HW 1

Manila Electric Company v. Sec. Quisumbing

G.R. No. 127598 Jan 27, 1999
Topic: Duty to Bargain Collectively

Facts: This is a petition for certiorari, MERALCO seeking to annul the orders of
Secretary Quisumbing wherein petitioner is required and its’s Rank and File (RnF)
union – MEWA to execute a CBA for the remainder of the parties 1992-1997 CBA cycle,
and to incorporate in this new CBA the Secretary’s dispositions on the disputed
economic and non-economic issues.
MEWA informed MERALCO of its intention to re-negotiate the terms of the
1992-97 CBA covering the remaining period of 2 years. MERALCO was willing and
entered to negotiations, however, both parties failed arrive in terms acceptable to both
parties. MERALCO petitioned with DOLE praying that the Secretary assume
jurisdiction over the labor dispute and to enjoin the striking employees to go back to
work.
Secretary granted the petition where the cause of his decision is pursuant to
Article 263(g) of the Labor Code and deputizing USEC. Espanol, Jr. to conduct
conciliation conferences between the parties. Thereafter, both parties submitted their
memoranda in which Economic Demands (such as wages, Red Circle Rate (RCR)
Allowances etc. were generally granted except for resignation benefits, night work) and
Political Demands (such as scope of the collective bargaining unit, union recognition
and security, transfer of assignment and job security) were granted.
MERALCO filed MR alleging that the Sec. of Labor committed grave abuse of
discretion amounting to lack or excess of jurisdiction in: (1) awarding MEWA P1.142B
that would imperil MERALCO’s viability as a public utility; (2) granting wage increase;
(3) incorporation into the CBA of all existing employee benefits; (4) granting certain
political demands presented by the union; and (5) in ordering the CBA to be effect of
Dec 1995 instead of Aug 19, 1996 when he resolved the dispute.

Issue: W/N there is a grave abuse of discretion on the part of the Secretary of Labor.

Ruling: The Secretary of Labor disregarded and misappreciated evidence, particularly

with respect to the wage award. The Secretary apparently also acted arbitrarily and
even whimsically in considering several legal points; even the Solicitor General himself
considered that the Secretary gravely abused his discretion on at least three major
points: (a) on the signing bonus issue; (b) on the inclusion of confidential employees in
the rank and file bargaining unit, and (c) in mandating a union security closed-shop
regime in the bargaining unit.
Doctrine: While We do not seek to enumerate in this decision the factors that should
affect wage determination, we must emphasize that a collective bargaining dispute such
as this one requires consideration and proper balancing of the interests of the parties to
the dispute and of those who might be affected by the dispute. To our mind, the best
way in approaching this task holistically is to consider the available objective facts,
including, where applicable, factors such as the bargaining history of the company, the
trends and amounts of arbitrated and agreed wage awards and the companies previous
CBAs, and industry trends in general. As a rule, affordability, or capacity to pay should
be considered but cannot be the sole yardstick in determining the wage award,
especially in a public utility like MERALCO. In considering a public utility, the decision
maker must always consider the public interest aspects of the case; MERALCOs income
and the amount of money available for operating expenses - including labor costs - are
subject to State regulation. We must also keep in mind that high operating costs will
certainly and eventually be passed on to the consuming public as MERALCO has
bluntly warned in its pleadings.

Dipositive: WHEREFORE, the petition is granted and the orders of public respondent
Secretary of Labor dated August 19, 1996 and December 28, 1996 are set aside to the
extent set forth above. The parties are directed to execute a CBA incorporating the terms
and conditions contained in the unaffected portions of the Secretary of Labors order of
August 19, 1996 and December 28, 1996, and the modifications set forth above. The
retirement fund issue is remanded to the Secretary of Labor for reception of evidence
and determination of the legal personality of the MERALCO retirement fund.
ARMANDO G. YRASUEGUI, petitioners,
vs.
PHILIPPINE AIRLINES, INC., respondents.

FACTS: THIS case portrays the peculiar story of an international flight steward who
was dismissed because of his failure to adhere to the weight standards of the airline
company.

The proper weight for a man of his height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL.

In 1984, the weight problem started, which prompted PAL to send him to an extended
vacation until November 1985. He was allowed to return to work once he lost all the
excess weight. But the problem recurred. He again went on leave without pay from
October 17, 1988 to February 1989.

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner
remained overweight. On January 3, 1990, he was informed of the PAL decision for him
to remain grounded until such time that he satisfactorily complies with the weight
standards. Again, he was directed to report every two weeks for weight checks, which
he failed to comply with.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for
weight check would be dealt with accordingly. He was given another set of weight
check dates, which he did not report to.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge
for violation of company standards on weight requirements. Petitioner insists that he is
being discriminated as those similarly situated were not treated the same.

On June 15, 1993, petitioner was formally informed by PAL that due to his inability to
attain his ideal weight, “and considering the utmost leniency” extended to him “which
spanned a period covering a total of almost five (5) years,” his services were considered
terminated “effective immediately.”

LABOR ARBITER: held that the weight standards of PAL are reasonable in view of the
nature of the job of petitioner. However, the weight standards need not be complied
with under pain of dismissal since his weight did not hamper the performance of his
duties.

NLRC affirmed.
CA: the weight standards of PAL are reasonable. Thus, petitioner was legally dismissed
because he repeatedly failed to meet the prescribed weight standards. It is obvious that
the issue of discrimination was only invoked by petitioner for purposes of escaping the
result of his dismissal for being overweight.

ISSUE: WON he was validly dismissed.

HELD: YES

A reading of the weight standards of PAL would lead to no other conclusion than that
they constitute a continuing qualification of an employee in order to keep the job. The
dismissal of the employee would thus fall under Article 282(e) of the Labor Code.

In the case at bar, the evidence on record militates against petitioner’s claims that
obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly
shows that it is possible for him to lose weight given the proper attitude, determination,
and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992,
petitioner himself claimed that “[t]he issue is could I bring my weight down to ideal
weight which is 172, then the answer is yes. I can do it now.”

Petitioner has only himself to blame. He could have easily availed the assistance of the
company physician, per the advice of PAL.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as
flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code
that justifies his dismissal from the service. His obesity may not be unintended, but is
nonetheless voluntary. As the CA correctly puts it, “[v]oluntariness basically means that
the just cause is solely attributable to the employee without any external force
influencing or controlling his actions. This element runs through all just causes under
Article 282, whether they be in the nature of a wrongful action or omission. Gross and
habitual neglect, a recognized just cause, is considered voluntary although it lacks the
element of intent found in Article 282(a), (c), and (d).”

NOTES:

The dismissal of petitioner can be predicated on the bona fide occupational qualification
defense. Employment in particular jobs may not be limited to persons of a particular
sex, religion, or national origin unless the employer can show that sex, religion, or
national origin is an actual qualification for performing the job. The qualification is
called a bona fide occupational qualification (BFOQ). In short, the test of reasonableness
of the company policy is used because it is parallel to BFOQ. BFOQ is valid “provided it
reflects an inherent quality reasonably necessary for satisfactory job performance.”
The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the aircraft.
The weight standards of PAL should be viewed as imposing strict norms of discipline
upon its employees.

The primary objective of PAL in the imposition of the weight standards for cabin crew
is flight safety.
Separation pay, however, should be awarded in favor of the employee as an act of social
justice or based on equity. This is so because his dismissal is not for serious misconduct.
Neither is it reflective of his moral character.
Manuel vs. N.C. Construction Supply
Eddie Manuel, Romeo Bana, Rogelio Pagtama, Jr. and Joel Rea vs. N.C. Construction
Supply, Johnny Lim, Anita Sy and National Labor Relations Commission (Second
Division)
G.R. No. 127553, November 28, 1997

FACTS: Petitioners were employed as drivers at. N.C. Construction Supply owned by
private respondents. Another company driver and his helper was found stealing
company property consisting of electrical wire, welding rod, G.I. sheet, steel bar and
plywood. The helper identified petitioners as among the perpetrators of the theft.

The petitioners received separate notices informing them that they were positively
identified by their co-worker and were thus invited to Pasig Police Station for
investigation. Petitioners admitted their guilt and offered to resign in exchange for the
withdrawal of any criminal charge against them. The resignation was accepted by the
counsel of the respondents.

ISSUES:
1. Whether or not petitioners were illegally dismissed because they were not informed
of the charge against them nor were they given an opportunity to dispute the same.
2. Whether or not the employer observed due process in terminating the employment of
the petitioners.
3. Whether or not the petitioner’s admission is inadmissible as evidence against them as
they were not assisted by counsel during the conduct of investigation at the police
station.
RULING:
1. Petitioners were dismissed for a just cause. They were found guilty of stealing
company property and it was proved during an investigation conducted by
respondents’ lawyer. An employer is authorized to terminate the services of an
employee for loss of trust and confidence, provided that the loss of confidence arises
from particular proven facts. The law does not require proof beyond reasonable doubt
of the employee’s misconduct. Substantial evidence is sufficient. Substantial evidence
has been defined as such relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.

2. Employers failed to observe due process in terminating the employment of

petitioners. Due process requires that the employer should furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the
cause(s) for termination and afford him ample opportunity to be heard and to defend
himself with the assistance of a representative if he so desires. Specifically, the employer
must furnish the worker with two written notices before termination of employment
can be legally effected: (1) notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought, and (2) the subsequent notice which
informs the employee of the employer’s decision to dismiss him.
3. The right to counsel under Section 12 of the Bill of Rights is meant to protect a suspect
in a criminal case under custodial investigation. Custodial investigation is the stage
where the police investigation is no longer a general inquiry into an unsolved crime but
has begun to focus on a particular suspect who had been taken into custody by the
police to carry out a process of interrogation that lends itself to elicit incriminating
statements. It is when questions are initiated by law enforcement officers after a person
has been taken into custody or otherwise deprived of his freedom of action in any
significant way. The right to counsel attaches only upon the start of such investigation.
Therefore, the exclusionary rule under paragraph (3) Section 12 of the Bill of Rights
applies only to admissions made in a criminal investigation but not to those made in an
administrative investigation. In this case, petitioners were not under custodial
investigation as they were not yet accused by the police of committing a crime. The
investigation was merely an administrative investigation conducted by the employer,
not a criminal investigation. The questions were propounded by the employer’s lawyer,
not by police officers. The fact that the investigation was conducted at the police station
did not necessarily put petitioners under custodial investigation as the venue of the
investigation was merely incidental. Hence, the admissions made by petitioners during
such investigation may be used as evidence to justify their dismissal.

NOTES:
An employer has a right to terminate the services of an employee subject to both
substantive and procedural limitations. This means that (1) the dismissal must be for a
just or authorized cause provided in the Labor Code, and (2) the employee must be
accorded due process before his employment is terminated.
LORNA DISING PUNZAL

VS

ETSI TECHNOLOGIES, INC.

518 SCRA 66 (2007)

No matter how much the employee dislikes the employer professionally, he cannot
afford to be disrespectful.

Petitioner Lorna Dising Punzal (Punzal) had been working for respondent ETSI
Technologies, Inc. (ETSI) as Department Secretary. Punzal sent an e-mail message to her
officemates announcing the holding of a Halloween Party that was to be held in the
office. Her immediate superior, respondent Carmelo Remudaro advised her to first
secure the approval of the SVP, respondent Werner Geisert. When Geisert did not
approve of the plan, Punzal then sent a second e-mail to her officemates that states
―Geisert was so unfair . . . para bang palagi siyang iniisahan sa trabaho. . . Anyway,
solohin na lang niya bukas ang office.”

Punzal’s superiors required her to explain her actions which found such as
unacceptable. She was then dismissed from employment due to improper conduct or
act of discourtesy or disrespect and making malicious statements concerning company
officer. Punzal filed before the National Labor Relations Commission (NLRC) a
complaint for illegal dismissal against ETSI, Geisert, and Remudaro.

The complaint was dismissed by the Labor Arbiter. On appeal, the NLRC found that
while she was indeed guilty of misconduct, the penalty of dismissal was
disproportionate to her infraction. The Court of Appeals held that Punzal’s dismissal
was in order.

ISSUE:
Whether or not there was a valid cause to dismiss Punzal

HELD:
A cordial or, at the very least, civil attitude, according due deference to one’s superiors,
is still observed, especially among high-ranking management officers. The Court takes
judicial notice of the Filipino values of pakikisama and paggalang which are not only
prevalent among members of a family and community but within organizations as well,
including work sites. An employee is expected to extend due respect to management,
the employer being the “proverbial hen that lays the golden egg,” so to speak. An
aggrieved employee who wants to unburden himself of his disappointments and
frustrations in his job or relations with his immediate superior would normally
approach said superior directly or otherwise ask some other officer possibly to mediate
and discuss the problem with the end in view of settling their differences without
causing ferocious conflicts. No matter how much the employee dislikes the employer
professionally, and even if he is in a confrontational disposition, he cannot afford to be
disrespectful and dare to talk with an unguarded tongue and/or with a bileful pen.

Punzal sent the e-mail message in reaction to Geisert’s decision which he had all the
right to make. That it has been a tradition in ETSI to celebrate occasions such as
Christmas, birthdays, Halloween, and others does not remove Geisert’s prerogative to
approve or disapprove plans to hold such celebrations in office premises and during
company time. Given the reasonableness of Geisert’s decision that provoked Punzal to
send the second e-mail message, the observations of the Court of Appeals that “the
message x x x resounds of subversion and undermines the authority and credibility of
management” and that petitioner “displayed a tendency to act without management’s
approval, and even against management’s will” are well taken.

The imposition of the penalty of dismissal is proper, because of the gravity of

Punzal’s misconduct, as earlier pointed out, and considering that:

(1) Punzal’s statements were discourteous and disrespectful not only to a mere co-
employee, but to a high ranking executive official of the company;

(2) Punzal’s statements tended to ridicule and undermine the credibility and authority
of SVP Geisert, and even encouraged disobedience to the said officer;

(3) Punzal’s message was sent to a great number of employees of ETSI, which tended to
sow dissent and disrespect to management among a great number of employees of
ETSI;

(4) Punzal’s message could not have been made in good faith, because the message
itself used language that placed SVP Geisert in ridicule and portrayed him as an object
of scorn, betraying the sender’s bad faith.

Given these circumstances, the fact that Punzal’s infraction occurred only once should
be largely insignificant. The gravity and publicity of the offense as well as its adverse
impact in the workplace is more than sufficient to place the same in the level of a
serious misconduct.22 (Underscoring supplied)
Social Justice Society v. Dangerous Drugs Board

Facts:
Petitioners question the constitutionality of Section 36 of RA 9165, a.k.a. the
Comprehensive Drugs Act of 2002. Section 36 requires mandatory drug testing of
candidates for public office, students of secondary and tertiary schools, officers and
employees of public and private offices, and persons charged before the prosecutor’s
office with certain offenses, particularly those who are charged with offenses
punishable by a penalty of not less than 6 years and 1 day of imprisonment.
On December 23, 2003, COMELEC issued Resolution 6486, which provides the rules on
the mandatory drugs testing of candidates for public office. It requires the COMELEC
offices and employees concerned to submit two separate lists of candidates: one for
those who complied with the mandatory drug testing and the other of those who failed
to comply. It was Aquilino Pimentel, Jr. who opposed such resolution, contending that
it was unconstitutional as it imposes an additional qualification for senators.

Issues:
1. Do Section 36(g) of RA 9165 and COMELEC Resolution 6468 impose an additional
qualification for candidates for senator?
2. Is RA 9165 unconstitutional?

Ruling:
1. Yes. The COMELEC cannot, in the guise of enforcing and administering election laws
or promulgating rules and regulations to implement Section 36, validly impose
qualifications on candidates for senator in addition to what the Constitution provides.
The COMELEC resolution effectively enlarges that qualification requirements for
senator, enumerated under Section 3, Article VI of the Constitution.
2. The provision of RA 9165 requiring mandatory drug testing for students (Section
36[b]) are constitutional as long as they are random and suspicionless. This is because
schools and their administrators stand in loco parentis with respect to their students,
and schools have the right to impose conditions on applicants for admission that are fair
and non-discriminatory.
The provision requiring mandatory drug testing for officers and employees of public
and private offices (Section 36[d]) are also justifiable. The privacy expectation in a
regulated office environment is reduced. A degree of impingement upon such privacy
has been upheld. To the Court, the need for drug testing to at least minimize illegal
drug use is substantial enough to override the individual’s privacy interest under the
premises.
On the other hand, the Court finds no justification in the mandatory drug testing of
those prosecuted for crimes punishable by imprisonment of more than 6 years and 1
day (Section 36[f]). The operative concepts in the mandatory drug testing are
randomness and suspicionless. In this case, it cannot be said that the drug testing is
random. To impose mandatory drug testing on the accused is a blatant attempt to
harness a medical test as a tool for criminal prosecution, contrary to the stated
objectives of RA 9165.
In sum, Section 36(c) and (d) are constitutional, but 36(f) is not.
Pollo vs David
G. R. No. 181881, October 18, 2011

Facts: Petitioner is a former Supervising Personnel Specialist of the CSC Regional Office
No. IV and also the Officer-in-Charge of the Public Assistance and Liaison Division
(PALD) under the “Mamamayan Muna Hindi Mamaya Na” program of the CSC.

On January 3. 2007, CSC Chairperson Karina Constantino-David received an unsigned

complaint letter which was marked “Confidential” and was sent through a courier
service (LBC) from certain Allan San Pascual of Bagong Silang, Caloocan City. The letter
contain allegations that the petitioner have been helping many who have pending cases
in the CSC and the letter sender pleas that the CSC should investigate this anomaly to
maintain the clean and good behaviour of their office.

Chairperson David immediately formed a team of four personnel with background in

information technology (IT), and issued a memo directing them to conduct an
investigation and specifically “to back up all the files in the computers found in the
Mamamayan Muna (PALD) and Legal divisions.”

After some briefing, the team proceeded at once to the CSC-ROIV office at Panay
Avenue, Quezon City. The backing-up of all files in the hard disk of computers at the
PALD and Legal Services Division (LSD) was witnessed by several employees, together
with Directors Castillo and Unite who closely monitored said activity. At around 6:00
p.m., Director Unite sent text messages to petitioner and the head of LSD, who were
both out of the office at the time, informing them of the ongoing copying of computer
files in their divisions upon orders of the CSC Chair.

Issue: Legality of the search conducted in the petitioner’s office computer and the
copying of his personal files without his knowledge and consent, alleged as a
transgression of his constitutional right to privacy.

Ruling: Yes.

In sum, we conclude that the “special needs, beyond the normal need for law
enforcement make the…probable-cause requirement impracticable,” x x x for
legitimate, work-related noninvestigatory intrusions as well as investigations of work-
related misconduct. A standard of reasonableness will neither unduly burden the
efforts of government employers to ensure the efficient and proper operation of the
workplace, nor authorize arbitrary intrusions upon the privacy of public employees. We
hold, therefore, that public employer intrusions on the constitutionally protected
privacy interests of government employees for noninvestigatory, work-related
purposes, as well as for investigations of work-related misconduct, should be judged by
the standard of reasonableness under all the circumstances. Under this reasonableness
standard, both the inception and the scope of the intrusion must be reasonable:
“Determining the reasonableness of any search involves a twofold inquiry: first, one
must consider ‘whether the…action was justified at its inception,’ x x x ; second, one
must determine whether the search as actually conducted ‘was reasonably related in
scope to the circumstances which justified the interference in the first place,’” x x x

Ordinarily, a search of an employee’s office by a supervisor will be “justified at its

inception” when there are reasonable grounds for suspecting that the search will turn
up evidence that the employee is guilty of work-related misconduct, or that the search
is necessary for a noninvestigatory work-related purpose such as to retrieve a needed
file. x x x The search will be permissible in its scope when “the measures adopted are
reasonably related to the objectives of the search and not excessively intrusive in light of
…the nature of the [misconduct].” x x x39 (Citations omitted; emphasis supplied.)

Under the facts obtaining, the search conducted on petitioner’s computer was justified
at its inception and scope. We quote with approval the CSC’s discussion on the
reasonableness of its actions, consistent as it were with the guidelines established by
O’Connor:
Even conceding for a moment that there is no such administrative policy, there is no
doubt in the mind of the Commission that the search of Pollo’s computer has
successfully passed the test of reasonableness for warrantless searches in the workplace
as enunciated in the above-discussed American authorities. It bears emphasis that the
Commission pursued the search in its capacity as a government employer and that it
was undertaken in connection with an investigation involving a work-related
misconduct, one of the circumstances exempted from the warrant requirement. At the
inception of the search, a complaint was received recounting that a certain division chief
in the CSCRO No. IV was “lawyering” for parties having pending cases with the said
regional office or in the Commission. The nature of the imputation was serious, as it
was grievously disturbing. If, indeed, a CSC employee was found to be furtively
engaged in the practice of “lawyering” for parties with pending cases before the
Commission would be a highly repugnant scenario, then such a case would have
shattering repercussions. It would undeniably cast clouds of doubt upon the
institutional integrity of the Commission as a quasi-judicial agency, and in the process,
render it less effective in fulfilling its mandate as an impartial and objective dispenser of
administrative justice. It is settled that a court or an administrative tribunal must not
only be actually impartial but must be seen to be so, otherwise the general public would
not have any trust and confidence in it.

Considering the damaging nature of the accusation, the Commission had to act fast, if
only to arrest or limit any possible adverse consequence or fall-out. Thus, on the same
date that the complaint was received, a search was forthwith conducted involving the
computer resources in the concerned regional office. That it was the computers that
were subjected to the search was justified since these furnished the easiest means for an
employee to encode and store documents. Indeed, the computers would be a likely
starting point in ferreting out incriminating evidence. Concomitantly, the ephemeral
nature of computer files, that is, they could easily be destroyed at a click of a button,
necessitated drastic and immediate action. Pointedly, to impose the need to comply
with the probable cause requirement would invariably defeat the purpose of the wok-
related investigation.

Worthy to mention, too, is the fact that the Commission effected the warrantless search
in an open and transparent manner. Officials and some employees of the regional office,
who happened to be in the vicinity, were on hand to observe the process until its
completion. In addition, the respondent himself was duly notified, through text
messaging, of the search and the concomitant retrieval of files from his computer.

All in all, the Commission is convinced that the warrantless search done on computer
assigned to Pollo was not, in any way, vitiated with unconstitutionality. It was a
reasonable exercise of the managerial prerogative of the Commission as an employer
aimed at ensuring its operational effectiveness and efficiency by going after the work-
related misfeasance of its employees. Consequently, the evidence derived from the
questioned search are deemed admissible.

Petitioner’s claim of violation of his constitutional right to privacy must necessarily fail.
His other argument invoking the privacy of communication and correspondence under
Section 3(1), Article III of the 1987 Constitution is also untenable considering the
recognition accorded to certain legitimate intrusions into the privacy of employees in
the government workplace under the aforecited authorities.
Meralco v. NLRC
G.R. No. 78763 July 12,1989, MEDIALDEA, J.

(Labor Standards: Proper Construction and Interpretation of labor Laws)

FACTS
Private resondent, Apolinario Signo was dismissed from work by Meralco when it was
found out that he breached the trust of thpe company by making it appear that the
residence of one applicant for an electric service is within the serviceable area of
MEralco. The applicant’s residence was installed with electrical services thru Signo’s
maneuver, however, due to the fault of the Power sales division, the applicant-
consumer was not billed for a year.
ISSUE
Whether or not, the dismissal of Signo was a proper penalty for his acts.
RULING
The Court affirmed the decision of the Labor Arbiter in finding that Dismissal was a
drastic measure considering the length of service of to the Company by Signo, which is
20 years, and the 2 awards he received for honesty from the employer. He was ordered
reinstated, thought without backwages for he is not at all faultless.
Further, it was held that in carrying out and interpreting the Labor Code's provisions
and its implementing regulations, the workingman's welfare should be the primordial
and paramount consideration. This kind of interpretation gives meaning and substance
to the liberal and compassionate spirit of the law as provided for in Article 4 of the New
Labor Code which states that "all doubts in the implementation and interpretation of
the provisions of the Labor Code including its implementing rules and regulations shall
be resolved in favor of labor"
MERALCO v. NLRC
Private respondent Signo was employed in petitioner company as supervisor-leadman
since January 1963 up to the time when his services were terminated on May 18, 1983.

In 1981, a certain Fernando de Lara filed an application with the petitioner company for
electrical services at his residence at Peñafrancia Subdivision, Marcos Highway,
Antipolo, Rizal. Private respondent Signo facilitated the processing of the said
application as well as the required documentation for said application at the
Municipality of Antipolo, Rizal. In consideration thereof, private respondent received
from Fernando de Lara the amount of P7,000.00. Signo thereafter filed the application
for electric services with the Power Sales Division of the company.

It was established that the area where the residence of de Lara was located is not yet
within the serviceable point of Meralco, because the place was beyond the 30-meter
distance from the nearest existing Meralco facilities. In order to expedite the electrical
connections at de Lara's residence, certain employees of the company, including
respondent Signo, made it appear in the application that the sari-sari store at the corner
of Marcos Highway, an entrance to the subdivision, is applicant de Lara's
establishment, which, in reality is not owned by the latter.

As a result of this scheme, the electrical connections to de Lara's residence were

installed and made possible. However, due to the fault of the Power Sales Division of
petitioner company, Fernando de Lara was not billed for more than a year.

Petitioner company conducted an investigation of the matter and found respondent

Signo responsible for the said irregularities in the installation. Thus, the services of the
latter were terminated on May 18, 1983.

On August 10 1983, respondent Signo filed a complaint for illegal dismissal, unpaid
wages, and separation pay.

ISSUE: whether or not respondent Signo should be dismissed from petitioner

company on grounds of serious misconduct and loss of trust and confidence

RULING:
The power to dismiss is the normal prerogative of the employer. An employer,
generally, can dismiss or lay-off an employee for just and authorized causes
enumerated under Articles 282 and 283 of the Labor Code. However, the right of an
employer to freely discharge his employees is subject to regulation by the State,
basically in the exercise of its paramount police power. This is so because the
preservation of the lives of the citizens is a basic duty of the State, more vital than the
preservation of corporate profits.
There is no question that herein respondent Signo is guilty of breach of trust and
violation of company rules, the penalty for which ranges from reprimand to dismissal
depending on the gravity of the offense. However, as earlier stated, the respondent
Commission and the Labor Arbiter found that dismissal should not be meted to
respondent Signo considering his twenty (20) years of service in the employ of
petitioner, without any previous derogatory record, in addition to the fact that
petitioner company had awarded him in the past, two (2) commendations for honesty.
If ever the petitioner suffered losses resulting from the unlisted electric consumption of
de Lara, this was found to be the fault of petitioner's Power Sales Division.

We find no reason to disturb these findings. Well-established is the principle that

findings of administrative agencies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but
even finality. Judicial review by this Court on labor cases does not go so far as to
evaluate the sufficiency of the evidence upon which the proper labor officer or office
based his or its determination but is limited to issues of jurisdiction or grave abuse of
discretion.

This Court has held time and again, in a number of decisions, that notwithstanding the
existence of a valid cause for dismissal, such as breach of trust by an employee,
nevertheless, dismissal should not be imposed, as it is too severe a penalty if the latter
has been employed for a considerable length of time in the service of his employer

Further, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and
paramount consideration. This kind of interpretation gives meaning and substance to
the liberal and compassionate spirit of the law as provided for in Article 4 of the New
Labor Code which states that "all doubts in the implementation and interpretation of
the provisions of the Labor Code including its implementing rules and regulations shall
be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA
140).

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case,
but without the award of backwages, considering the good faith of the employer in
dismissing the respondent.
Juco v. NLRC

Facts: Benjamin C. Juco was hired as a project engineer of National Housing

Corporation (NHC) from November 16, 1970 to May 14, 1975. On May 14, 1975, he was
separated from the service for having been implicated in a crime of theft and/or
malversation of public funds. On March 25, 1977, Juco filed a complaint for illegal
dismissal against the NHC with the Department of Labor. On September 17, 1977, the
Labor Arbiter rendered a decision dismissing the complaint on the ground that the
NLRC had no jurisdiction over the case. Juco then elevated the case to the NLRC which
rendered a decision on December 28, 1982, reversing the decision of the Labor Arbiter.
NHC then appealed the NLRC decision before the Supreme Court and on January 17,
1985 which petition the Court granted thereby setting aside the NLRC decision and
reinstating the labor arbiter’s decision of dismissing the case.
On January 6, 1989, Juco filed with the Civil Service Commission a complaint for
illegal dismissal, with preliminary mandatory injunction. On February 6, 1989, NHC
moved for the dismissal of the complaint on the ground that the Civil Service
Commission has no jurisdiction over the case. CSC granted the motion to dismiss on the
ground of lack of jurisdiction.
On April 28, 1989, Juco filed with NLRC a complaint for illegal dismissal with
preliminary mandatory injunction against NHC. NLRC find NHC guilty of illegal
dismissal. On June 1, 1990, NHC filed its appeal before the NLRC and on March 14,
1991, the NLRC promulgated a decision which reversed the decision of Labor Arbiter
Manuel R. Caday on the ground of lack of jurisdiction.

Issue: Whether or not the NLRC committed grave abuse of discretion in holding that
petitioner is not governed by the Labor Code

Held: Yes. Under the laws then in force, employees of government-owned and/or
controlled corporations were governed by the Civil Service Law and not by the Labor
Code. Although in National Housing Corporation v. Juco, it was held that employees of
government-owned and/or controlled corporations, whether created by special law or
formed as subsidiaries under the general Corporation Law, are governed by the Civil
Service Law and not by the Labor Code, this ruling has been supplanted by the 1987
Constitution which states that the civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government owned or
controlled corporations with original charter. In National Service Corporation
(NASECO) v. National Labor Relations Commission, it was held that the NLRC has
jurisdiction over the employees of NASECO on the ground that it is the 1987
Constitution that governs because it is the Constitution in place at the time of the
decision. It was further held that the new phrase "with original charter" means that
government-owned and controlled corporations refer to corporations chartered by
special law as distinguished from corporations organized under the Corporation Code.
Thus, NASECO which had been organized under the general incorporation statute and
a subsidiary of the National Investment Development Corporation, which in turn was a
subsidiary of the Philippine National Bank, is excluded from the purview of the Civil
Service Commission. The above doctrine applies in this case. In the case at bench, the
National Housing Corporation is a government owned corporation organized in 1959 in
accordance with Executive Order No. 399, otherwise known as the Uniform Charter of
Government Corporation, dated January 1, 1959. Its shares of stock are and have been
one hundred percent (100%) owned by the Government from its incorporation under
Act 1459, the former corporation law. The government entities that own its shares of
stock are the Government Service Insurance System, the Social Security System, the
Development Bank of the Philippines, the National Investment and Development
Corporation and the People's Homesite and Housing Corporation. Considering the fact
that the NHA had been incorporated under Act 1459, the former corporation law, it is
but correct to say that it is a government-owned or controlled corporation whose
employees are subject to the provisions of the Labor Code. This observation is reiterated
in the recent case of Trade Union of the Philippines and Allied Services (TUPAS) v.
National Housing
Corporation, where the SC held that the NHA is now within the jurisdiction of the
Department of Labor and Employment, it being a government-owned and/or
controlled corporation without an original charter. Furthermore, the Court previously
ruled that the workers or employees of the NHC (now NHA) undoubtedly have the
right to form unions or employee's organization and that there is no impediment to the
holding of a certification election among them as they are covered by the Labor Code.
REPUBLIC OF THE PHILIPPINES VS. COURT OF APPEALS and THE NATIONAL
PARKS DEVELOPMENT SUPERVISORY ASSOCIATION & THEIR MEMBERS
G.R. No. 87676. 20 December, 1989. First Division (Grino-Aquino, J.)

Topic: Non-applicability of the Labor Code (Art. 6, LC) The Civil Service Law embraces
all branches, subdivisions, instrumentalities and agencies of the Government, including
GOCCs with original chapter, hence, employees thereof are civil service employees.

Facts
National Parks Development Committee (NPDC, for brevity) was originally created in
1963 under Executive Order No. 30, as the Executive Committee for the development of
Quezon Memorial, Luneta and other national parks. The Committee was registered
with the SEC as a non-stock and non-profit corporation.
However, in 1987, due to failure to comply with SEC requirements (i.e. to submit
General Information Sheet and Financial Statements from 1981 to 1987; to register its
Corporate Books; and to operate for a continuous period for at least 5 years since 1967)
NPDC was attached to the Ministry of Tourism. Pursuant thereto, Civil Service
Commission notified NPDC that all appointments and other personnel actions shall be
submitted to the former.
The Rizal Park Supervisory Employees Association was organized, and it affiliated with
the Trade Union of the Philippines and Allied Service (TUPAS, for brevity) under
Certificate No. 1206. However, NPDC entered into a separate CBA with NPDCEA
(TUPAS Local Chapter No. 967), and NPDCSA (TUPAS Chapter No. 1206) for a period
of two (2) years. Pursuant thereto, these unions staged a strike alleging unfair labor
practices by NPDC.
Contention of the NPDC: The strike is illegal on ground that the strikers, being
government employees, the strikers have no right to strike, although they may form a
union.
Ruling of the Trial Court and CA: Complaint is dismissed for lack of jurisdiction, to wit:
(1) there exists an employer-employee relationship between NPDC and the strikers; (2)
the acts complained of falls under par 5, Art. 217, in relation to Art. 265 of the Labor
Code. Hence, the case properly falls under the jurisdiction of DOLE. On appeal, CA
affirmed the decision of the trial court.

Issue
WON the NPDC Employees are covered by the Civil Service Law.

Ruling
NPDC is a government agency, and its employees are covered by the Civil Service
Rules and Regulations.

Citing the case of Jesus P. Perlas vs. People of the Philippines (G.R. No. 84637-39),
NPDC remained under the Office of the President despite an attempt to transfer it to the
Bureau of Forest Development, DENR in 1975. Further, since 1977 to 1981, the annual
appropriations decrees listed NPDC as a regular government agency under the Office
of the President.
Pursuant thereto, NPDC employees are allowed under the 1987 Constitution to
organize and join unions of their choice, that notwithstanding, there is as yet no law
permitting them to strike.

Anent the issue on WON the labor dispute is cognizable by DOLE, the Court held that
In case of a labor dispute between the employees and the government, Section 15 of
Executive Order No. 180 dated June 1, 1987 provides that the Public Sector Labor-
Management Council, not the Department of Labor and Employment, shall hear the
dispute.
SSS Employees Association v Court of Appeals
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T.
BAYLON, RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO
DE ALDAY, SERGIO ARANETA, PLACIDO AGUSTIN, VIRGILIO MAGPAYO,
petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C.
PERALEJO, RTC, BRANCH 98, QUEZON CITY, respondents.

G.R. No. 85279

July 28, 1989

Facts:

On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a
complaint for damages with a prayer for a writ of preliminary injunction against
petitioners, alleging that on June 9, 1987, the officers and members of SSSEA staged an
illegal strike and baricaded the entrances to the SSS Building, preventing non-striking
employees from reporting for work and SSS members from transacting business with
the SSS; that the strike was reported to the Public Sector Labor - Management Council,
which ordered the strikers to return to work; that the strikers refused to return to work;
and that the SSS suffered damages as a result of the strike. The complaint prayed that a
writ of preliminary injunction be issued to enjoin the strike and that the strikers be
ordered to return to work; that the defendants (petitioners herein) be ordered to pay
damages; and that the strike be declared illegal.

It appears that the SSSEA went on strike after the SSS failed to act on the union's
demands, which included: implementation of the provisions of the old SSS-SSSEA
collective bargaining agreement (CBA) on check-off of union dues; payment of accrued
overtime pay, night differential pay and holiday pay; conversion of temporary or
contractual employees with six (6) months or more of service into regular and
permanent employees and their entitlement to the same salaries, allowances and
benefits given to other regular employees of the SSS; and payment of the children's
allowance of P30.00, and after the SSS deducted certain amounts from the salaries of the
employees and allegedly committed acts of discrimination and unfair labor practices.

Issue:

Whether or not employees of the Social Security System (SSS) have the right to strike.

Held:

The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that
the State "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" [Art. XIII, Sec. 31].
Resort to the intent of the framers of the organic law becomes helpful in understanding
the meaning of these provisions. A reading of the proceedings of the Constitutional
Commission that drafted the 1987 Constitution would show that in recognizing the
right of government employees to organize, the commissioners intended to limit the
right to the formation of unions or associations only, without including the right to
strike.

Considering that under the 1987 Constitution "the civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters" [Art. IX(B), Sec. .
2(l) see also Sec. 1 of E.O. No. 180 where the employees in the civil service are
denominated as "government employees"] and that the SSS is one such government-
controlled corporation with an original charter, having been created under R.A. No.
1161, its employees are part of the civil service [NASECO v. NLRC, G.R. Nos. 69870 &
70295, November 24,1988] and are covered by the Civil Service Commission's
memorandum prohibiting strikes. This being the case, the strike staged by the
employees of the SSS was illegal.
HW #2
BAGUIO TRANSPORT v NLRC

The liability of an employer in job contracting, vis-a-vis his contractor’s employees, is

the sole issue brought to the fore in this labor dispute.

Upon the facts and circumstances, we uphold the solidary liability of GMC and LUPO for
the latter’s liabilities in favor of employees whom he had earlier employed and
dismissed.chanrobles law library

Recovery, however, should not be based on Article 106 of the Labor Code. This
provision treats specifically of "labor-only" contracting, which is not the set-up between
GMC and LUPO.

Article 106 provides: jgc:chanrobles.com.ph

"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.

x          x           x

"There is "labor-only" contracting where the person supplying workers to an employer

does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such persons are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by him"
(Emphasis supplied).

In other words, a person is deemed to be engaged in "labor-only" contracting where (1)

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 (2) the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer (See
Section 9, Rule VIII, Book III of the omnibus Rules Implementing the Labor Code;
italics ours).

Since the construction of an annex building inside the company plant has no relation
whatsoever with the employer’s business of flour and feeds manufacturing, "labor-only"
contracting does not exist. Article 106 is thus inapplicable.

Instead, it is "job contracting," covered by Article 107, which is involved, reading: jgc:chanrobles.com.ph

"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." (Emphasis supplied).

Specifically, there is "job contracting" where (1) the contractor carries on an

independent business and undertakes the contract work on his own account under his
own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of
the work except as to the results thereof; and (2) the contractor has substantial capital
or investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business. It may be that LUPO
subsequently ran out of capital and was unable to satisfy the award to petitioners. That
was an after-the-fact development, however, and does not detract from his status as
an independent contractor.

Based on the foregoing, GMC qualifies as an "indirect employer." It entered into a

contract with an independent contractor, LUPO, for the construction of an annex
building, a work, task, job or project not directly related to GMC’s business of flour and
feeds manufacturing. Being an "indirect employer," GMC is solidarily liable with LUPO
for any violation of the Labor Code pursuant to Article 109 thereof, reading: jgc:chanrobles.com.ph

"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." cralaw virtua1aw library

The provision of existing law referred to is Article 1728 of the Civil Code, which states,
among others, that "the contractor is liable for all the claims of laborers and others
employed by him . . ." cralaw virtua1aw library

The foregoing interpretation finds a precedent in the case of Deferia v. NLRC (G.R. No.
78713, 27 February 1991) per Sarmiento, J., where Articles 107 and 109 were applied
as the statutory basis for the joint and several liability of the employer with his
contractor, in addition to Article 106, since the situation in that case was clearly one of
"labor-only" contracting.

The NLRC submission that Article 107 is not applicable in the instant case for the reason
that the coverage thereof is limited to one "not an employer" whereas GMC is such an
employer as defined in Article 97 (b) of the Labor Code, 1 is not well-taken. Under the
peculiar set-up herein, GMC is, in fact, "not an employer" (in the sense of not being a
direct employer) as understood in Article 106 of the Labor Code, but qualifies as an
"indirect employer" under Article 107 of said Code.

The distinction between Articles 106 and 107 lies in the fact that Article 106 deals with
"labor-only" contracting. Here, by operation of law, the contractor is merely considered
as an agent of the employer, who is deemed "responsible to the workers to the same
extent as if the latter were directly employed by him." on the other hand, Article 107
deals with" job contracting." In the latter situation, while the contractor himself is the
direct employer of the employees, the employer is deemed, by operation of law, as an
indirect employer.

In other words, the phrase "not an employer" found in Article 107 must be read in
conjunction with Article 106. A contrary interpretation would render the provisions of
Article 107 meaningless considering that everytime an employer engages a contractor,
the latter is always acting in the interest of the former, whether directly or indirectly, in
relation to his employees.

It should be recalled that a finding that a contractor is a "labor-only" contractor is

equivalent to declaring that there is an employer-employee relationship between the
owner of the project and the employees of the "labor-only" contractor (Associated
Anglo-American Tobacco Corp. v. Clave, G.R. No. 50915, 30 August 1990, 189 SCRA
127; Industrial Timber Corp. v. NLRC, G.R. No. 83616, 20 January 1989, 169 SCRA
341). This is evidently because, as heretofore stated, the "labor-only" contractor is
considered as a mere agent of an employer. In contrast, in "job contracting," no
employer-employee relationship exists between the owner and the employees of his
contractor. The owner of the project is not the direct employer but merely an indirect
employer, by operation of law, of his contractor’s employees. chanrobles.com : virtual law library

As an indirect employer, and for purposes of determining the extent of its civil liability,
GMC is deemed a "direct employer" of his contractor’s employees pursuant to the last
sentence of Article 109 of the Labor Code. As a consequence, GMC can not escape its
joint and solidary liability to petitioners.

Further, Article 108 of the Labor Code requires the posting of a bond to answer for
wages that a contractor fails to pay, thus: jgc:chanrobles.com.ph

"Article 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, fails to pay the same." cralaw virtua1aw library

Having failed to require LUPO to post such a bond, GMC must answer for whatever
liabilities LUPO may have incurred to his employees. This is without prejudice to its
seeking reimbursement from LUPO for whatever amount it will have to pay petitioners.
MARAGUINOT v NLRC
Maraguinot and Enero were separately hired by Vic Del Rosario under Viva Films as
part of the filming crew. Sometime in May 1992, sought the assistance of their
supervisor to facilitate their request that their salary be adjusted in accordance with the
minimum wage law.

On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario would
agree to their request only if they sign a blank employment contract. Petitioners refused
to sign such document. After which, the Mr. Enero was forced to go on leave on the
same month and refused to take him back when he reported for work. Mr. Maraguinot
on the other hand was dropped from the payroll but was returned days after. He was
again asked to sign a blank employment contract but when he refused, he was
terminated.

Consequently, the petitioners sued for illegal dismissal before the Labor Arbiter. The
private respondents claim the following: (a) that VIVA FILMS is the trade name of
VIVA PRODUCTIONS, INC. and that it was primarily engaged in the distribution &
exhibition of movies- but not then making of movies; (b) That they hire contractors
called “producers” who act as independent contractors as that of Vic Del Rosario; and
(c) As such, there is no employee-employer relation between petitioners and private
respondents.

The Labor Arbiter held that the complainants are employees of the private respondents.
That the producers are not independent contractor but should be considered as labor-
only contractors and as such act as mere agent of the real employer. Thus, the said
employees are illegally dismissed.

The private respondents appealed to the NLRC which reversed the decision of the
Labor Arbiter declaring that the complainants were project employees due to the ff.
reasons: (a) Complainants were hired for specific movie projects and their employment
was co-terminus with each movie project; (b)The work is dependent on the availability
of projects. As a result, the total working hours logged extremely varied; (c) The
extremely irregular working days and hours of complainants work explains the lump
sum payment for their service; and (d) The respondents alleged that the complainants
are not prohibited from working with other movie companies whenever they are not
working for the independent movie producers engaged by the respondents.

A motion for reconsideration was filed by the complainants but was denied by NLRC.
In effect, they filed an instant petition claiming that NLRC committed a grave abuse of
discretion in: (a) Finding that petitioners were project employees; (b) Ruling that
petitioners were not illegally dismissed; and (c) Reversing the decision of the Labor
Arbiter.
In the instant case, the petitioners allege that the NLRC acted in total disregard of
evidence material or decisive of the controversy.

Issues:

(a) W/N there exist an employee- employer relationship between the petitioners and
the private respondents.

(b) W/N the private respondents are engaged in the business of making movies.

(c) W/N the producer is a job contractor.

Held:

There exist an employee- employer relationship between the petitioners and the private
respondents because of the ff. reasons that nowhere in the appointment slip does it
appear that it was the producer who hired the crew members. Moreover, it was VIVA’s
corporate name appearing on heading of the slip. It can likewise be said that it was
VIVA who paid for the petitioners’ salaries.

Respondents also admit that the petitioners were part of a work pool wherein they
attained the status of regular employees because of the ff. requisites: (a) There is a
continuous rehiring of project employees even after cessation of a project; (b) The tasks
performed by the alleged “project employees” are vital, necessary and indispensable to
the usual business or trade of the employer; and (c) However, the length of time which
the employees are continually re-hired is not controlling but merely serves as a badge of
regular employment.

Since the producer and the crew members are employees of VIVA and that these
employees’ works deal with the making of movies. It can be said that VIVA is engaged
of making movies and not on the mere distribution of such.

The producer is not a job contractor because of the ff. reasons: (Sec. Rule VII, Book III of
the Omnibus Rules Implementing the Labor Code.)

a. A contractor carries on an independent business and undertakes the contract work on

his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof. The said
producer has a fix time frame and budget to make the movies.

b. The contractor should have substantial capital and materials necessary to conduct his
business. The said producer, Del Rosario, does not have his own tools, equipment,
machinery, work premises and other materials to make motion pictures. Such materials
were provided by VIVA.

It can be said that the producers are labor-only contractors. Under Article 106 of the
Labor Code (reworded) where the contractor does not have the requisites as that of the
job contractors.
CALAMBA MEDICAL CENTER v NATIONAL LABOR RELATIONS COMMISSION

An employment relationship exists between a physician and a hospital if the hospital

controls both the means and the details of the process by which the physician is to
accomplish his task.

Petitioner Calamba Medical Center (CMC), engaged the services of medical doctors-
spouses Ronaldo Lanzanas (Dr. Ronaldo) and Merceditha Lanzanas (Dr. Merceditha) as
part of its team of resident physicians. They were given, among others, identification
cards and work schedules; and were paid a monthly retainer. They were likewise
enrolled in the Social Security System (SSS). Subsequently, CMC’s medical director
issued a Memorandum to Dr. Ronaldo after a resident physician overheard Dr. Ronaldo
and a fellow employee discussing the low admission in the hospital. After the incident
involving her husband, Dr. Merceditha was no longer given any work assignments.

Afterwards, the rank and file employees union of Calamba Medical Center went on a
strike. Dr. Ronaldo and Dr. Merceditha meanwhile filed a complaint for illegal
suspension and illegal dismissal, respectively before the National Labor Relations
Commission Regional Arbitration Board (NLRC-RAB). Consequently, the Department
of Labor and Employment (DOLE) issued a return to work order. Dr. Ronaldo, on the
other hand, received a notice of termination indicating his failure to return for work. Dr.
Ronaldo thus amended his complaint to illegal dismissal. The CMC contends that the
doctors-spouses are not employees of the same, so that they cannot be illegally
dismissed.

ISSUES:
Whether or not an employee-employer relationship does not exist between Calamba
Medical Center and the doctors-spouses Lanzanas

HELD:
Under the ―control test,‖ an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by which
the physician is to accomplish his task.

Where a person who works for another does so more or less at his own pleasure and is
not subject to definite hours or conditions of work, and is compensated according to the
result of his efforts and not the amount thereof, the element of control is absent.

As priorly stated, the spouses-doctors maintained specific work-schedules, as

determined by petitioner through its medical director, which consisted of 24-hour shifts
totaling forty-eight hours each week and which were strictly to be observed under pain
of administrative sanctions.
That CMC exercised control over spouses-doctors gains light from the undisputed fact
that in the emergency room, the operating room, or any department or ward for that
matter, spouses-doctors’ work is monitored through its nursing supervisors, charge
nurses and orderlies. Without the approval or consent of CMC or its medical director,
no operations can be undertaken in those areas. For control test to apply, it is not
essential for the employer to actually supervise the performance of duties of the
employee, it being enough that it has the right to wield the power.

With respect to spouses-doctors sharing in some hospital fees, this scheme does not
sever the employment tie between them and CMC as this merely mirrors additional
form or another form of compensation or incentive similar to what commission-based
employees receive as contemplated in Article 97 (f) of the Labor Code.
The spouses-doctors were in fact made subject to petitioner-hospital’s Code of Ethics,
the provisions of which cover administrative and disciplinary measures on negligence
of duties, personnel conduct and behavior, and offenses against persons, property and
the hospital’s interest.

More importantly, the CMC itself provided incontrovertible proof of the employment
status of respondents, namely, the identification cards it issued them, the payslips and
BIR W-2 (now 2316) Forms which reflect their status as employees, and the classification
as ―salary‖ of their remuneration. Moreover, it enrolled respondents in the SSS and
Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage
under the SSS Law is premised on the existence of an employer-employee relationship,
[35] except in cases of compulsory coverage of the self-employed. It would be
preposterous for an employer to report certain persons as employees and pay their SSS
premiums as well as their wages if they are not its employees.

And if the spouses-doctors were not CMC’s employees, how does it account for its
issuance of the earlier-quoted March 7, 1998 memorandum explicitly stating that
respondent is ―employed‖ in it and of the subsequent termination letter indicating Dr.
Ronaldo’s employment status.

Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor
Code, an employer-employee relationship exists between the resident physicians and
the training hospitals, unless there is a training agreement between them, and the
training program is duly accredited or approved by the appropriate government
agency. In the spouses-doctors’ case, they were not undergoing any specialization
training. They were considered non-training general practitioners, assigned at the
emergency rooms and ward sections.
SONSA v ABS CBN
For the first time, the Supreme Court has determined the nature of the relationship
between a broadcasting network and its radio and television personalities. Applying the
so-called 'control' test in the landmark case, the court ruled that as a network does not
control the means and method by which a personality renders his or her contracted
services, the personality is an independent contractor rather than a network employee
(Jose Sonza v ABS-CBN Broadcasting Corporation (431 SCRA 583)). The ruling is a
welcome precedent for broadcasting networks, which are no longer stifled by the
stringent constitutional rights of employees when dealing with radio and television
personalities.

Facts

The parties to the case were Jose 'Jay' Sonza, a well-known radio and television
personality, and ABS-CBN Broadcasting Corporation, one of the country's biggest radio
and television networks.

Sonza and the network entered into a three-year agreement whereby Sonza undertook
to (i) co-host the Mel and Jay radio programme between 8:00am and 10:00am, Mondays
to Fridays, and (ii) co-host the Mel and Jay television programme between 5:30pm and
7:00pm on Sundays.

In turn, the network agreed to pay Sonza a significant monthly fee and other financial
benefits. Sonza rescinded the agreement in writing shortly before the start of its third
year and proceeded to sue the network in the Labour Court for alleged non-payment of
accrued benefits.

The network moved for dismissal on the basis that the Labour Court had no jurisdiction
over the case, given that there was no employer-employee relationship between the
parties. Since the Labour Court has jurisdiction over employer-employee relationships,
the principal issue became whether Sonza was an employee of the network. The Labour
Court ruled that Sonza was not an employee. The network hired him on account of his
unique skills and talent as a radio broadcaster and television host. As such, he was "free
to perform the services he undertook to provide, in accordance with his own style". The
control test was applied, according to which if the hiring party exercises no supervision
or control over the means and method by which the hired party provides his or her
contracted services, the latter is deemed to be an independent contractor and not an
employee. Accordingly, Sonza's complaint was dismissed for lack of jurisdiction due to
the absence of an employer-employee relationship between the parties.

Sonza appealed to the appellate Labour Commission, the Court of Appeals and the
Supreme Court, all of which rejected his claims. During these appeals, Sonza conceded
the applicability of the control test, but argued that the network had exercised control
over the means and method of his work. In his petition before the Supreme Court,
Sonza cited the following circumstances as indicators of this control:

The network had discretion not to broadcast Sonza's television and radio shows
(although in the event of doing so, it was still liable to pay his fees);
The agreement stipulated that Sonza should abide with the Television and Radio Code
of Ethics of the Association of Broadcasters of the Philippines; and
Sonza was tied exclusively to the network for the duration of the agreement.
Judgment

The Supreme Court ruled that these circumstances did not establish control by the
network over the means and method through which Sonza performed his work, since:

the network's discretion as to whether to broadcast his radio and television

programmes involved control over the result of his work, not over the means and
method thereof;
Sonza's undertaking to adhere to the ethical standards set by the Association of
Broadcasters of the Philippines did not constitute any control by the network over the
means and method by which he performed his work; and
the exclusivity clause in the agreement was inconsequential as it did not vest the
network with any control over the means and method by which Sonza provided his
services.
The Supreme Court added that the following facts had been clearly established:

The network was not involved in the performance that constituted the finished product
of Sonza's work;
The network did not instruct Sonza as to how to carry out his job;
The network did not supervise and control Sonza's work (rather, it was interested only
in providing a platform for his talent during the airing of the programmes in question);
and
The network's sole concern was the overall quality of the shows and their standing in
the ratings.
In light of these facts, the Supreme Court affirmed that Sonza was an independent
contractor and not an employee, commenting as follows:

"Even though the network provided Sonza with a place of work and necessary
equipment, he was still an independent contractor since the network did not supervise
and control his work. The network's sole concern was that Sonza showed off his talents
during the airing of the programmes.

A radio broadcast specialist who works under minimal supervision is an independent

contractor. Sonza's work as a radio and television host required special skills and talent,
which he admittedly possesses. The records do not show that the network exercised any
supervision and control over how he utilized his skills and talent in his shows."
TABANG v NLRC
The records show that petitioner Purificacion Tabang was a founding member, a
member of the Board of Trustees, and the corporate secretary of private respondent
Pamana Golden Care Medical Center Foundation, Inc., a non-stock corporation engaged
in extending medical and surgical services.

On October 30, 1990, the Board of Trustees issued a memorandum appointing petitioner
as Medical Director and Hospital Administrator of private respondent’s Pamana
Golden Care Medical Center in Calamba, Laguna.

Although the memorandum was silent as to the amount of remuneration for the
position, petitioner claims that she received a monthly retainer fee of five thousand
pesos (P5,000.00) from private respondent, but the payment thereof was allegedly
stopped in November, 1991.

As medical director and hospital administrator, petitioner was tasked to run the affairs
of the aforesaid medical center and perform all acts of administration relative to its
daily operations.

On May 1, 1993, petitioner was allegedly informed personally by Dr. Ernesto Naval that
in a special meeting held on April 30, 1993, the Board of Trustees passed a resolution
relieving her of her position as Medical Director and Hospital Administrator, and
appointing the latter and Dr. Benjamin Donasco as acting Medical Director and acting
Hospital Administrator, respectively. Petitioner averred that she thereafter received a
copy of said board resolution.

On June 6, 1993, petitioner filed a complaint for illegal dismissal and non-payment of
wages, allowances and 13th month pay before the labor arbiter.

Respondent corporation moved for the dismissal of the complaint on the ground of lack
of jurisdiction over the subject matter. It argued that petitioner’s position as Medical
Director and Hospital Administrator was interlinked with her position as member of
the Board of Trustees, hence, her dismissal is an intra-corporate controversy which falls
within the exclusive jurisdiction of the Securities and Exchange Commission (SEC).

Petitioner opposed the motion to dismiss, contending that her position as Medical
Director and Hospital Administrator was separate and distinct from her position as
member of the Board of Trustees. She claimed that there is no intra-corporate
controversy involved since she filed the complaint in her capacity as Medical Director
and Hospital Administrator, or as an employee of private respondent.

On April 26, 1994, the labor arbiter issued an order dismissing the complaint for lack of
jurisdiction. He ruled that the case falls within the jurisdiction of the SEC, pursuant to
Section 5 of Presidential Decree No. 902-A. 1
Petitioner’s motion for reconsideration was treated as an appeal by the labor arbiter
who consequently ordered the elevation of the entire records of the case to public
respondent NLRC for appellate review. 2

On appeal, respondent NLRC affirmed the dismissal of the case on the additional
ground that "the position of a Medical Director and Hospital Administrator is akin to
that of an executive position in a corporate ladder structure," hence, petitioner’s
removal from the said position was an intra-corporate controversy within the original
and exclusive jurisdiction of the SEC. 3

Aggrieved by the decision, petitioner filed the instant petition which we find, however,
to be without merit.

We agree with the findings of the NLRC that it is the SEC which has jurisdiction over
the case at bar. The charges against herein private respondent partake of the nature of
an intra-corporate controversy. Similarly, the determination of the rights of petitioner
and the concomitant liability of private respondent arising from her ouster as a medical
director and/or hospital administrator, which are corporate offices, is an intra-
corporate controversy subject to the jurisdiction of the SEC.

Contrary to the contention of petitioner, a medical director and a hospital administrator

are considered as corporate officers under the by-laws of respondent corporation.
Section 2(i), Article I thereof states that one of the powers of the Board of Trustees is
"(t)o appoint a Medical Director, Comptroller/Administrator, Chiefs of Services and
such other officers as it may deem necessary and prescribe their powers and duties." 4

The president, vice-president, secretary and treasurer are commonly regarded as the
principal or executive officers of a corporation, and modern corporation statutes usually
designate them as the officers of the corporation. 5 However, other offices are
sometimes created by the charter or by-laws of a corporation, or the board of directors
may be empowered under the by-laws of a corporation to create additional offices as
may be necessary. 6

It has been held that an "office" is created by the charter of the corporation and the
officer is elected by the directors or stockholders. 7 On the other hand, an "employee"
usually occupies no office and generally is employed not by action of the directors or
stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee. 8 chanroblesvirtuallawlibrary

In the case at bar, considering that herein petitioner, unlike an ordinary employee, was
appointed by respondent corporation’s Board of Trustees in its memorandum of
October 30, 1990, 9 she is deemed an officer of the corporation. Perforce, Section 5(c) of
Presidential Decree No. 902-A, which provides that the SEC exercises exclusive
jurisdiction over controversies in the election or appointment of directors, trustees,
officers or managers of corporations, partnerships or associations, applies in the present
dispute. Accordingly, jurisdiction over the same is vested in the SEC, and not in the
Labor Arbiter or the NLRC.

Moreover, the allegation of petitioner that her being a member of the Board of Trustees
was not one of the considerations for her appointment is belied by the tenor of the
memorandum itself. It states: "We hope that you will uphold and promote the mission
of our foundation," 10 and this cannot be construed other than in reference to her
position or capacity as a corporate trustee.

A corporate officer’s dismissal is always a corporate act, or an intra-corporate

controversy, and the nature is not altered by the reason or wisdom with which the
Board of Directors may have in taking such action. 11 Also, an intra-corporate
controversy is one which arises between a stockholder and the corporation. There is no
distinction, qualification, nor any exemption whatsoever. The provision is broad and
covers all kinds of controversies between stockholders and corporations. 12

With regard to the amount of P5,000.00 formerly received by herein petitioner every
month, the same cannot be considered as compensation for her services rendered as
Medical Director and Hospital Administrator. The vouchers 13 submitted by petitioner
show that the said amount was paid to her by PAMANA, Inc., a stock corporation
which is separate and distinct from herein private respondent. Although the payments
were considered advances to Pamana Golden Care, Calamba branch, there is no
evidence to show that the Pamana Golden Care stated in the vouchers refers to herein
respondent Pamana Golden Care Medical Center Foundation, Inc.

Pamana Golden Care is a division of Pamana, Inc., while respondent Pamana Golden
Care Medical Center Foundation, Inc. is a non-stock, non-profit corporation. It is stated
in the memorandum of petitioner that Pamana, Inc. is a stock and profit corporation
selling pre-need plan for education, pension and health care. The health care plan is
called Pamana Golden Care Plan and the holders are called Pamana Golden Care Card
Holders or, simply, Pamana Members. 14

It is an admitted fact that herein petitioner is a retained physician of Pamana, Inc.,

whose patients are holders of the Pamana Golden Care Card. In fact, in her complaint
15 filed before the Regional Trial Court of Calamba, herein petitioner is asking, among
others, for professional fees and/or retainer fees earned for her treatment of Pamana
Golden Care card holders. 16 Thus, at most, said vouchers can only be considered as
proof of payment of retainer fees made by Pamana, Inc. to herein petitioner as a
retained physician of Pamana Golden Care.

Moreover, even assuming that the monthly payment of P5,000.00 was a valid claim
against respondent corporation, this would not operate to effectively remove this case
from the jurisdiction of the SEC. In the case of Cagayan de Oro Coliseum, Inc. v. Office
of the Minister of Labor and Employment etc., Et Al., 17 we ruled that "(a)lthough the
reliefs sought by Chavez appear to fall under the jurisdiction of the labor arbiter as they
are claims for unpaid salaries and other remuneration for services rendered, a close
scrutiny thereof shows that said claims are actually part of the perquisites of his
position in, and therefore interlinked with, his relations with the corporation. In Dy, Et
Al., v. NLRC, Et Al., the Court said: ‘(t)he question of remuneration involving as it does,
a person who is not a mere employee but a stockholder and officer, an integral part, it
might be said, of the corporation, is not a simple labor problem but a matter that comes
within the area of corporate affairs and management and is in fact a corporate
controversy in contemplation of the Corporation Code.’"
FRANCISCO v NLRC
FACTS:

1995, Petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer to the
City of Makati to secure business permits, construction permits and other licenses for
the initial operation of the company.

Although she was designated as Corporate Secretary, she was not entrusted with the
corporate documents; neither did she attend any board meeting nor required to do so.
She never prepared any legal document and never represented the company as its
Corporate Secretary. 1996, petitioner was designated Acting Manager. Petitioner was
assigned to handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with government
agencies, especially with the BIR, SSS and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is
owned and operated by Kasei Corporation.

January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. Kasei
Corporation reduced her salary, she was not paid her mid-year bonus allegedly because
the company was not earning well. On October 2001, petitioner did not receive her
salary from the company. She made repeated follow-ups with the company cashier but
she was advised that the company was not earning well. Eventually she was informed
that she is no longer connected with the company.

Since she was no longer paid her salary, petitioner did not report for work and filed an
action for constructive dismissal before the labor arbiter. Private respondents averred
that petitioner is not an employee of Kasei Corporation. They alleged that petitioner
was hired in 1995 as one of its technical consultants on accounting matters and act
concurrently as Corporate Secretary. As technical consultant, petitioner performed her
work at her own discretion without control and supervision of Kasei Corporation.
Petitioner had no daily time record and she came to the office any time she wanted and
that her services were only temporary in nature and dependent on the needs of the
corporation.

The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with
modification the Decision of the Labor Arbiter. On appeal, CA reversed the NLRC
decision. CA denied petitioner’s MR, hence, the present recourse.

ISSUES:

WON there was an employer-employee relationship between petitioner and private

respondent; and if in the affirmative,
Whether petitioner was illegally dismissed.
RULING:

Generally, courts have relied on the so-called right of control test where the person for
whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the
existence of an employer-employee relationship.
There are instances when, aside from the employer’s power to control the employee,
economic realities of the employment relations help provide a comprehensive analysis
of the true classification of the individual, whether as employee, independent
contractor, corporate officer or some other capacity.

It is better, therefore, to adopt a two-tiered test involving: (1) the employer’s power to
control; and (2) the economic realities of the activity or relationship.

The control test means that there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control not only the
end achieved but also the manner and means used to achieve that end.

There has to be analysis of the totality of economic circumstances of the worker. Thus,
the determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as: (1) the extent to which the
services performed are an integral part of the employer’s business; (2) the extent of the
worker’s investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the relationship between
the worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. The proper standard of
economic dependence is whether the worker is dependent on the alleged employer for
his continued employment in that line of business

By applying the control test, it can be said that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura,
the corporation’s Technical Consultant. She reported for work regularly and served in
various capacities as Accountant, Liaison Officer, Technical Consultant, Acting
Manager and Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of engagement.
Respondent corporation had the power to control petitioner with the means and
methods by which the work is to be accomplished.
Under the economic reality test, the petitioner can also be said to be an employee of
respondent corporation because she had served the company for 6 yrs. before her
dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month
pay, bonuses and allowances, as well as deductions and Social Security contributions
from. When petitioner was designated General Manager, respondent corporation made
a report to the SSS. Petitioner’s membership in the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent corporation. The
coverage of Social Security Law is predicated on the existence of an employer-employee
relationship.

The corporation constructively dismissed petitioner when it reduced her. This amounts
to an illegal termination of employment, where the petitioner is entitled to full
backwages
A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of
work resorted to when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to an
employee. Petition is GRANTED.
MY MIDTERM ANSWERS:
1. NO, XR and YRA argument is incorrect. Under the law, the reliefs available to OFWs
are full reimbursement of placement free, payment of salaries for the unexpired portion
of their employment contract and damages. Here, XR and YRA are solidarily liable for
the whole two years as payment of the unexpired portion of the employment contract.
The principal and employer assumed liabilities at the time the contract approved by the
POEA.

2. The steps to be taken before Annie can work for Cebu integrated electronics are:
1.) Prepare the employment contract for the conditions of employment;
2.) Provide housing accomodation in the such place of work;
3.) Provide pre-employment orientation;
4.) Register the worker with the Barangay office in or near the place of work

3. Yes, POEA should grant the motion. As POEA acts as the protector of overseas
workers' rights to fair and equitable employment practices, POEA should grant the
motion for clemency based on the fact that such dismissal was not due to gross
misconduct of the employee thus should protect the employee for heavy sanctions.

4. I would advice A to comply with the company policy for such policy is valid. Under
the Labor Code, Employers have the right to make reasonable rules and regulations for
the management of their employees. Company policies are generally binding and valid
on the parties and forms part of the employment contract when entered into, unless it is
shown that such policy is grossly oppressive or contrary to law. Here, the policy of
disclosing such relationships is not oppressive nor violates any law, therefore, it is
valid.

No, the agency's defense is invalid. Under the law, a recruitment agency is solidarily
liable with the acts of the principal or employer. A recruitment agency assumed
solidarily liability under its license and the employment contract with the worker, thus
he shall be liable.

XR and YRA's argument are incorrect. Under the Labor Code, the Labor Arbiter of the
NLRC has exclusive and original jurisdiction on cases of money claims of OFWs arising
from employer-employee relationship or employment contract. Here, upon the
approval of POEA of the contract, employment contract between the parties exist, thus
falls under the jurisdiction of the labor arbiter.

No, under the Constitution only a judge may issue search and arrest warrants. The
Secretary of DOLE is not a judge and therefor cannot issue search and arrest warrants.

XR and YRA's argument is correct. Under the Labor Code, in order to determine
employer-employee relationship, two test may be applied: Four-fold test or the two-
tiered test. Accoding to these tests, Control test is the most important factor to
determine employer-employee relationship. Here, we cannot determine if there exists
the control test for work has not yet started, thus, there is no employer-employee
relationship yet.

A's contention is correct. According to the Magna Carta for disabled persons, qualified
disabled persons shall be granted the same terms and conditions of employment as
qualified abled employees. Here, since X works as a regular employee and not as mere
apprentice or learner such wage and deduction is proper.