Magallanes vs. Sun Yat SenG.R. No. 160876 January 18, 2008

Facts: Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs), petitioners, Grace Gonzales, and Bella Gonzales were all employed as teachers in the Sun Yat Sen Elementary School in Surigao City. Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng and Benito Ang are its directors, while Teotimo Tan is the school treasurer. They are all respondents herein.

On May 22, 1994, respondents terminated the services of petitioners. Thus, on August 3, 1994, they filed with the Sub-Regional Arbitration Branch No. X, National Labor Relations Commission (NLRC), Butuan City, complaints against respondents for illegal dismissal, underpayment of wages, payment of backwages, 13thmonth pay, ECOLA, separation pay, moral damages, and attorneys fees. Likewise, on August 22, 1994, petitioner Cotecson filed a separate complaint praying for the same reliefs.

Issue: (1) whether the Court of Appeals (Seventh Division) erred in holding that affixing a wrong docket number on a motion renders it "non-existent;" and (2) whether the issuance by the NLRC of the Order dated March 30, 2001, amending the amounts of separation pay and backwages, awarded by the Court of Appeals (Sixteenth Division) to petitioners and computed by the Labor Arbiter, is tantamount to grave abuse of discretion amounting to lack or excess of jurisdiction.

Held:WHEREFORE, weGRANTthe petition. The challenged Resolutions dated October 29, 2001, May 8, 2003, and October 10, 2003 in CA-G.R. SP No. 67068 areREVERSED. The Order of the NLRC dated March 30, 2001 in NLRC Case No. M-006176-2001 isSET ASIDE. The Order of the Labor Arbiter dated January 8, 2001 isREINSTATED.

Ratio Decidendi: 1. Court of Appeals (Seventh Division) is correct when it ruled that petitioners motion for reconsideration of its Resolution dated October 29, 2001 in CA-G.R. SP No. 67068 is "non-existent." Petitioners counsel placed a wrong case number in their motion. Where a pleading bears an erroneous docket number and thus "could not be attached to the correct case," the said pleading is, for all intents and purposes, "non-existent." It has neither the duty nor the obligation to correct the error or to transfer the case to the Seventh Division. However, we opt for liberality in the application of the rules to the instant case in light of the following considerations.First, the rule that negligence of counsel binds the client may be relaxed where adherence thereto would result in outright deprivation of the clients liberty or property or where the interests of justice so require.Second, this Court is not a slave of technical rules, shorn of judicial discretion in rendering justice; it is guided by the norm that on the balance, technicalities take a backseat against substantive rights. Thus, if the application of the rules would tend to frustrate rather than promote justice, it is always within this Courts power to suspend the rules or except a particular case from its application.

2. We sustain petitioners contention that the NLRC, in modifying the award of the Court of Appeals, committed grave abuse of discretion amounting to lack or excess of jurisdiction.Quasi-judicial agencies have neither business nor power to modify or amend the final and executory Decisions of the appellate courts. Under the principle of immutability of judgments, any alteration or amendment which substantially affects a final and executory judgment is void for lack of jurisdiction.8We thus rule that the Order dated March 30, 2001 of the NLRC directingthat the monetary award should be computed from June 1994, the date petitioners were dismissed from the service, up to June 20, 1995 only, isvoid.

Arco Metal Products vs. SAMARM-NAFLUG.R. No. 170734 May 14, 2008

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13thmonth pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. The employees were Rante Lamadrid, Alberto Gamban, and Rodelio Collantes. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration. The voluntary arbitrator, Apron M. Mangabat, ruled in favor of the petitioner.

Issue/s: Whether or not the Court of Appeals erred when it ruled that the grant of 13thmonth pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, the prorated payment of the said benefits does not constitute diminution of benefits under Article 100 of the Labor Code.

Whether the intent of the CBA provisions is to grant full benefits regardless of service actually rendered by an employee to the company.

Held:IN VIEW HEREOF, the petition isDENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 85089 dated 29 September 2005 is and its Resolution dated 9 December 2005 are herebyAFFIRMED.

Ratio Decidendi: The Petition fails.

In cases involving money claims of employees, the employer has the burden of proving that the employees did receive the wages and benefits and that the same were paid in accordance with law. Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily presented other proofs, such as the names of other employees who did not fully serve for one year and thus were given prorated benefits. Experientially, a perfect attendance in the workplace is always the goal but it is seldom achieved. There must have been other employees who had reported for work less than a full year and who, as a consequence received only prorated benefits. This could have easily bolstered petitioners theory of mistake/error, but sadly, no evidence to that effect was presented.

PLDT v NLRC and Marilyn Abucay, G.R. No. L- 80609 http://www.lawphil.net/judjuris/juri1988/aug1988/gr_80609_1988.htmlFACTS: Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation.1Investigated and heard, she was found guilty as charged and accordingly separated from the service.2She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit.

Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said decisionin totoand dismissed the appeals.4The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above- quoted award as having been made with grave abuse of discretion.

The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. In the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring corruption.

For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years.

ISSUE: The legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent.

HELD:

The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded separation pay not withstanding that the first cause was certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was two months separation pay for 2 years service. In Firestone, the employee was allowed full separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month separation pay for every year of her 15year service. It would seem then that length of service is not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal.

The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor.

There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause.

But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.

We hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.

The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee.

The petition is GRANTED.

Toyota Motors Phils. Corp. workers Association v. NLRC, J. Velasco Jr.

http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/158786_158789.htmFACTS:

TheUnionis a legitimate labor organization duly registered with the Department of Labor and Employment (DOLE) and is the sole and exclusive bargaining agent of allToyotarank and file employees.[5]Toyota, on the other hand, is a domestic corporation engaged in the assembly and sale of vehicles and parts.

OnFebruary 14, 1999, theUnionfiled a petition for certification election among theToyotarank and file employees with the National Conciliation and Mediation Board (NCMB), which was docketed as Case No. NCR-OD-M-9902-001.Med-Arbiter Ma. Zosima C. Lameyra denied the petition, but, on appeal, the DOLE Secretary granted theUnions prayer, and, through the June 25, 1999 Order, directed the immediate holding of the certification election.[7]AfterToyotas plea for reconsideration was denied, the certification election was conducted.Med-Arbiter LameyrasMay 12, 2000Order certified theUnionas the sole and exclusive bargaining agent of all theToyotarank and file employees.Toyotachallenged said Order via an appeal to the DOLE Secretary.In the meantime, theUnionsubmitted its Collective Bargaining Agreement (CBA) proposals toToyota, but the latter refused to negotiate in view of its pending appeal.

In connection withToyotas appeal,Toyotaand theUnionwere required to attend a hearing onFebruary 21, 2001before the Bureau of Labor Relations (BLR) in relation to the exclusion of the votes of alleged supervisory employees from the votes cast during the certification election. TheFebruary 21, 2001hearing was cancelled and reset toFebruary 22, 2001.OnFebruary 21, 2001, 135 Union officers and members failed to render the required overtime work, and instead marched to and staged a picket in front of the BLR office in Intramuros,Manila.[9]TheUnion, in a letter of the same date, also requested that its members be allowed to be absent onFebruary 22, 2001to attend the hearing and instead work on their next scheduled rest day. This request however was denied byToyota.

Despite denial of theUnions request, more than 200 employees staged mass actions on February 22 and 23, 2001 in front of the BLR and the DOLE offices, to protest the partisan and anti-union stance ofToyota. Due to the deliberate absence of a considerable number of employees onFebruary 22 to 23, 2001,Toyotaexperienced acute lack of manpower in its manufacturing and production lines, and was unable to meet its production goals resulting in huge losses of PhP 53,849,991.

February 27, 2001, Toyota sent individual letters to some 360 employees requiring them to explain within 24 hours why they should not be dismissed for their obstinate defiance of the companys directive to render overtime work on February 21, 2001, for their failure to report for work on February 22 and 23, 2001, and for their participation in the concerted actions which severely disrupted and paralyzed the plants operations.

On the next day, theUnionfiled with the NCMB another notice of strike docketed as NCMB-NCR-NS-02-061-01 for union busting amounting to unfair labor practice.

March 1, 2001, theUnionnonetheless submitted an explanation in compliance with theFebruary 27, 2001notices sent byToyotato the erring employees. The Union members explained that their refusal to work on their scheduled work time for two consecutive days was simply an exercise of their constitutional right to peaceably assemble and to petition the government for redress of grievances. It further argued that the demonstrations staged by the employees on February 22 and 23, 2001 could not be classified as an illegal strike or picket, and thatToyotahad already condoned the alleged acts when it accepted back the subject employees.

March 2 and 5, 2001, Toyota issued two (2) memoranda to the concerned employees to clarify whether or not they are adopting the March 1, 2001 Unions explanation as their own.The employees were also required to attend an investigative interview,[14]but they refused to do so.

OnMarch 16, 2001,Toyotaterminated the employment of 227 employees[15]for participation in concerted actions in violation of its Code of Conduct and for misconduct under Article 282 of the Labor Code.

In reaction to the dismissal of its union members and officers, theUnionwent on strike onMarch 17, 2001.Subsequently, fromMarch 28, 2001toApril 12, 2001, theUnionintensified its strike by barricading the gates ofToyotas Bicutan and Sta. Rosa plants. The strikers prevented workers who reported for work from entering the plants.

Toyotafiled a petition to declare the strike illegal with the NLRC arbitration branch, which was docketed as NLRC NCR (South) Case No. 30-04-01775-01, and prayed that the erring Union officers, directors, and members be dismissed.

OnApril 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an Order[20]certifying the labor dispute to the NLRC. In said Order, the DOLE Secretary directed all striking workers to return to work at their regular shifts byApril 16, 2001.On the other hand, it orderedToyotato accept the returning employees under the same terms and conditions obtaining prior to the strike or at its option, put them under payroll reinstatement.The parties were also enjoined from committing acts that may worsen the situation.

TheUnionended the strike onApril 12, 2001.The union members and officers tried to return to work onApril 16, 2001but were told thatToyotaopted for payroll-reinstatement authorized by the Order of the DOLE Secretary.

The Union filed a motion for reconsideration of the DOLE Secretarys April 10, 2001 certification Order, which, however, was denied by the DOLE Secretary in her May 25, 2001 Resolution. Consequently, a petition for certiorari was filed before the CA.

Despite the issuance of the DOLE Secretarys certification Order, several payroll-reinstated members of the Union staged a protest rally in front of Toyotas Bicutan Plant bearing placards and streamers in defiance of the April 10, 2001 Order.

May 28, 2001, around forty-four (44) Union members staged another protest action in front of the Bicutan Plant.At the same time, some twenty-nine (29) payroll-reinstated employees picketed in front of the Santa Rosa Plants main entrance, and were later joined by other Union members.

June 5, 2001, notwithstanding the certification Order, theUnionfiled another notice of strike.

Notwithstanding repeated orders to file its position paper, theUnionstill failed to submit its position paper onJuly 19, 2001. Consequently, the NLRC issued an Order directing theUnionto submit its position paper on the scheduledAugust 3, 2001hearing; otherwise, the case shall be deemed submitted for resolution based on the evidence on record.

During theAugust 3, 2001hearing, theUnion, despite several accommodations, still failed to submit its position paper.Later that day, theUnionclaimed it filed its position paper by registered mail.

Subsequently, the NLRC, in itsAugust 9, 2001Decision, declared the strikes staged by theUniononFebruary 21 to 23, 2001and May 23 and 28, 2001 as illegal.

The NLRC considered the mass actions staged onFebruary 21 to 23, 2001illegal as theUnionfailed to comply with the procedural requirements of a valid strike under Art. 263 of the Labor Code.

After the DOLE Secretary assumed jurisdiction over theToyotadispute onApril 10, 2001, theUnionagain staged strikes on May 23 and 28, 2001.The NLRC found the strikes illegal as they violated Art. 264 of the Labor Code which proscribes anystrike or lockout after jurisdiction is assumed over the dispute by the President or the DOLE Secretary.

The NLRC held that both parties must have maintained the status quo after the DOLE Secretary issued the assumption/certification Order, and ruled that theUniondid not respect the DOLE Secretarys directive.

Accordingly, bothToyotaand theUnionfiled Motions for Reconsideration, which the NLRC denied in itsSeptember 14, 2001Resolution.[23]Consequently, both parties questioned the August 9, 2001 Decision[24]and September 14, 2001 Resolution of the NLRC in separate petitions for certiorari filed with the CA.

CA considered the participation in illegal strikes as serious misconduct.It defined seriousmisconduct as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.

However, in itsJune 20, 2003Resolution,[28]the CA modified itsFebruary 27, 2003Decision by reinstating severance compensation to the dismissed employees based on social justice.

ISSUE:

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

HELD:

TheUnioncontends that the NLRC violated its right to due process when it disregarded its position paper in decidingToyotas petition to declare the strike illegal.

We rule otherwise.

It is entirely theUnions fault that its position paper was not considered by the NLRC.Records readily reveal that the NLRC was even too generous in affording due process to theUnion.It issued no less than three (3) orders for the parties to submit its position papers, which theUnionignored until the last minute.No sufficient justification was offered why theUnionbelatedly filed its position paper.

The proper ruling in this situation is to consider the petition as compliant with the formal requirements with respect to the parties who signed it and, therefore, can be given due course only with regard to them.The other petitioners who did not sign the verification and certificate against forum shopping cannot be recognized as petitioners have no legal standing before the Court.The petition should be dismissed outright with respect to the non-conforming petitioners.

The alleged protest rallies in front of the offices of BLR and DOLE Secretary and at theToyotaplants constituted illegal strikes

When is a strike illegal?

Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz:

(1)[when it] is contrary to a specificprohibition of law, such as strike by employees performing governmental functions; or

(2)[when it] violates a specificrequirement of law[, such as Article 263 of the Labor Code on the requisites of a valid strike]; or

(3)[when it] is declared for an unlawfulpurpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or

(4)[when it] employs unlawfulmeansin the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or

(5)[when it] is declared in violation of an existinginjunction[, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or

(6)[when it] is contrary to an existingagreement, such as a no-strike clause or conclusive arbitration clause.[33]

Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not within the ambit of strikes as defined in the Labor Code, since they were legitimate exercises of their right to peaceably assemble and petition the government for redress of grievances.

A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute, in turn, includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of the employer and the employee.

Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken by the Union officials and members onFebruary 21 to 23, 2001are not valid and proper exercises of their right to assemble and ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. TheUnions position is weakened by the lack of permit from the City ofManilato hold rallies. Shrouded as demonstrations, they were in reality temporary stoppages of work perpetrated through the concerted action of the employees who deliberately failed to report for work on the convenient excuse that they will hold a rally at the BLR and DOLE offices in Intramuros, Manila, on February 21 to 23, 2001.The purported reason for these protest actions was to safeguard their rights against any abuse which the med-arbiter may commit against their cause. However, theUnionfailed to advance convincing proof that the med-arbiter was biased against them. The acts of the med-arbiter in the performance of his duties are presumed regular.Sans ample evidence to the contrary, theUnionwas unable to justify the February 2001 mass actions.What comes to the fore is that the decision not to work for two days was designed and calculated to cripple the manufacturing arm ofToyota.It becomes obvious that the real and ultimate goal of theUnionis to coerceToyotato finally acknowledge theUnionas the sole bargaining agent of the company.This is not a legal and valid exercise of the right of assembly and to demand redress of grievance.

We sustain the CAs affirmance of the NLRCs finding that the protest rallies staged onFebruary 21 to 23, 2001were actually illegal strikes.

The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the illegal strikes held fromFebruary 21 to 23, 2001, from March 17 toApril 12, 2001, and on May 23 and 28, 2001.We uphold the findings of fact of the NLRC on the involvement of said union officials in the unlawful concerted actions as affirmed by the CA.

Members liability depends on participation in illegal actsDid they commit illegal acts during the illegal strikes onFebruary 21 to 23, 2001, from March 17 toApril 12, 2001, and on May 23 and 28, 2001?

The answer is in the affirmative.

As we have ruled that the strikes by theUnionon the three different occasions were illegal, we now proceed to determine the individual liabilities of the affected union members for acts committed during these forbidden concerted actions.

There can be no good faith in intentionally incurring absences in a collective fashion from work on February 22 and 23, 2001 just to attend the DOLE hearings.TheUnions strategy was plainly to cripple the operations and bringToyotato its knees by inflicting substantial financial damage to the latter to compel union recognition.The Union officials and members are supposed to know through common sense that huge losses would befall the company by the abandonment of their regular work.It was not disputed thatToyotalost more than PhP 50 million because of the willful desertion of company operations in February 2001 by the dismissed union members.In addition, further damage was experienced byToyotawhen theUnionagain resorted to illegal strikes from March 28 toApril 12, 2001, when the gates ofToyotawere blocked and barricaded, and the company officials, employees, and customers were intimidated and harassed.Moreover, they were fully aware of the company rule on prohibition against concerted action inimical to the interests of the company and hence, their resort to mass actions on several occasions in clear violation of the company regulation cannot be excused nor justified.Lastly, they blatantly violated the assumption/certification Order of the DOLE Secretary, exhibiting their lack of obeisance to the rule of law.These acts indeed constituted serious misconduct.

A painstaking review of case law renders obtuse theUnions claim for separation pay.In a slew of cases, this Court refrained from awarding separation pay or financial assistance to union officers and members who were separated from service due to their participation in or commission of illegal acts during strikes.

The petitions in G.R. Nos. 158786 and 158789 areDENIEDwhile those in G.R. Nos. 158798-99 areGRANTED.

The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the grant of severance compensation isANNULLEDandSET ASIDE.

The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which affirmed theAugust 9, 2001Decision of the NLRC but deleted the grant of severance compensation, isREINSTATEDandAFFIRMED.No costs.

Reno Foods Inc v. Nagkakakisang Lakas ng Manggagawa (NLM), J. del Castillo

FACTS:

Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which VicenteKhuis the president and is being sued in that capacity.RespondentNenitaCapor(Capor) was an employee of Reno Foods until her dismissal onOctober 27, 1998.

It is a standard operating procedure of petitioner-company to subject all its employees to reasonable search of their belongings upon leaving the company premises.OnOctober 19, 1998, the guard on duty found sixRenocanned goods wrapped in nylon leggings insideCaporsfabric clutch bag.The only other contents of the bag were money bills and a small plastic medicine container.

Petitioners accordedCaporseveral opportunities to explain her side, often with the assistance of the union officers ofNagkakaisangLakasngManggagawa(NLM)Katipunan.In fact, after petitioners sent a Notice of Termination toCapor, she was given yet another opportunity for reconsideration through a labor-management grievance conference held onNovember 17, 1999.Unfortunately, petitioners did not find reason to change its earlier decision to terminateCaporsemployment with the company.

OnDecember 8, 1998, petitioners filed a complaint-affidavit againstCaporfor qualified theft in the Office of the City Prosecutor,Malabon-NavotasSubstation.OnApril 5, 1999, a Resolutionwas issued finding probable cause for the crime charged.Consequently,an Informationwas filed againstCapordocketed as Criminal Case No. 207-58-MN.

Meanwhile, theNagkakaisangLakasngManggagawa(NLM)Katipunanfiled on behalf ofCapora complaint[4]for illegal dismissal and money claims against petitioners with the Head Arbitration Office of the National Labor Relations Commission (NLRC) for the National Capital Region.The complaint prayed thatCaporbe paid her fullbackwagesas well as moral and exemplary damages.The complaint was docketed as NLRC NCR Case No. 00-01-00183-99.

The Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who commits theft of company property may be validly terminated and consequently, the said employee is not entitled to separation pay.

The NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but added an award of financial assistance.

The appellate court affirmed the NLRCs award of financial assistance toCapor.It stressed that the laborers welfare should be the primordial and paramount consideration when carrying out and interpreting provisions of the Labor Code.It explained that the mandate laid down inPhilippine Long Distance Telephone Company v. National Labor Relations Commissionwas not absolute, but merely directory.

ISSUE: The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for theft of company property.

HELD: Conviction in a criminal case is not necessary to find just cause for termination of employment - Criminal cases require proof beyond reasonable doubt while labor disputesrequireonlysubstantialevidence,whichmeanssuchrelevantevidenceas a reasonablemind might accept as adequate to justify a conclusion.[20]The evidence in this case was reviewed by the appellate court and two labor tribunals endowed with expertise on the matter the Labor Arbiter and the NLRC.They all found substantial evidence to conclude thatCaporhad been validly dismissed for dishonesty or serious misconduct.It is settled that factual findings of quasi-judicial agencies are generally accorded respect and finality so long as these are supported by substantial evidence.In the instant case, we find no compelling reason to doubt the common findings of the three reviewing bodies.

The award of separation pay is not warranted under the law and jurisprudence.- We find no justification for the award of separation pay toCapor.This award is a deviation from established law and jurisprudence.

The law is clear.Separation pay is only warranted when the cause for termination is not attributable to the employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible.It isnotallowed when an employee is dismissed for just cause,such as serious misconduct.

Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring employee.We see no reason why the same should not be similarly applied in the case ofCapor.She attempted to steal the property of her long-time employer.For committing such misconduct, she is definitely not entitled to an award of separation pay.

It is true that there have been instances when the Court awarded financial assistance to employees who were terminated for just causes, on grounds of equity and social justice.The same, however, has been curbed and rationalized inPhilippine Long Distance Telephone Company v. National Labor Relations Commission.In that case, we recognized the harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which the employer can rightfully terminate their employment.For these instances, the award of financial assistance was allowed.But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character.When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion.It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof.It will be an insult to all the laborers who, despite their economic difficulties, strive to maintain good values and moral conduct.

While we sympathize withCaporsplight, being of retirement age and having served petitioners for 39 years, we cannot award any financial assistance in her favor because it is not only against the law but also a retrogressive public policy.

Petition is granted.

SAN MIGUEL CORPORATION v. NLRC, 551 SCRA 410

Facts:

Ernesto M. Ibias (respondent) was employed by petitioner SMC on24 December 1978initially as a CRO operator in its Metal Closure and Lithography Plant.

According to SMCs Policy on Employee Conduct,[4]absences without permission or AWOPs, which are absences not covered either by a certification of the plant doctor that the employee was absent due to sickness or by a duly approved application for leave of absence filed at least six (6) days prior to the intended leave, are subject to disciplinary action.

The same Policy on Employee Conduct also punishes falsification of company records or documents with discharge or termination for the first offense if the offender himself or somebody else benefits from falsification or would have benefited if falsification is not found on time.[6]

It appears that per company records, respondentwas AWOP on a number of dates.For his absences on 2, 4 and 11 January and 28 and 29 April, he was given a written warning[7]dated9 May 1997that he had already incurred five (5) AWOPs and that further absences would be subject to disciplinary action.For his absences on 28 and 29 April and 7 and 8 May, respondent was alleged to have falsified his medical consultation card by stating therein that he was granted sick leave by the plant clinic on said dates when in truth he was not.

Respondent was required to explain his AWOPs. Respondent did not comply with these notices.He was again issued two Notices to Explain[10]both dated3 June 1997, one for his AWOPs from 26 May to2 June 1997and another for falsification of medical consultation card entries for 28 April and8 May 1997.

On5 June 1997, respondent submitted a handwritten explanation to the charges denying the falsification charge.

Not satisfied with the explanation, SMC conducted an administrative investigation on 17 and23 June 1997. After the completion of the investigation, SMC concluded that respondent committed the offenses of excessive AWOPs and falsification of company records or documents because of the testimony of the staff assistant and the plant doctor. SMC accordingly dismissed him.

On30 March 1998, respondentfiled a complaint for illegal dismissal against SMC.

The LA rendered his Decision, for the respondent. The labor arbiter believed that respondent had committed the absences pointed out by SMC but found the imposition of termination of employment based on his AWOPs to be disproportionate since SMC failed to show by clear and convincing evidence that it had strictly implemented its company policy on absences.It also noted that termination based on the alleged falsification of company records was unwarranted in view of SMCs failure to establish respondentsguilt.

The NLRC affirmed the decision of the LA.

On28 June 2000, the Court of Appeals rendered its Decision affirming the findings of the LA and NLRC.

Issue: W/N the respondent was illegally dismissed? NO

Held:

Petition partly granted.The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employers dismissal of an employee and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. Thus, substantial evidence is the least demanding in the hierarchy of evidence.[24]

The Court agrees with the tribunals below that SMC was unable to prove the falsification charge against respondent. Respondentcannot be legally dismissed on the basis ofthe uncorroborated and self-servingtestimonies of SMCs employees.SMC merely relied on the testimonies of Marabe and Siwa, who both stated that respondent admitted to them that he falsified his medical consultation card to cover up his excessive AWOPs.For his part, respondent denied having had any knowledge of said falsification, both in his testimony during the company-level investigation and in his handwritten explanation.He did not even claim that he had requested for, nor had been granted any sick leave for the days that the falsified entries were made.Siwa, being responsible for the medical cards, should take the blame for the loss and alleged tampering thereof, and not respondent who had no control over the same.

The issue of the unauthorized absences, however, is another matter.

However, while respondent has admitted these absences, before the Court, he also seeks to belittle the plain by countering that SMC has not been too rigid in its application of company rules pertaining to leave availments.In the proceedings below he claimed that during the days that he was absent, he had attended to some family matters.

Respondent cannot feign surprise nor ignorance of the earlier AWOPs he had incurred.He was even given a warning.

Thus, even if he was not punished for his subsequent AWOPs, the same remained on record.He was aware of the number ofAWOPs he incurred and should have knownthat these were punishable under company rules. The fact that he was spared from suspension cannot be used as a reason to incur further AWOPs and be absolved from the penalty therefor.

Respondents dismissal was well within the purview of SMCs management prerogative.

Management also has its own rights, which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with [fewer] privileges in life, the Supreme Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine.[38]What the lower tribunals perceived as laxity, we consider as leniency.

It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition.[37]Thus, in the implementation of its rules and policies, the employer has the choice to do so strictly or not, since this is inherent in its right to control and manage its business effectively.Consequently,management has the prerogative to impose sanctions lighter than those specifically prescribed by its rules, or to condone completely the violations of its erring employees. Of course, this prerogative must be exercised free of grave abuse of discretion, bearing in mind the requirements of justice and fair play.Television and Production Exponents(TAPE) Inc. v. Servana, J. Tinga

FACTS:

TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety program, Eat Bulaga!. Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto C. Servana had served as a security guard for TAPE from March 1987 until he was terminated on 3 March 2000.

Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard. He was detailed at Broadway Centrum in Quezon City where Eat Bulaga! regularly staged its productions. On 2 March 2000, respondent received a memorandum informing him of his impending dismissal on account of TAPEs decision to contract the services of a professional security agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00. He claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary considerations were withheld from him. He further contended that his dismissal was undertaken without due process and violative of existing labor laws, aggravated by nonpayment of separation pay.

TAPE countered that the labor arbiter had no jurisdiction over the case in the absence of an employer-employee relationship between the parties. TAPE made the following assertions: (1) that respondent was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency, TAPE engaged respondents services, as part of the support group and thus a talent, to provide security service to production staff, stars and guests of Eat Bulaga! as well as to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that complainant would render his services until such time that respondent company shall have engaged the services of a professional security agency; (5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a talent and a member of the support group, until such time that TAPE shall have engaged the services of a professional security agency; (6) that respondent was not prevented from seeking other employment, whether or not related to security services, before or after attending to his Eat Bulaga! functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the engagement of the security agency, informing them of the managements decision to terminate their services.

TAPE averred that respondent was an independent contractor falling under the talent group category and was working under a special arrangement which is recognized in the industry.

Respondent for his part insisted that he was a regular employee having been engaged to perform an activity that is necessary and desirable to TAPEs business for thirteen (13) years.

Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of TAPE.

the National Labor Relations Commission (NLRC) in a Decisiondated 22 April 2002 reversed the Labor Arbiter and considered respondent a mere program employee, thus:

We have scoured the records of this case and we find nothing to support the Labor Arbiters conclusion that complainant was a regular employee.

x x x x

The primary standard to determine regularity of employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.

Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee.

ISSUE: WON there was an employer-employee relationship between the petitioner and respondent.

HELD:

In concluding that respondent was an employee of TAPE, the Court of Appeals applied the four-fold test in this wise:

First. The selection and hiring of petitioner was done by private respondents. In fact, private respondents themselves admitted having engaged the services of petitioner only in 1995 after TAPE severed its relations with RPN Channel 9.

By informing petitioner through the Memorandum dated 2 March 2000, that his services will be terminated as soon as the services of the newly hired security agency begins, private respondents in effect acknowledged petitioner to be their employee. For the right to hire and fire is another important element of the employer-employee relationship.

Second. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. . . Payment as admitted by private respondents was given by them on a monthly basis at a rate of P5,444.44.

Third. Of the four elements of the employer-employee relationship, the control test is the most important. x x x

The bundy cards representing the time petitioner had reported for work are evident proofs of private respondents control over petitioner more particularly with the time he is required to report for work during the noontime program of Eat Bulaga! If it were not so, petitioner would be free to report for work anytime even not during the noontime program of Eat Bulaga! from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a talent. Precisely, he is being paid for being the security of Eat Bulaga! during the above-mentioned period. The daily time cards of petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the management of private respondent TAPE.

Policy Instruction No. 40 defines program employees as

x x x those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three (3) days from its consummation.

TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy instruction. It did not even present its contract with respondent. Neither did it comply with the contract-registration requirement.

In sum, we find no reversible error committed by the Court of Appeals in its assailed decision.

However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE.Thus, the Court of Appeals ruling on this point has to be modified.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION in that only petitioner Television and Production Exponents, Inc. is liable to pay respondent the amount of P10,000.00 as nominal damages for non-compliance with the statutory due process and petitioner Antonio P. Tuviera is accordingly absolved from liability.

Peoples Broadcasting v. Sec. of DOLE

G.R. no. 179652. May 8, 2009

Facts:

Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service, Inc.(Bombo Radyo Phils., Inc) (petitioner)for illegal deduction, non-payment of service incentive leave, 13thmonth pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) RegionalOffice No. VII,CebuCity.

On the basis of the complaint, the DOLE conducted a plant level inspection on23 September 2003. In theInspection Report Form,the Labor Inspector wrote under the heading Findings/Recommendations non-diminution of benefits and Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results.

Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers.

In his Order dated27 February 2004,DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee ofpetitioner, and that the former is entitled to his money claims amounting toP203, 726.30. Petitioner sought reconsideration of the Order, claiming that theRegional Director gave credence to the documents offered by respondent withoutexamining the originals, but at the same time he missed or failed to consider petitionersevidence.Petitioners motion for reconsideration was denied.[On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order dated27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no employer-employee relationshiphad ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter becauserespondents claim exceededP5,000.00.

Issue:

Does the Secretary of Labor have the power to determine the existence of an employer-employee relationship?

Held:

No.

Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all.The reason is obvious.In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationshipdemand that the level of scrutiny should be far above the cursory and the mechanical.Whiledocuments,particularlydocumentsfoundintheemployers office are the primary source materials, what may provedecisive are factorsrelated to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should becomprehensive and intensiveand therefore best leftto the specialized quasi-judicial body that isthe NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship.Such prerogatival determination, however, cannot be coextensivewith the visitorial and enforcement power itself.Indeed, such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions.The determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause in cases where the relationship of employer-employee still exists in Art. 128 (b).

Thus, before the DOLE mayexercise its powers under Article 128, two important questions must be resolved:(1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law?

The existence of an employer-employee relationship is a statutory prerequisite to and alimitationon the power of the Secretary of Labor, one which the legislative branch is entitled to impose.The rationale underlying this limitation is to eliminate the prospect of competingconclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by thequasi-judicial body, which is the NRLC, rather than an administrativeofficial of the executive branch of the government.If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes,his office confers jurisdiction on itself which it cannot otherwise acquire.

Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powersfor the purpose ofdeterminingviolationsof,and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto.Necessarily, the actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees.Among these differentiated rights are those accorded by the labor standards provisionsof the Labor Code, which theSecretary of Laboris mandated to enforce.If there is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable.

At least aprima facieshowing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power.The Secretary of Labor would not have been precluded from exercising the powers under Article 128 (b) over petitioner if another person withbetter-grounded claim of employmentthan that which respondent had.Respondent, especially if he were an employee,could have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its aegis.

The most important consideration for the allowance of the instant petition is the opportunity for the Court not only to set the demarcation between the NLRCs jurisdiction and the DOLEs prerogative but also the procedure whenthe case involves the fundamental challengeon the DOLEs prerogative based on lack of employer-employee relationship. Asexhaustively discussed here, the DOLEs prerogative hinges on the existence ofemployer-employee relationship, the issue is which is at the very heart of this case.And the evidence clearly indicates private respondent has never been petitioners employee.But the DOLE did not address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant petition on a technicality woulddeprive the Court of the opportunity to resolvethenovel controversy.

WHEREFORE, the petition isGRANTED.

Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008G.R. No. 167622, November 07, 2008Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement(Agreement) he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days notice in writing.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their earnings and would want to revert to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition.

Issue:

1. WON Tongko was an employee of Manulife

2. WON Tongko was illegally dismissed.

Held:

1. Yes

In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion.

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:

The Agent hereby agrees to comply with all regulations and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the Company's products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership.Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses.

Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control exercised by the company over Tongko. The fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents.

Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means and methods by which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with Manulife.

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of Manulife.

2. Yes

In its Petition for Certiorari dated January 7, 2005[26]filed before the CA, Manulife argued that even if Tongko is considered as its employee, his employment was validly terminated on the ground of gross and habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of Manulife. Manulife stated:

In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape up and altogether disregarded the latter's advice resulting in his laggard performance clearly indicative of his willful disobedience of the lawful orders of his superior. As private respondent has patently failed to perform a very fundamental duty, and that is to yield obedience to all reasonable rules, orders and instructions of the Company, as well as gross failure to reach at least minimum quota, the termination of his engagement from Manulife is highly warranted and therefore, there is no illegal dismissal to speak of.

It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota of evidence to support its claims. Manulife did not even point out which order or rule that Tongko disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's alleged "laggard performance," without substantiating such claim, and equated the same to disobedience and neglect of duty.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the validity of the termination of employment rests on the employer. Failure to discharge this evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just cause and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employer's dismissal of an employee, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to identify the specific acts by which Tongko's employment was terminated much less support the same with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must be concluded that Tongko was illegally dismissed.

Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

FRANCISCO vs. NLRC

ANGELINA FRANCISCO vs. NLRC, KASEI CORPORATION, et al.G.R. No. 170087August 31, 2006

FACTS:

In 1995, petitioner Angelina Francisco was hired by Kasei Corporation (Kasei) during its incorporation stage. She was designated as Accountant, Corporate Secretary and Liaison Officer of the company. In 1996, Francisco was designated Acting Manager to handle recruitment of all employees and perform management administration functions, represent the company in all dealings with government agencies, and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei.

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation.

In January 2001, Francisco was replaced as Manager. She alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei. The Treasurer convened a meeting of all employees and announced that Francisco was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters.

Thereafter, Kasei reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. She was not paid her mid-year bonus allegedly because the company was not earning well. In October 2001, she did not receive her salary from the company, made repeated follow-ups with the cashier but was advised that the company was not earning well. On October 15, 2001, she asked for her salary, but 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.

Kasei Corporation claimed that Francisco was not their employee, having been designated as technical consultant who performed work at her own discretion without the control and supervision of the Corporation, and that her consultancy may be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation.

To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji Corporation.

ISSUES:

Whether or not there was an employer-employee relationship between Francisco and Kasei Corporation; and whether Francisco was illegally dismissed.

HELD:

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.

However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished, 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.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment.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 employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers 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.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations 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 performingfunctions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years 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 August 1, 1999 to December 18, 2000. When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation.

It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business.The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement.

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.

In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development.

Peoples Broadcasting v. Sec. of DOLE | G.R. no. 179652. May 8, 2009Facts:

Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service, Inc.(Bombo Radyo Phils., Inc) (petitioner)for illegal deduction, non-payment of service incentive leave, 13thmonth pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) RegionalOffice No. VII,CebuCity.

On the basis of the complaint, the DOLE conducted a plant level inspection on23 September 2003. In theInspection Report Form,the Labor Inspector wrote under the heading Findings/Recommendations non-diminution of benefits and Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results.

Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers.

In his Order dated27 February 2004,DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee ofpetitioner, and that the former is entitled to his money claims amounting toP203, 726.30. Petitioner sought reconsideration of the Order, claiming that theRegional Director gave credence to the documents offered by respondent withoutexamining the originals, but at the same time he missed or failed to consider petitionersevidence.Petitioners motion for reconsideration was denied.[On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order dated27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no employer-employee relationshiphad ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter becauserespondents claim exceededP5,000.00.

Issue:

Does the Secretary of Labor have the power to determine the existence of an employer-employee relationship?

Held:

No.

Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all.The reason is obvious.In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationshipdemand that the level of scrutiny should be far above the cursory and the mechanical.Whiledocuments,particularlydocumentsfoundintheemployers office are the primary source materials, what may provedecisive are factorsrelated to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should becomprehensive and intensiveand therefore best leftto the specialized quasi-judicial body that isthe NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship.Such prerogatival determination, however, cannot be coextensivewith the visitorial and enforcement power itself.Indeed, such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions.The determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause in cases where the relationship of employer-employee still exists in Art. 128 (b).

Thus, before the DOLE mayexercise its powers under Article 128, two important questions must be resolved:(1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law?

The existence of an employer-employee relationship is a statutory prerequisite to and alimitationon the power of the Secretary of Labor, one which the legislative branch is entitled to impose.The rationale underlying this limitation is to eliminate the prospect of competingconclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by thequasi-judicial body, which is the NRLC, rather than an administrativeofficial of the executive branch of the government.If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes,his office confers jurisdiction on itself which it cannot otherwise acquire. Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powersfor the purpose ofdeterminingviolationsof,and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto.Necessarily, the actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees.Among these differentiated rights are those accorded by the labor standards provisionsof the Labor Code, which theSecretary of Laboris mandated to enforce.If there is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable.

At least aprima facieshowing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power.The Secretary of Labor would not have been precluded from exercising the powers under Article 128 (b) over petitioner if another person withbetter-grounded claim of employmentthan that which respondent had.Respondent, especially if he were an employee,could have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its aegis.

The most important consideration for the allowance of the instant petition is the opportunity for the Court not only to set the demarcation between the NLRCs jurisdiction and the DOLEs prerogative but also the procedure whenthe case involves the fundamental challengeon the DOLEs prerogative based on lack of employer-employee relationship. Asexhaustively discussed here, the DOLEs prerogative hinges on the existence ofemployer-employee relationship, the issue is which is at the very heart of this case.And the evidence clearly indicates private respondent has never been petitioners employee.But the DOLE did not address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant petition on a technicality woulddeprive the Court of the opportunity to resolvethenovel controversy.

WHEREFORE, the petition isGRANTED.

Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008 | G.R. No. 167622, November 07, 2008

Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement(Agreement) he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days notice in writing.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their earnings and would want to revert to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition.

Issue:

1. WON Tongko was an employee of Manulife

2. WON Tongko was illegally dismissed.

Held:

1. Yes

In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion.

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:

The Agent hereby agrees to comply with all regulations and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the Company's products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership.Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses.

Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control exercised by the company over Tongko. The fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents.

Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means and methods by which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was t