dy’s case since its subject matter is an incident of a labor case. It is within the jurisdiction of the labor arbiter and not the trial court.

DOCTRINE: Regular courts have no jurisdiction to act on labor cases or various incidents arising therefrom, including the execution of decisions, awards or orders. Jurisdiction to try and adjudicate such cases pertain exclusively to the proper labor official concerned under the Department of Labor and Employment. To hold

otherwise is to sanction split jurisdiction which is obnoxious to the orderly administration of justice.

1) DOLE v NLRC jurisdictionLC Art. 128. Visitorial and enforcement power.

2. The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer’s records and premises at any time 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.

3. 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. 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. (As amended by Republic Act No. 7730, June 2, 1994). An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994)

4. The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the

employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation.

5. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article.

6. Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after appropriate administrative investigation, be subject to summary dismissal from the service.

7. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and maintain such employment records as may be necessary in aid of his visitorial and enforcement powers under this Code.

LC Art. 217. supra

KAPISANAN NG KABABAIHANG POTRERO INC. v REMEDIOS BARRENO (June 2013; J. Perlas-Bernabe)

SUMMARY: Respondents filed a Complaint before the DOLE for the violation of labor standards against KPKPI. During the pendency of this case, one of the respondents was fired, and so she filed another case, but this time for illegal dismissal at the NLRC. The NLRC and CA found respondents guilty of committing forum shopping. However, the SC held that they did not commit forum shopping because there is no identity of cases of action between the cases pending with the DOLE and NLRC.

DOCTRINE: Termination cases falls under the jurisdiction of the NLRC, while violation of labor standards law falls within the powers of the Secretary of Labor.

Thus, in cases where the complaint for violation of labor standard laws preceded the termination of the employee and the filing of the illegal dismissal case, it would not be consonance with justice to charge the complainants with engaging in forum shopping when the remedy available to them at the time their causes of action arose was to file separate cases before different fora.

2) Labor dispute v civil dispute

CECILIA T. MANESE v JOLLIBEE FOOD CORP. (Oct. 11, 2012; J. Peralta )

SUMMARY: Manese was one of the members of the team of employees of Jollibee who were tasked to open a new Jollibee branch. She owns a car loan with the company. Due to postponements in the opening of the branch, the pre-ordered

Chickenjoy deteriorated. To save themselves and the chicken from wastage, they tampered the product by washing them in soda. The management discovered and they were terminated due to loss of trust and confidence. They filed a complaint for illegal dismissal. The Court ruled there was valid dismissal. The Court also held that the car loan cannot be offset against the monetary benefits due to her.

DOCTRINE: Demand for payment of the employees’ amortizations or loans is not a labor, but a civil, dispute. It involves debtor-creditor relations, rather than employee-employer relations. The legal remedy of the company is civil in nature, arising from a contractual obligation.

MARIETTA PORTILLO v RUDOLF LIETZ (October 10, 2012; J. Perez)

SUMMARY: Portillo was hired by Lietz, Inc. under the “Goodwill clause”, or the condition that Portillo “will not engage in any other gainful employment by yourself or with any other company, either directly or indirectly without written consent of Lietz Inc. Portillo resigned from Lietz, stating that she intends to engage in a rice business. Eventually, she was hired by Ed Keller Phils, a competitor of Lietz. Portillo then demanded from Lietz her remaining salary, and Lietz admitted its liability but raised the defense that Portillo’s money claims should be offset against the her liability to Lietz due to her breach of the Goodwill Clause. The Court ruled that there can be no offset because the money claim for damages arise post-employment relations and is under the jurisdiction of regular courts.

DOCTRINE: Article 217 (4) does not automatically cover all disputes between an employer and employee. The money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship. If the cause of action was within the realm of Civil Law, such as tort, malicious prosecution, or breach of contract , jurisdiction over the controversy belongs to the regular courts.

3) Labor dispute v intra-corporate dispute

RAUL COSARE v BROADCOM ASIA (Feb. 5, 2014;)

SUMMARY: Cosare, an incorporator and AVP for Sales of Broadcom, was precluded from entering the premises of his office due to alleged inimical acts against the company. Cosare filed a case for illegal dismissal but it was contended that the case involved an intra-corporate dispute, because of his being an incorporator and AVP, and thus should be tried in the RTC instead of LA/NLRC. The Court held that Cosare was not a corporate officer, and thus, the dispute is not an intra-corporate one. Cosare’s being a stockholder also does not automatically make it an intra-corporate controversy.

DOCTRINE: Intra-corporate disputes are tried in the RTC and not the LA/NLRC. For a controversy to be intra-corporate, the controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation

An intra-corporate controversy involve any of the following relationships:1. the corporation, partnership or association and the public2. Between the corporation, partnership or association and the State in so far as its

franchise, permit or license to operate is concerned;3. Between the corporation, partnership or association and its stockholders,

partners, members or officers; and4. Among the stockholders, partners or associates, themselves

g. Technical Rules, not binding

MANILA ELECTRIC COMPANY v JAN CARLO GAL (Feb. 29., 2012; J. Brion)

SUMMARY: A probationary lineman was dismissed from work due to his involvement in a pilferage incident. He filed an illegal dismissal complaint, alleging that he was not directly involved in pilfering since he was at a distance and he assumed that there was nothing illegal going on as his superiors were involved. In his reply to the instant petition, he sought the dismissal of the case on procedural grounds. The Court relaxed the rules in the interest of justice and proceeded with the case’s merits. It ruled that the lineman was complicit in the commission, although not by direct participation, but by his inaction and failure to report the incident to the proper authorities. His dismissal was thus valid as he failed to qualify as a regular employee.

DOCTRINE: The application of technical rules of procedure in labor cases may be relaxed to serve the demands of substantial justice. It is in the spirit and intention of labor legislation that the NLRC and the labor arbiter use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, provided due process is duly observed.

Liberality in application of rules

INDUSTRIAL TIMBER CORP. v ABABON (Jan. 25, 2006; J. Ynares-Santiago)

SUMMARY: Petitioner ITC decided to shut down the plywood plant after several months of suspension of operation due to lack of raw materials used for milling operations, the expiration of the anti-pollution permit in April 1990, and the termination of the lease contract with IPGC in August 1990. This forced respondent Ababon to file a case against petitioner for illegal dismissal. In the course of the proceedings before the CA, ITC’s motion for reconsideration was denied for being three-days late. The Court found that CA erred in rigidly applying the procedural rules, thus doing greater injustice to ITC who will be ordered to reinstate its employees to their positions that no longer exist due to valid and legitimate cessation.

DOCTRINE: Ordinarily, once a judgment has become final and executory, it can no longer be disturbed, altered or modified. However, this principle admits of exceptions, as where facts and circumstances transpire which render its execution impossible or unjust and it therefore becomes necessary, ‘in the interest of justice, to direct its modification in order to harmonize the disposition with the prevailing circumstances.

Moreover, the NLRC may, in the exercise of its appellate powers, correct, amend, or waive any error, defect or irregularity whether in substance or in form.

The rules of evidence prevailing in courts of law or equity shall not be controlling as it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters to use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process.

1) Substantial compliance with the rules

MA. LIGAYA B. SANTOS v LITTON MILLS INC. (June 22, 2011; J. Del Castillo)

SUMMARY: A criminal complaint for robbery/extortion was filed by Litton Mills against Ma. Ligaya B. Santos after having been caught engaging in an unauthorized arrangement with a waste buyer. Her petition was dismissed by the CA for failure to comply with the provisions of Sec. 3, Rule 46 of the Rules of Court or the failure to indicate the complete addresses of the parties and of their counsels, and for failure to state in the Certificate of non-forum shopping that there were no other pending case between the parties. Santos filed an MR explaining that her petition subsequently complied. The SC set aside the resolution of the CA and ruled that there was substantial and subsequent compliance on the part of Santos.

DOCTRINE: Subsequent and substantial compliance may call for the relaxation of the rules of procedure. The Court has time and again relaxed the rigid application of the rules to offer full opportunity for parties to ventilate their causes and defenses in order to promote rather than frustrate the ends of justice.

2) Non-applicability of technical rules of procedure in labor cases, not a license to disregard right of employer against unreasonable claims

RICARDO N. AZUELO v ZAMECO II ELECTRIC COOPERATIVE. (October 22, 2014; J. Reyes)

SUMMARY: Ricardo Azuelo filed a complaint against his employer ZAMECO before the NLRC for illegal dismissal. Despite repeated extensions, Azuelo wasn’t able to file his position paper on time, prompting the LA to dismiss his complaint. Consequently, Azuelo filed another complaint with essentially the same facts, which was struck down by the NLRC and later affirmed by the CA. SC affirmed, stating that the unjustified failure to submit his position paper is akin to failure to prosecute his action, and that the dismissal of the case on failure to prosecute bars the filing of another complaint based on same allegations.

DOCTRINE: Indeed, technical rules of procedure are not binding in labor cases. The LAs and the NLRC are mandated to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of the law or procedure.

The non-applicability of technical rules of procedure in labor cases should not be made a license to disregard the rights of employers against unreasonable and/or unjustified claims.

The expeditious disposition of labor cases is mandated not only for the benefit of the employees but of the employers as well.

It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management. The intent is to balance the scale of justice; to put up the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer

h. Rule-making/LimitationLC Art. 5. Rules and regulations. The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation.

KAPISANANG MANGAGAWANG PINAGYAKAP v NLRC & FRANKLIN BAKER CO. OF THE PHILIPPINES (July 16, 1987; C.J. Teehankee)

SUMMARY: The Labor Arbiter ruled that the negotiated daily wage increase in the parties’ CBA (Jan 1977) could be deducted from what was later required by PD 1123 (May 1977), based on the IRR the Secretary of Labor issued. However, this provision in the IRR was struck down by the SC as unconstitutional in another case. The SC granted the petitioners’ appeal and emphasized that the rules on statutory construction should be followed in issuing the implementing rules and regulations.

DOCTRINE: When the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

i. ApplicabilityLC Art. 6. Applicability. All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural. (As amended by Presidential Decree No. 570-A, November 1, 1974)

LC Art. 282. Government Employees. The terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations, shall be governed by the Civil Service Law, rules and regulations. Their salaries shall be standardized by the National Assembly as provided for in the New Constitution. However, there shall be no reduction of existing wages, benefits and other terms and conditions of employment being enjoyed by them at the time of the adoption of this Code.

1987 Constitution, Art. IX-B, Sec. 2.(1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of

the Government, including government-owned or controlled corporations with original charters

PNOC ENERGY DEVELOPMENT CORP. v NLRC & DANILO MERCADO (September 11, 1991; J. Paras)

SUMMARY: Danilo Mercado, an employee of Philippine National Oil Company-Energy Development Corporation (PNOC-EDC), was dismissed from his work on the grounds of serious acts of dishonesty. He filed a complaint for illegal dismissal and the LA ruled in favor of him due to lack of evidence. One of the contentions is whether or not the provisions of the Labor Code will apply to him when PNOC-EDC is in fact a GOCC. The Court ruled in the affirmative, stating that since PNOC-EDC was incorporated under the General Corporation Law, its employees are subject to the provisions of the Labor Code.

DOCTRINE: Under the present state of the law, the test in determining whether a GOCC is subject to the Civil Service Law is the manner of its creation such that government corporations created by special charter are subject to its provisions while those incorporation under the General Corporation Law are not within its coverage.

Moreover, the fact that the case arose under the 1973 Constitution does not deprive NLRC of jurisdiction because it is the 1987 Constitution that governs at the time of the decision.

j. Enforcement and SanctionsLC Art. 128. supra

LC Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers.

Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules.

The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989)

LC Art. 225. Ocular inspection. The Chairman, any Commissioner, Labor Arbiter or their duly authorized representatives, may, at any time during working hours, conduct an ocular inspection on any establishment, building, ship or vessel, place or premises, including any work, material, implement, machinery, appliance or any object therein, and ask any employee, laborer, or any person, as the case may be, for any information or data concerning any matter or question relative to the object of the investigation.

LC Art. 294. Penalties. Except as otherwise provided in this Code, or unless the acts complained of hinge on a question of interpretation or implementation of ambiguous provisions of an existing collective bargaining agreement, any violation of the provisions of this Code declared to be unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos (P10,000.00) or imprisonment of not less than three months nor more than three years, or both such fine and imprisonment at the discretion of the court.

In addition to such penalty, any alien found guilty shall be summarily deported upon completion of service of sentence.

Any provision of law to the contrary notwithstanding, any criminal offense punished in this Code, shall be under the concurrent jurisdiction of the Municipal or City Courts and the Courts of First Instance. (As amended by Section 3, Batas Pambansa Bilang 70)

LC Art. 295. Who are liable when committed by other than natural person. If the offense is committed by a corporation, trust, firm, partnership, association or any other entity, the penalty shall be imposed upon the guilty officer or officers of such corporation, trust, firm, partnership, association or entity.

LC Art. 296. Offenses. Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three (3) years.

All unfair labor practice arising from Book V shall be filed with the appropriate agency within one (1) year from accrual of such unfair labor practice; otherwise, they shall be forever barred.

LC Art. 296.  Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.

All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with the implementing rules and regulations of the Code; otherwise, they shall be forever barred.

Workmen’s compensation claims accruing prior to the effectivity of this Code and during the period from November 1, 1974 up to December 31, 1974, shall be filed with the appropriate regional offices of the Department of Labor not later than March 31, 1975;

otherwise, they shall forever be barred. The claims shall be processed and adjudicated in accordance with the law and rules at the time their causes of action accrued.

LC Art. 298. Institution of money claims. Money claims specified in the immediately preceding Article shall be filed before the appropriate entity independently of the criminal action that may be instituted in the proper courts.

Pending the final determination of the merits of money claims filed with the appropriate entity, no civil action arising from the same cause of action shall be filed with any court. This provision shall not apply to employees compensation case which shall be processed and determined strictly in accordance with the pertinent provisions of this Code.

1987 Constitution, Art. III, Sec. 11. Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty.

1987 Constitution, Art. III, Sec. 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies.

6. WORK RELATIONSHIP

a. Definition:

1) EmployerArt. 97. Definitions. As used in this Title:(b) "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations.

LC Art. 173. Definition of terms. As used in this Title, unless the context indicates otherwise:(f) Employer" means any person, natural or juridical, employing the services of the employee.

LC Art. 218. Definitions.(e) “Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.

2) EmployeeLC Art. 97. Definitions. As used in this Title:(c) “Employee" includes any individual employed by an employer.

LC Art. 173. Definition of terms. As used in this Title, unless the context indicates otherwise:(g) Employee" means any person compulsorily covered by the GSIS under Commonwealth Act Numbered One hundred eighty-six, as amended, including the

members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS under Republic Act Numbered Eleven hundred sixty-one, as amended

LC Art. 218. Definitions(f) "Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.

b. Employer-Employee Relationship1) Factors/Tests/Four-fold Test

NELSON V. BEGINO (AND 3 OTHERS) v ABS-CBN CORP. & AMALIA VILLAFUERTE (April 20. 2015;)

SUMMARY: Petitioners were hired as cameramen/editors and reporters for TV Patrol Bicol. They have been rehired continuously over the years and subject to policies of ABS-CBN but they are supposedly covered by Talent Contracts. They filed complaints as regular workers but ABS-CBN averred that they are talents and not regular employees. Supreme Court used the four-fold test and concluded that they are indeed regular workers regardless of the nomenclature of their contract.

DOCTRINE:

Four-fold test for ER-EE Relationship:(a) The selection and engagement of the employee;(b) The payment of wages;(c) The power of dismissal; and(d) The employer's power to control the employee on the means and methods by which the work is accomplished ‘control test’ - most crucial and determinative indicator; the employer has the right to control not only the end result but also the manner and means utilized to achieve the same.

Regardless of the name of the contract, the test to determine whether employment is regular or not is the reasonable connection between the activity performed by the employee in relation to the business or trade of the employer. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient evidence of the necessity, if not indispensability of that activity in the business. Indeed, an employment stops being co-terminous with specific projects where the employee is continuously re-hired due to the demands of the employer’s business”

SOUTH EAST INTERNATIONAL RATTAN, INC. v J.J. COMING (March 12, 2014; J. Villarama)

SUMMARY: Jesus Coming was hired by petitioner as a Sizing Machine Operator. At one point of his employment, he was told not to report for work until two months later, which he did. He was eventually dismissed because of “financial reasons” so he filed a complaint for illegal dismissal before the LA. On petitioner’s part, they denied having hired Coming as their employee. The Court, using the four-fold test and basing its decision on evidence presented, ruled that the employer-employee relationship existed between the petitioners and the respondent.

DOCTRINE: To prove the existence of ER-EE relationship, substantial evidence – that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion – is sufficient. In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in favor of the laborer.

CESAR C. LIRIO, DOING BUSINESS AS CELKOR AD SONICMIX v WILMER D. GENOVIA (November 23, 2011;)

SUMMARY: Wilmer was hired by Cesar as studio manager of Celkor. Later, Wilmer was additionally tasked with composing and promoting songs for Cesar’s daughter and Wilmer was promised to be compensated accordingly. When Wilmer finished the songs, he asked for his compensation but he was only given 20% share of net profits. Also, his salary as studio manager was to be deducted from that 20% share. He objected and he was terminated. He filed a complaint for illegal dismissal. The SC found that an employer-employee relationship existed and that he was illegally dismissed for lack of due process.

DOCTRINE: The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct.

The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. The power of control refers merely to the existence of the power. It is not essential for the employer to actually supervise the performance of duties of the employee, as it is sufficient that the former has a right to wield the power.

MARTICIO SEMBLANTE AND DUBRICK PILAR v CA, GALLERA DE MANDAUE (August 15, 2011; J. Velasco)

SUMMARY: Petitioners, who were the official masiador and sentenciador of the Gallera de Mandaue (cockpit), were one day denied entry into the cockpit upon the instructions of the Respondents, and were informed of the termination of their services effective that date. Petitioners cry illegal dismissal. SC said there was no illegal dismissal because there was no employer-employee relationship between the Petitioner and Respondent, as they failed to pass the four-fold test.

DOCTRINE: Those who possess a kind of expertise are not mere employees. They are akin to independent contractors who possess unique skills and talent to distinguish them from ordinary employees.

i. Control Test v Economic Reality Test

OROZCO v FIFTH DIVISION, CA (August 13, 2008; J. Nachura)

SUMMARY: Orozco writes for Philippine Daily Inquirer Lifestyle Column. She submits her articles weekly. She receives compensation of P250 (later became P300) for every column published. On Nov.1992, her editor told her that PDI wanted to stop the publication of her articles because of there are too many columnists and they wanted to keep only those that are well-written and with regular feedbacks and following. Apostol, PDI’s Chairperson, thinks that Orozco’s column failed to improve, is superficially and poorly written, and failed to meet the high standards of PDI. Thus, Orozco filed for illegal dismissal, backwages, moral and exemplary damages and other money claims before NLRC. Contrary to Orizco’s claim that she is an employee because PDI wield control over her output (i.e. content, deadline, length), the Court held that Orozco is not an employee of PDI but an independent contractor. The power that PDI wield over her is not the control as to the means and methods, but the results.

DOCTRINE: Not every form of control over the conduct of the party hired in relation to the services rendered establishes an employer-employee relationship. The main determinant of the control test: whether the rules set by the employer are meant to control not just the results of the work but also the means and method to be used by the hired party in order to achieve such results

Moreover, in the ECONOMIC REALITY TEST, the economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. The benchmark in using this test is the economic dependence of worker on his employer.

ii. Evidence of Employee Status

BERNARD A. TENAZAS ET. AL. v VILLEGAS TAXI TRANSPORT (April 2, 2014; J. Reyes)

SUMMARY: The 3 employees assert that they are employees. Francisco claims he was illegally dismissed upon the company's unfounded suspicion that he was organizing a labor union. . Villegas denies that Jaime Francisco was their employee. The SC ruled that the party who alleges he is an employee must prove it with substantial evidence. Jaime has failed to present any substantial proof (no attendance logbook, payroll, SSS record or any personnel file). He simply relied on his allegation that he is an employee without any proof. This mere allegation in the position paper is insufficient given the company’s denial.

DOCTRINE: In labor cases, as in other administrative and quasi-judicial proceedings, the quantum of proof necessary is substantial evidence- such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The burden of proof rests upon the party who asserts the affirmative of an issue.

2) Burden of Proving employer-employee relationship vis-à-vis burden of proving illegality of dismissal

BITOY JAVIER v FLY ACE CORPORATION (February 15, 2012;)

SUMMARY: Bitoy Javier worked as a pahinante or extra help to Fly Ace, when the latter’s contracted hauler was unavailable. When Bitoy was prevented from working, he filed for illegal dismissal and claimed that he was in fact an employee despite the irregular nature of his work. The Court ruled that he failed to prove the existence of an employer-employee relationship through substantial evidence.

DOCTRINE: In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established. It is incumbent upon the one alleging the existence of employer-employee relationship to prove it by substantial evidence.

3) Piercing the corporate veil

TIMOTEO H. SARONA v NLRC, ROYALE SECURITY AGENCY (FORMERLY SCEPTRE) (January 18, 2012; J. Reyes)

SUMMARY: Timoteo Sarona was a security guard at Sceptre security agency. One day, the Operation Manager asked him to submit a resignation letter as a requirement for applying for a position at Royale Security Agency (new Sceptre). After being transferred from one client to another, he was informed that he would no longer be given any assignment. Sarona filed for illegal dismissal. LA, NLRC, CA upheld illegality of dismissal but had conflicting decisions on computation of backwages. Court held that it should be computed from 1976 (employment in Sceptre) because Sceptre and Royale are one and the same entity.

DOCTRINE: The corporate mask may be removed or the corporate veil pierced when the corporation is just an alter ego of a person or of another corporation. For reasons of public policy and in the interest of justice, the corporate veil will justifiably be impaled only when it becomes a shield for fraud, illegality or inequity committed against third persons.

The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely1) defeat of public convenience as when the corporate fiction is used as a vehicle for

the evasion of an existing obligation2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud,

or defend a crime;

3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.

c. Independent Contractor and Labor-only ContractorLC Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such 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.

LC Art. 107. Indirect Employer. The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.

LC Art. 108. Posting of bond. An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same.

LC Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.

Omnibus Rules Implementing the Labor Code, Book III, Rule VIII-A (incorporated through Department Order No. 10, S. of 1997, as amended by Department Order No. 03 S. of 2001, Department Order No. 18-02, S. of 2002, and Department Order No. 18-A, S. of 2011).

1) Guiding principlesDepartment Order No. 18-A-11, Sec. 1. Guiding Principles. Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulations for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization and collective bargaining. Labor-only contracting as defined herein shall be prohibited.

2) CoverageDepartment Order No. 18-A-11, Sec. 2. Coverage. These Rules shall apply to all parties of contracting and subcontracting arrangements where employer-employee relationship exist. It shall also apply to cooperatives engaging in contracting and subcontracting arrangements.

Contractors and subcontractors referred to in these Rules are prohibited from engaging in recruitment and placement activities as defined in Article 13(b) of the Labor Code, whether for local or overseas employment.

3) Trilateral RelationshipDepartment Order No. 18-A-11, Sec. 3. Definition of terms. The following terms as used in these Rules, shall mean:(m) “Trilateral Relationship” refers to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work, or service between the principal and the contractor, and a contract of employment between the contractor and its workers. There are three (3) parties involved in these arrangements: the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the contractual workers engaged by the contractor to accomplish the job, work, or service.

Department Order No. 18-A-11, Sec. 5. Trilateral Relationship in contracting arrangements; Solidary liability. In legitimate labor contracting or subcontracting arrangement there exists:

(a) An employer-employee relationship between the contractor and the employees it engaged to perform the specific job, work, or service being contracted; and

(b) A contractual relationship between the principal and the contractor as governed by the provisions of the Civil Code

In the event of any violation of any provision of the Labor Code, including the failure to pay wages, there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the Labor Code and other social legislation, to the extent of the work performed under the employment contract.

However, the principal shall be deemed the direct employer of the contractor’s employee in cases where there is a finding by a competent authority of labor-only contracting or commission of prohibited activities as provided in Section 7, or a violation of either Section 8 or 9 hereof.

i. ContractingDepartment Order No. 18-A-11, Sec. 3. Definition of terms. The following terms as used in these Rules, shall mean:(c) “Contracting” or “Subcontracting” refers to an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal.

PHILIPPINE BANK OF COMUNICATIONS v NLRC (;)

SUMMARY: There is a tri-lateral relationship between the principal: Phil. Bank of Communications (PBC), the contractor: Corporate Executive Search Inc. (CESI) and the labor/worker: Ricardo Orpiada. There is contention as to whether the bank is liable to reinstate the employee and to pay for 13th month pay if there is no employee-employer relationship between the employee and the bank but rather, between the employee and the contractor. The Court ruled that since the contractor engages in labor-only contracting, the bank will be considered the direct employer of Orpiada and not CESI.

DOCTRINE: 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.

SAN MIGUEL CORPORATION v SEMILLANO (July 5, 2010; J. Mendoza)

SUMMARY: SMC entered into a Contract of Services with AMPCO designating the latter as the employer of Semillano. Semillano was fired, and he sues SMC for illegal dismissal. SMC argues that AMPCO is liable since it is an independent contractor. The Court held that SMC was a labor-only contractor, hence it is solidarily liable with AMPCO for all the rightful claims of respondents.

DOCTRINE: In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of facts and the surrounding circumstances of the case are to be considered. The test determine the existence of INDEPENDENT CONTRACTORSHIP is whether or not the one claiming to be dependent contractor has contracted to the work according to his own methods and without being subject to the control of the employer, except only as to the results work.

4) Parties

i. PrincipalDepartment Order No. 18-A-11, Sec. 3. Definition of terms. The following terms as used in these Rules, shall mean:

(h) “Principal” refers to any employer, whether a person or entity, including government agencies and government-owned and controlled corporations, who/which puts out or farms out a job, service, or work to a contractor.

ii. ContractorDepartment Order No. 18-A-11, Sec. 3. Definition of terms. The following terms as used in these Rules, shall mean:

(d) “Contractor” refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled workers, temporary workers, or a combination of services to a principal under a Service Agreement.

iii. Contractor’s employeeDepartment Order No. 18-A-11, Sec. 3. Definition of terms. The following terms as used in these Rules, shall mean:

(e) “Contractor’s employee” includes one employed by a contractor to perform a complete job, work, or service pursuant to a Service Agreement with a principal.

It shall also refer to regular employees of the contractor whose functions are not dependent on the performance or completion of a specific job, work or service within a definite period of time, i.e. administrative staff.

5) Rights of contractual employeesDepartment Order No. 18-A-11, Sec. 8. All contractor’s employees whether deployed or assigned as reliever, seasonal, week-ender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided for in the Labor Code, as amended, to include the following:

(a) Safe and healthful working conditions(b) Labor standards such as but not limited to service incentive leave, rest days,

overtime pay, holiday pay, 13th month pay, and separation pay as may be provided in the Service Agreement or under the Labor Code

(c) Retirement benefits under the SSS or retirement plans of the contractor, if there is any

(d) Social security and welfare benefits(e) Self-organization, collective bargaining and peaceful concerted activities, and (f) Security of tenure

FVR SKILLS AND SERVICES EXPONENTS INC. v JOVERT SEVA (AND 27 OTHERS) (October 22, 2014; J. Brion)

SUMMARY: A group of 28 janitorial and maintenance employees were terminated by their employer, an independent contractor, after its contract with Robinsons

expired. The Court ruled that these employees are regular employees who are entitled to various benefits, including the right to security of tenure, as they may only be dismissed with the proper substantial and procedural requirements.

DOCTRINE: DO 18-02 grants contractual employees all the rights and privileges due a regular employee, including the following: (a) safe and healthful working conditions; (b) labor standards such as service incentive leave, rest days, overtime pay, holiday

pay, 13th month pay and separation pay; (c) social security and welfare benefits;(d) self-organization, collective bargaining and peaceful concerted action; and (e) security of tenure

6) Legitimate contracting or subcontractingDepartment Order No. 18-A-11, Sec. 4. Legitimate contracting or subcontracting. Contracting or subcontracting shall be legitimate if all the following circumstances concur:(a) The contractor must be registered in accordance with these Rules and carries a

distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;

(b) The contractor has substantial capital and/or investment; and(c) The Service Agreement ensures compliance with all the rights and benefits

under Labor Laws.

RONNIE L. ABING v NLRC, ALLIED BANKING CORPORATION, FACILITATORS GENERAL SERVICES AND MARILAG BUSINESS AND INDUSTRIAL MANAGEMENT

SERVICES, INC. (September 10, 2014;)

SUMMARY: Petitioner had been working in Allied Banking through the employment of various contractors (FGSI and Marilag). Upon termination of the second contractor’s service contract with Allied Banking, he alleges that the latter is his true employer and cries illegal dismissal. The Court ruled that Ronnie was not an employee of Allied Bank; he was employed with FGSI, a legitimate job contractor. FGSI’s service contract with Allied Bank further states that the janitorial and maintenance personnel will remain to be FGSI’s employees.

DOCTRINE: Legitimate labor contracting or subcontracting “as an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service with a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. Under such an arrangement, no employer-employee relationship is created between the principal and the contractual worker, who is actually the employee of the contractor.”

FUJI TELEVISION NETWORK, INC. v ARLENE ESPIRITU (December 3, 2014; J. Leonen)

SUMMARY: Fuji Television Network hired Arlene Espiritu as a news correspondent/producer to report Philippine news to Japan, with her contract renewed annually. However, when she got diagnosed with lung cancer, she informs Fuji, who then disclosed that they will have a hard time renewing the contract, considering her situation. Both parties sign a contract for non-renewal, which stipulates that she would not renew and that she would receive $18,050 as compensation for services, etc. Arlene filed a complaint against Fuji for illegally dismissing her. SC decides in her favor. Arlene is a regular employee, not an independent contractor.

DOCTRINE: It is the burden of the employer to prove that a person whose services it pays for is an independent contractor rather than a regular employee with or without a fixed term. An independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under one’s own responsibility according to one’s own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. No employer-employee relationship exists in independent contracting.

Moreover, that a person has a disease does not per se entitle the employer to terminate his or her services.

7) Elements of Labor-only contractingDepartment Order No. 18-A-11, Sec. 6. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For tis purpose, labor only contracting shall refer to an arrangement where:(a) The contractor does not have substantial capital or investments in the form of

tools, equipment, machineries, work premises, among others, and the employees recruited and placed are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or

(b) The contractor does not exercise the right to control over the performance of the work of the employee.

POLYFOAM-RGC INTERNATIONAL CORP. v EDGARDO CONCEPCION (June 13 2012; J. Peralta)

SUMMARY: Conception, a factory worker at Polyfoam was dismissed from work due to an alleged infraction of a company rule. He filed for an illegal dismissal complaint. Gramaje filed a Motion for Intervention, claiming to be the real employer of Concepcion. The Court, in assessing Gramaje’s contractorship using the elements of labor only contracting, found out that Gramaje is a labor only contractor. Because of this, the Court rules that there was an employer-employee relationship between Polyfoam and Concepcion since a finding that a contractor is a labor only contractor is equivalent to declaring an employer-employee relationship between Polyfoam and Concepcion.

DOCTRINE: Labor only contracting is a prohibited act where the contractor merely recruits workers to perform a job for a principal. These elements are present in labor only contracting: (1) contractor does not have substantial capital or investment, and (2) employees recruited, supplied or placed by such contractor are performing activities which are directly related to the main business of the principal.

A finding that a contractor is a labor only contractor is equivalent to declaring an employer-employee relationship between the worker of the contractor and the principal.

NORKIS TRADING v JOAQUIN BUENAVISTA (October 10. 2012; J. Reyes)

SUMMARY: Norkis Trading hired Buenavista et. al. as operators and welders. Norkis recognizes them as members of PASAKA (a cooperative which is deemed to be an independent contractor). Respondents filed a complaint for labor-only contracting and non-payment of wages with DOLE against Norkis Trading and PASAKA. The Court held that PASAKA was a labor-only contractor.

DOCTRINE: Labor-only contracting is a prohibited act where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. The elements are the ff:a. the contractor or subcontractor does not have substantial capital or investment to

actually perform the job, work, or service under its own account and responsibility

b. the employees recruited, supplied or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.The Court differentiated labor-only contracting with from legitimate job

contracting, which is an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. The requisites are:a. the contractor carries on a distinct and independent business and partakes the

contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance

b. the contractor has substantial capital or investmentc. the agreement between the principal and the contractor or subcontractor assures

the contractual employees’ entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits

8) Other prohibitionsDepartment Order No. 18-A-11, Sec. 7. Other Prohibitions. Notwithstanding section 6 of these Rules, the following are hereby declared prohibited for being contrary to law or public policy:

1) Contracting out of jobs, works or services when the same results in the termination or reduction of regular employees and reduction of work hours or reduction or splitting of the bargaining unit.

2) Contracting out of work with a “cabo”3) Taking undue advantage of the economic situation or lack of bargaining

strength of the contractor’s employees, or undermining their security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances:

i. Requiring them to perform functions which are currently being performed by the regular employees of the principal; and

ii. Requiring them to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or from any liability as to payment of future claims.

4) Contracting out of a job, work or service through an in-house agency.5) Contracting out of a job, work or service that is necessary or desirable or

directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent.

6) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in Art. 248 (c) of the Labor Code, as amended.

7) Repeated hiring of employees under an employment contract of short duration or under a Service Agreement of short duration with the same or different contractors, which circumvents the Labor Code provisions on Security of Tenure.

8) Requiring employees under a subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement.

9) Refusal to provide a copy of the Service Agreement and the employment contracts between the contractor and the employees deployed to work in the bargaining unit of the principal’s certified bargaining agent to the sole and exclusive bargaining agent (SEBA).

10) Engaging or maintaining by the principal of subcontracted employees in excess of those provided for in the applicable Collective Bargaining Agreement (CBA) or as set by the Industry Tripartite Council (ITC).

9) Registration of contractorsDepartment Order No. 18-A-11, Sec. 14. Mandatory Registration and Registry of Legitimate Contractors. Consistent with the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor to protect the rights of workers, it shall be mandatory for all persons or entities, including cooperatives, acting as contractors, to register with the Regional Office of the Department of Labor and Employment (DOLE) where it principally operates.

Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting.

Accordingly, the registration system governing contracting arrangements and implemented by the Regional Offices of the DOLE is hereby established, with the Bureau of Working Conditions (BWC) as the central registry.

Department Order No. 18-A-11, Sec. 15. Requirements for registration. The application for registration as a contractor shall be filed at the DOLE Regional Office in the region where it seeks to principally operate. The applicant shall provide in the application form the following information:

(a) The name and business address of the applicant and the areas where it seeks to operate

(b) The names and addresses of officers, if the applicant is a corporation, partnership, cooperative, or a labor organization

(c) The nature of the applicant’s business and the industry or industries where the applicant seeks to operate

(d) The number of regular workers and the total workforce(e) The list of clients, if any, the number of personnel assigned to each client, if

any, and the services provided to the client(f) The description of the phases of the contract, including the number of

employees covered in each phase, where appropriate; and (g) Proof of compliance with substantial capital requirement as defined in

Section 3(l) of these RulesThe application should be supported by:

(a) A certified true copy of a certificate of registration of firm or business name from the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), Cooperative Development Authority (CDA),or from the DOLE if the applicant is a labor organization.

(b) A certified true copy of the license or business permit issued by the local government units where the contractor operates

(c) A certified listing, with proof of ownership or lease contract, of facilities, tools, equipment, premises, implements, machineries and work premises, that are actually and directly used by the contractor in the performance or completion of the job, work, or service contacted out. In addition, the applicant shall submit a photo of the office building and premises where it holds office;

(d) A copy of audited financial statements if the applicant is a corporation, partnership, cooperative, or a labor organization, or copy of the latest ITR if the applicant is a sole proprietorship

(e) A sworn disclosure that the registrant, its officers and owners or principal stockholders or any one of them, has not been operating or previously operating as a contactor under a different business name or entity or with pending cases of violations of these Rules and/or labor standards, or with a cancelled registration. In case any of the foregoing has a pending case, a copy of the complaint and the latest status of the case shall be attached.

The application shall be verified. It shall include a DOLE certification of attendance to orientation seminar on these Rules and an undertaking that the contractor shall abide by all applicable labor laws and regulations.

i. Bureau of Working Conditions (BWC)/central registryDepartment Order No. 18-A-11, Sec. 14 (par. 3). supra

ii. Effect of Non-ComplianceDepartment Order No. 18-A-11, Sec. 14 (par. 2). supra

10) Solidary Liability of Indirect Employer/Direct employerDepartment Order No. 18-A-11, Sec. 5 (par. 2). Supra

Department Order No. 18-A-11, Sec. 27. Effects of finding of labor-only contracting and/or violation of Sections 7, 8, or 9 of the Rules. A finding by competent authority of labor-only contracting shall render the principal jointly and severally liable with the contractor to the latter’s employees, in the same manner and extent that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as amended.

A finding of commission of any of the prohibited activities in Section 7, or violation of either Section 8 or 9 hereof, shall render the principal the direct employer of the employees of the contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended.

BENIGNO M. VIGILIA v PHILIPPINE COLLEGE OF CRIMINOLOGY (June 2013;)

SUMMARY: Petitioners in the case at bar are maintenance personnel of Philippine College of Criminology (PCCr), but are allegedly under MBMSI which is a corporation engaged in providing janitorial services to clients. Upon PCCr’s discovery that MBMSI’s Certification of Incorporation was revoked, it dismissed the maintenance personnel. The dismissed employees filed a complaint for illegal dismissal against MBMSI, its president, and the president of PCCr. However, quitclaims executed by the employees were presented by PCCr. The LA, NLRC, CA, as well as the SC all held that facts show that PCCr was really the employer and being engaged in a labor-only contracting, shall be held solidarily liable with MBMSI. However, by virtue of the quitclaims, they cannot be held liable. In answering the argument that said documents have no validity for being executed after the dissolution of the corporation, the SC held that the executed releases, waivers and quitclaims are valid and binding notwithstanding the revocation of MBMSI’s Certificate of Incorporation.

DOCTRINE: Section 27. Effects of finding of labor-only contracting and/or violation of Sections 7, 8 or 9 of the Rules – A finding by competent authority of labor-only contracting shall render the principal jointly and severally liable with the contractor to the latter’s employees, in the same manner and extent that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as amended. A finding of commission of any of the prohibited activities in Section 7, or violation of either Sections 8 or 9 hereof, shall render the principal the direct employer of the employees of the contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended. (Department Order No. 18-A, series of 2011, which is the latest set of rules implementing Articles 106-109 of the Labor Code)

SUPERIOR PACKAGING CORP. v ARNEL BALAGSAY (October 10, 2012; J. Reyes)

SUMMARY: Superior Packaging Corporation (Superior) engaged the services of Lancer Staffing & Services Network, Inc. (Lancer) to provide reliever services to its business, which involves the manufacture and sale of commercial and industrial corrugated boxes. Respondents filed a complaint for non-payment of wages and other benefits. DOLE ordered Superior to pay, but the latter argues that respondents were not its employees but of Lancer’s. The Court held that there was labor-only contracting, therefore Superior is liable for the unpaid money claims.

DOCTRINE: Labor-only contracting means that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the principal, the real employer.

EPARWA SECURITY AND JANITORIAL SERVICES v LICEO DE CAGAYAN UNVERSITY (November 28, 2006; J. Carpio)

SUMMARY: Eparwa and LDCU entered into a Contract for Security Services. The security guards assigned to LDCU filed a complaint for underpayment against both Eparwa and LDCU before the NLRC. The Court held that Eparwa and LCDU are solidarily liable but LDCU has the ultimate liability. Since there is no privity of contract between the security guards and LDCU, the security guards’ immediate recourse for the payment of the increases is with their direct employer, which is Eparwa. On the other, there exists a contractual agreement between the principal and the security agency, wherein the former availed of the security services provided by the latter. In return, the security agency collects from its client payment for its security services. Eparwa can therefore claim reimbursements from LDCU.

DOCTRINE: This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractor’s employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers’ performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution.

11) Prohibitionsi. Against labor-only contracting

Department Order No. 18-A-11, Sec. 6. supra

ii. Other prohibitionsDepartment Order No. 18-A-11, Sec. 7. supra

12) Effects of Finding of LOC and/or any violationDepartment Order No. 18-A-11, Sec. 5. Trilateral Relationship in contracting arrangements; Solidary liability.

x x x x x xIn the event of any violation of any provision of the Labor Code, including the

failure to pay wages, there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the Labor Code and other social legislation, to the extent of the work performed under the employment contract.

However, the principal shall be deemed the direct employer of the contractor’s employee in cases where there is a finding by a competent authority of labor-only contracting or commission of prohibited activities as provided in Section 7, or a violation of either Section 8 or 9 hereof.

7. EMPLOYMENT CONTRACT

ROYALE HOMES MARKETING CORP. v FIDEL P. ALCANTARA (July 28, 2014; J. Del Castillo)

SUMMARY: Alcantara claimed that he was an employee of Royale Homes and was therefore illegally dismissed. Contract contained a stipulation that he was an independent contractor. Court held that the terms of the contract were clear and therefore there was no employer-employee relationship.

DOCTRINE: The primary evidence of the nature of the parties’ relationship in this case is the WRITTEN CONTRACT that they signed and execute in pursuance of their mutual agreement. The characterization the parties gave to their relationship in the Agreement cannot simply be brushed aside because it embodies their INTENT at the time they entered the Agreement, and they were governed by this understanding throughout their relationship. At the very least, the provision on the absence of employer- employee relationship between the parties can be an aid in considering the Agreement and its implementation, and in appreciating the other evidence on record.

GLOBAL RESOURCE FOR OUTSOURCED WORKERS (GROW) v ABRAHAM VELASCO & NANETTE VELASCO (August 22, 2012; J. Perlas-Bernabe)

SUMMARY: In the employment contract between MS Retail and the respondents, it was indicated that they would work for “48 hrs/month”. Petitioners promptly informed respondents that this was a typo, and that it should actually be 48 hrs/week. On filing a case for constructive dismissal, respondents also claimed overtime pay in excess of the 48 hrs/month. The Court ruled that they were not entitled to overtime pay because it the true intent of the contract was really 48 hrs/week.

DOCTRINE: In case of conflict between the text of the contract and the intent of the parties, it is the latter that prevails, for intention is the soul of the contract, not its wording which is prone to mistakes, inadequacies or ambiguities. To hold otherwise would give life, validity, and precedence to mere typographical errors and defeat the very purpose of agreements.