Avelino S. Alilin, et al. vs. Petron Corporation

G.R. No. 177592

June 9, 2014

FACTS:

Alilin, et al. are laborers hired by Romualdo D. Gindang Contractor and RDG to work in the premises of Petron's bulk plant. Their dates of hiring range from 1968 to 1993. In 2000, Petron and RDG entered into a Contract of Services for the period June 1, 2000 to May 31, 2002 whereby RDG undertook to provide Petron with janitorial, maintenance, tanker receiving, packaging and other utility services in its Mandaue Bulk Plant. This contract was extended on July 31, 2002 and further extended until September 30, 2002. Upon expiration, no further extension was made. Thus, on October 16, 2002, Alilin, et al. were barred from continuing their services with Petron.

Hence, the filing of a complaint for illegal dismissal, etc. against Petron, claiming to be the latter's regular employees. Petron, on the other hand, alleges that they are employees of RDG, an independent contractor. It presented the following pieces of evidence: (1) RDG's Certificate of Registration of Business Name issued by DTI; (2) RDG's Certificate of Registration issued by DOLE; (3) Contractor's Pre-Qualification Statement; (4) Conflict of Interest Statement signed by Romeo Gindang as manager of RDG; (5) RDG's Audited Financial Statements for the years 1998, 1999 and 2000; (6) RDG's Mayor's Permit for the years 2000 and 2001; (7) RDG's Certificate of Accreditation issued by DTI; (8) performance bond and insurance policy; (9) SSS Online Inquiry System Employee Contributions and Employee Static Information; and (10) Romeo's affidavit stating that he had paid the salaries of his employees assigned to Petron.

LA found against Petron and ruled that Alilin, et al. are its regular employees because their jobs were directly related to Petron's business operations; they worked under the supervision of Petron's foreman; they were using Petron's tools and equipment in the performance of their works. NLRC affirmed the ruling. However, CA reversed the ruling and found RDG to be a legitimate contractor.

ISSUE: Whether or not RDG is a legitimate contractor

HELD:

Petron failed to discharge the burden of proving that RDG is a legitimate contractor. Hence, the presumption that RDG is a labor-only contractor stands.

The audited financial statements and other financial documents of RDG for the years 1999 to 2001 establish that it does have sufficient working capital to meet the requirements of its service contract. In fact, the financial evaluation conducted by Petron of RDG's financial statements for years 1998-2000 showed RDG to have a maximum financial capability of Php4.807 Million as of December 1998, and PHp1.611 Million as of December 2000. Petron was able to establish RDG's sufficient capitalization when it entered into the service contract in 2000. The Court stresses though that this determination of RDG's status as an independent contractor is only with respect to its financial capability for the period covered by the financial and other documents presented. In other words, the evidence adduced merely proves that RDG was financially qualified as a legitimate contractor but only with respect to its last service contract with Petron in the year 2000.

As may be recalled, petitioners have rendered work for Petron for a long period of time even before the service contract was executed in 2000. The respective dates on which petitioners claim to have started working for Petron, as well as the fact that they have rendered continuous service to it until October 16, 2002, when they were prevented from entering the premises of Petron's Mandaue Bulk Plant, were not at all disputed by Petron. In fact, Petron even recognized that some of the petitioners were initially fielded by Romualdo Gindang, the father of Romeo, through RDG's precursor, Romualdo D. Gindang Contractor, while the others were provided by Romeo himself when he took over the business of his father in 1989. Hence, while Petron was able to establish that RDG was financially capable as a legitimate contractor at the time of the execution of the service contract in 2000, it nevertheless failed to establish the financial capability of RDG at the time when petitioners actually started to work for Petron in 1968, 1979, 1981, 1987, 1990, 1992 and 1993.

Petron's power of control over petitioners exists in this case

The facts that petitioners were hired by Romeo or his father and that their salaries were paid by them do not detract from the conclusion that there exists an employer-employee relationship between the parties due to Petron's power of control over petitioners. One manifestation of the power of control is the power to transfer employees from one work assignment to another. Here, Petron could order petitioners to work outside of their regular "maintenance/utility" job. Also, petitioners were required to report for work every day at the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed by the safety and security measures being implemented within the bulk plant. All these imply control. In an industry where safety is of paramount concern, control and supervision over sensitive operations, such as those performed by the petitioners, are inevitable if not at all necessary. Indeed, Petron deals with commodities that are highly volatile and flammable which, if mishandled or not properly attended to, may cause serious injuries and damage to property and the environment. Naturally, supervision by Petron is essential in every aspect of its product handling in order not to compromise the integrity, quality and safety of the products that it distributes to the consuming public.

Petitioners already attained regular status as employees of Petron

Petitioners were given various work assignments such as tanker receiving, barge loading, sounding, gauging, warehousing, mixing, painting, carpentry, driving, gasul filling and other utility works. Petron refers to these work assignments as menial works which could be performed by any able-bodied individual. The Court finds, however, that while the jobs performed by petitioners may be menial and mechanical, they are nevertheless necessary and related to Petron's business operations. If not for these tasks, Petron's products will not reach the consumers in their proper state. Indeed, petitioners' roles were vital inasmuch as they involve the preparation of the products that Petron will distribute to its consumers.

Furthermore, while it may be true that any able-bodied individual can perform the tasks assigned to petitioners, the Court notes the undisputed fact that for many years, it was the same able-bodied individuals (petitioners) who performed the tasks for Petron. The engagement of petitioners for the same works for a long period of time is a strong indication that such works were indeed necessary to Petron's business. In view of these, and considering further that petitioners' length of service entitles them to become regular employees under the Labor Code, petitioners are deemed by law to have already attained the status as Petitioner's regular employees. As such, Petron could not terminate their services on the pretext that the service contract it entered with RDG has already lasped.

• The principal who alleges that the contractor is a legitimate one has the burden of proving permissible contracting
• For a contractor to be considered a legitimate one, it must have substantial capitalization for the entire duration that the contractor's employees were assigned at the principal's premises

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Coca-Cola Bottlers Phils., Inc. vs. Alan M. Agito, et al.

G.R. No. 179546, February 13, 2009

FACTS:

Agito, et al. are salesmen assigned at the Lagro Sales Office of Coca-Cola for a number of years but were not regularized. Their employment was terminated without just cause and due process. They filed complaints against Coca-Cola, Interserve, Peerless Integrated Services, Inc. Better Builders, Inc., and Excellent Partners, Inc. However, they failed to state a reason for filing complaints against Interserve, Peerless, Better Builders and Excellent Partners.

Coca-Cola averred that Agito, et al. were employees of Interserve who were tasked to perform contracted services in accordance with the provision of the Contract of Services. The contract covering the period of April 1, 2002 to September 30, 2002 constituted legitimate job contracting.

To prove that Interserve is an independent contractor, Coca-Cola presented the following: (1) AOI of Interserve; (2) Certificate of Registration of Interserve with BIR; (3) ITR with Audited Financial Statements of Interserve for 2001; and (4) Certificate of Registration of Interserve as an independent contractor issued by DOLE.

As a result, Coca-Cola asserted that Agito, et al. were employees of Interserve since it was the latter which hired them, paid their wages and supervised their work, as proven by: (1) PDFs are in the records of Interserve; (2) Contracts of Temporary Employment with Interserve; and (3) payroll records of Interserve.

LA found for Coca-Cola and held that Interserve was a legitimate job contractor. The complaints against Peerless, Better Building and Excellent Partners was dismissed for failure to pursue the case.

On appeal, NLRC affirmed LA's decision.

CA reversed the NLRC decision and ruled that Interserve was a labor-only contractor with insufficient capital and investments for the services which it was contracted to perform. Additionally, CA determined that Coca-Cola had effective control over the means and method of Agito, et al.'s work as evidenced by the Daily Sales Monitoring Report, the Conventional Route System Proposed Set-Up, and the memoranda issued by the supervisor of petitioner addressed to workers. Respondents' tasks were directly related and necessary to the main business of Coca-Cola. Finally, certain provisions of the Contract of Service between Coca-Cola and Interserve suggested that the latter's undertaking did not involve a specific job but rather the supply of manpower.

ISSUE: Whether or not Interserve is a legitimate job contractor

HELD:

Legitimate Contracting vs. Labor-Only Contracting

The relations which may arise in a situation, where there is an employer, a contractor, and employees of the contractor, are identified and distinguished under Article 106 of the Labor Code:

Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

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

There is labor-only contracting where the person supplying workers to an employee 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.

The afore-quoted provision recognizes two possible relations among the parties: (1) the permitted legitimate job contract, or (2) the prohibited labor-only contracting.

A legitimate job contract, wherein an employer enters into a contract with a job contractor for the performance of the formers work, is permitted by law. Thus, the employer-employee relationship between the job contractor and his employees is maintained. In legitimate job contracting, the law creates an employer-employee relationship between the employer and the contractors employees only for a limited purpose, i.e., to ensure that the employees are paid their wages. The employer becomes jointly and severally liable with the job contractor only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the employer is not responsible for any claim made by the contractors employees.

On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent in recruiting and supplying the principal employer with workers for the purpose of circumventing labor law provisions setting down the rights of employees. It is not condoned by law.A finding by the appropriate authorities that a contractor is a labor-only contractor establishes an employer-employee relationship between the principal employer and the contractors employees and the former becomes solidarily liable for all the rightful claims of the employees. 

Section 5 of the Rules Implementing Articles 106-109 of the Labor Code, as amended, provides the guidelines in determining whether labor-only contracting exists:

Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements are [is] present:

i)                    The contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or

ii)                   The contractor does not exercise the right to control the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended.

Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out.

The right to control shall refer to the right reversed to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. (Emphasis supplied.)

When there is labor-only contracting, there is employer-employee relationship between the principal and the contractual employee

When there is labor-only contracting, Section 7 of the same implementing rules, describes the consequences thereof:

Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages.

The principal shall be deemed the employer of the contractual employee in any of the following case, as declared by a competent authority:

a.                   where there is labor-only contracting; or

b.                  where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.

According to the foregoing provision, labor-only contracting would give rise to: (1) the creation of an employer-employee relationship between the principal and the employees of the contractor or sub-contractor; and (2) the solidary liability of the principal and the contractor to the employees in the event of any violation of the Labor Code.

Even if employees are not performing activities indispensable to the business of the principal, labor-contracting may still exist if the contractor does not demonstrate substantial capital or investment

The law clearly establishes an employer-employee relationship between the principal employer and the contractors employee upon a finding that the contractor is engaged in labor-only contracting. Article 106 of the Labor Code categorically states: There is labor-only contracting where the person supplying workers to an employee 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. Thus, performing activities directly related to the principal business of the employer is only one of the two indicators that labor-only contracting exists; the other is lack of substantial capital or investment. The Court finds that both indicators exist in the case at bar.

Interserve has no substantial capital; it is impossible to measure whether or not there is substantial capital because the Contract between Coca-Cola and Interserve does not specify the work or the project that needs to be performed or completed.

At the outset, the Court clarifies that although Interserve has an authorized capital stock amounting toP2,000,000.00, only P625,000.00 thereof was paid up as of 31 December 2001. The Court does not set an absolute figure for what it considers substantial capital for an independent job contractor, but it measures the same against the type of work which the contractor is obligated to perform for the principal. However, this is rendered impossible in this case since the Contract between petitioner and Interserve does not even specify the work or the project that needs to be performed or completed by the latters employees, and uses the dubious phrase tasks and activities that are considered contractible under existing laws and regulations. Even in its pleadings, petitioner carefully sidesteps identifying or describing the exact nature of the services that Interserve was obligated to render to petitioner. The importance of identifying with particularity the work or task which Interserve was supposed to accomplish for petitioner becomes even more evident, considering that the Articles of Incorporation of Interserve states that its primary purpose is to operate, conduct, and maintain the business of janitorial and allied services. But respondents were hired as salesmen and leadman for petitioner. The Court cannot, under such ambiguous circumstances, make a reasonable determination if Interserve had substantial capital or investment to undertake the job it was contracting with petitioner.

Burden of proof of substantial capital rests in the contractor, or in its absence, the principal claiming it to be an independent contractor

The contractor, not the employee, has the burden of proof that it has the substantial capital, investment, and tool to engage in job contracting. Although not the contractor itself (since Interserve no longer appealed the judgment against it by the Labor Arbiter), said burden of proof herein falls upon petitioner who is invoking the supposed status of Interserve as an independent job contractor. Noticeably, petitioner failed to submit evidence to establish that the service vehicles and equipment of Interserve, valued at P510,000.00 and P200,000.00, respectively, were sufficient to carry out its service contract with petitioner. Certainly, petitioner could have simply provided the courts with records showing the deliveries that were undertaken by Interserve for the Lagro area, the type and number of equipment necessary for such task, and the valuation of such equipment. Absent evidence which a legally compliant company could have easily provided, the Court will not presume that Interserve had sufficient investment in service vehicles and equipment, especially since respondents allegation that they were using equipment, such as forklifts and pallets belonging to petitioner, to carry out their jobs was uncontroverted.

Interserve did not exercise the right to control the performance of the work of the respondents

The lack of control of Interserve over the respondents can be gleaned from the Contract of Services between Interserve (as the CONTRACTOR) and petitioner (as the CLIENT).

Paragraph 3 of the Contract specified that the personnel of contractor Interserve, which included the respondents, would comply with CLIENT as well as CLIENTs policies, rules and regulations. It even required Interserve personnel to subject themselves to on-the-spot searches by petitioner or its duly authorized guards or security men on duty every time the said personnel entered and left the premises of petitioner. Said paragraph explicitly established the control of petitioner over the conduct of respondents. Although under paragraph 4 of the same Contract, Interserve warranted that it would exercise the necessary and due supervision of the work of its personnel, there is a dearth of evidence to demonstrate the extent or degree of supervision exercised by Interserve over respondents or the manner in which it was actually exercised. There is even no showing that Interserve had representatives who supervised respondents work while they were in the premises of petitioner.

Also significant was the right of petitioner under paragraph 2 of the Contract to request the replacement of the CONTRACTORS personnel. True, this right was conveniently qualified by the phrase if from its judgment, the jobs or the projects being done could not be completed within the time specified or that the quality of the desired result is not being achieved, but such qualification was rendered meaningless by the fact that the Contract did not stipulate what work or job the personnel needed to complete, the time for its completion, or the results desired. The said provision left a gap which could enable petitioner to demand the removal or replacement of any employee in the guise of his or her inability to complete a project in time or to deliver the desired result. The power to recommend penalties or dismiss workers is the strongest indication of a companys right of control as direct employer.

Paragraph 4 of the same Contract, in which Interserve warranted to petitioner that the former would provide relievers and replacements in case of absences of its personnel, raises another red flag. An independent job contractor, who is answerable to the principal only for the results of a certain work, job, or service need not guarantee to said principal the daily attendance of the workers assigned to the latter. An independent job contractor would surely have the discretion over the pace at which the work is performed, the number of employees required to complete the same, and the work schedule which its employees need to follow.

As the Court previously observed, the Contract of Services between Interserve and petitioner did not identify the work needed to be performed and the final result required to be accomplished. Instead, the Contract specified the type of workers Interserve must provide petitioner (Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD) and their qualifications (technical/vocational course graduates, physically fit, of good moral character, and have not been convicted of any crime). The Contract also states that, to carry out the undertakings specified in the immediately preceding paragraph, the CONTRACTOR shall employ the necessary personnel, thus, acknowledging that Interserve did not yet have in its employ the personnel needed by petitioner and would still pick out such personnel based on the criteria provided by petitioner. In other words, Interserve did not obligate itself to perform an identifiable job, work, or service for petitioner, but merely bound itself to provide the latter with specific types of employees. These contractual provisions strongly indicated that Interserve was merely a recruiting and manpower agency providing petitioner with workers performing tasks directly related to the latters principal business.

Certification issued by DOLE is not sufficient to prove independent contractorship

The certification issued by the DOLE stating that Interserve is an independent job contractor does not sway this Court to take it at face value, since the primary purpose stated in the Articles of Incorporation of Interserve is misleading. According to its Articles of Incorporation, the principal business of Interserve is to provide janitorial and allied services. The delivery and distribution of Coca-Cola products, the work for which respondents were employed and assigned to petitioner, were in no way allied to janitorial services. While the DOLE may have found that the capital and/or investments in tools and equipment of Interserve were sufficient for an independent contractor for janitorial services, this does not mean that such capital and/or investments were likewise sufficient to maintain an independent contracting business for the delivery and distribution of Coca-Cola products.

• Legitimate Contracting vs. Labor-only Contracting
• When there is labor-only contracting, an employer-employee exists between the contractual employee and the principal
• Even if employees are not performing activities indispensable to the business of the principal, labor-only contracting may still exist if the contractor does not demonstrate substantial capital or investment
• To determine whether or not there is substantial capital for purposes of legitimate contracting, one must examine the specific job, work or service provided in the Service Agreement
• The burden of proof that the contractor is a legitimate contractor rests with the contractor, or in its absence, the principalCertification from DOLE is not sufficient to prove independent contractorship

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Polyfoam-RGC International Corporation and Precilla A. Gramaje vs. Edgardo Concepcion

G.R. No. 172349, June 13, 2012

FACTS :

Concepcion was hired by Polyfoam as an all-around factory worker and served as such for almost six years. One day, when Concepcion reported for work, he discovered that his time card was not in the rack and he was later informed by the security guard that he could no longer punch his time card. He was informed by his supervisor that the management decided to dismiss him due to an infraction of a company rule.

Hence, the filing of a complaint for illegal dismissal.

Gramaje later intervened, claiming to be the real employer of Concepcion. Gramaje claimed that P.A. Gramaje Employment Services (PAGES) is a legitimate job contractor who provided some manpower needs of Polyfoam and that Concepcion was hired as a packer and assigned to Polyfoam. She claimed no dismissal but that Concepcion simply stopped reporting for work.

LA found that Concepcion was illegally dismissed and holding Polyfoam and Gramaje solidarily liable for money claims.

On appeal, NLRC modified the decision by exonerating Polyfoam from liability and deleting the awards of backwages, 13th month pay, damages and attorney's fees. NLRC found Gramaje to be an independent contractor who had its own office equipment, tools, and substantial capital, and in fact supplied the plastic containers and carton boxes used by her employees in performing their duties. NLRC also found that Gramaje paid respondents wages and benefits and reported the latter to the SSS as a covered employee.

CA agreed with LA's conclusion that Gramaje is a labor-only contractor because of the following: (1) Gramaje failed to present its Audited Financial Statement that would have show its financial standing and ownership of equipment, machineries, and tools necessary to run her own business; (2) Gramaje failed to present a single copy of the purported contract with Polyfoam as to the packaging aspect of the latter's business; (3) Gramaje's licenses supposedly issued by the DOLE appeared to be spurious; (4) Gramaje was not registered with DOLE as a private recruitment agency; and (5) Gramaje presented only one SSS Quarterly Collection List whose authenticity is doubtful. The CA noted that petitioners are represented by only one law firm though they made it appear that they were represented by different lawyers.


ISSUES:

1. Whether or not Gramaje is an independent job contractor
2. Whether or not an employer-employee relationship exists between Polyfoam and respondent; and
3. Whether or not respondent was illegally dismissed from employment


HELD:


Contracting or subcontracting

Article 106 of the Labor Code explains the relations which may arise between an employer, a contractor, and the contractor's employees, thus:

Art. 106. Contracting or subcontracting. – Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

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

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

In Sasan, Sr. v. National Labor Relations Commission 4th Division, the Court distinguished permissible job contracting or subcontracting from labor-only contracting, to wit:

Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.  A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:

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

(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.

Labor-only Contracting

In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal.  In labor-only contracting, the following elements are present:

(a)    The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and

(b) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal.[42]

 The test of independent contractorship

The test of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.[43] In San Miguel Corporation v. Semillano,[44] the Court laid down the criteria in determining the existence of an independent and permissible contractor relationship, to wit:

x x x [W]hether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing and payment of the contractors workers; the control of the premises; the duty to supply the premises, tools, appliances, materials, and labor; and the mode, manner and terms of payment.[45]

Simply put, the totality of the facts and the surrounding circumstances of the case are to be considered. Each case must be determined by its own facts and all the features of the relationship are to be considered.[46]

Gramaje is a labor-only contractor

Applying the foregoing tests, we agree with the CAs conclusion that Gramaje is not an independent job contractor, but a labor-only contractor.

First, Gramaje has no substantial capital or investment. The presumption is that a contractor is a labor-only contractor unless he overcomes the burden of proving that it has substantial capital, investment, tools, and the like. The employee should not be expected to prove the negative fact that the contractor does not have substantial capital, investment and tools to engage in job-contracting.[47]

Gramaje claimed that it has substantial capital of its own as well as investment in its office, equipment and tools. She pointed out that she furnished the plastic containers and carton boxes used in carrying out the function of packing the mattresses of Polyfoam. She added that she had placed in Polyfoams workplace ten (10) sealing machines, twenty (20) hand trucks, and two (2) forklifts to enable respondent and the other employees of Gramaje assigned at Polyfoam to perform their job.Finally, she explained that she had her own office with her own staff.[48] However, aside from her own bare statement, neither Gramaje nor Polyfoam presented evidence showing Gramajes ownership of the equipment and machineries used in the performance of the alleged contracted job.Considering that these machineries are found in Polyfoams premises, there can be no other logical conclusion but that the tools and equipment utilized by Gramaje and her employees are owned by Polyfoam. Neither did Polyfoam nor Gramaje show that the latter had clients other than the former. Since petitioners failed to adduce evidence that Gramaje had any substantial capital, investment or assets to perform the work contracted for, the presumption that Gramaje is a labor-only contractor stands.[49]

Second, Gramaje did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, Polyfoam, its apparent role having been merely to recruit persons to work for Polyfoam.[50] It is undisputed that respondent had performed his task of packing Polyfoams foam products in Polyfoams premises. As to the recruitment of respondent, petitioners were able to establish only that respondents application was referred to Gramaje, but that is all. Prior to his termination, respondent had been performing the same job in Polyfoams business for almost six (6) years. He was even furnished a copy of Polyfoams Mga Alituntunin at Karampatang Parusa,[51]which embodied Polyfoams rules on attendance, the manner of performing the employees duties, ethical standards, cleanliness, health, safety, peace and order. These rules carried with them the corresponding penalties in case of violation.

While it is true that petitioners submitted the Affidavit of Polyfoams supervisor Victor Abadia, claiming that the latter did not exercise supervision over respondent because the latter was not Polyfoams but Gramajes employee, said Affidavit is insufficient to prove such claim. Petitioners should have presented the person who they claim to have exercised supervision over respondent and their alleged other employees assigned to Polyfoam. It was never established that Gramaje took entire charge, control and supervision of the work and service agreed upon. And as aptly observed by the CA, it is likewise highly unusual and suspect as to the absence of a written contract specifying the performance of a specified service, the nature and extent of the service or work to be done and the term and duration of the relationship.[52]

An Employer-Employee Relationship Exists
Between Respondent and Polyfoam

A finding that a contractor is a labor-only contractor, as opposed to permissible job contracting, is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the principal, the real employer.[53] In this case, Polyfoam is the principal employer and Gramaje is the labor-only contractor. Polyfoam and Gramaje are, therefore, solidarily liable for the rightful claims of respondent.[54]


Respondent was Illegally Dismissed
From Employment

Respondent stated that on January 14, 2000, his time card was suddenly taken off the rack. His supervisor later informed him that Polyfoams management decided to dismiss him due to infraction of company rule. In short, respondent insisted that he was dismissed from employment without just or lawful cause and without due process. Polyfoam did not offer any explanation of such dismissal.It, instead, explained that respondents real employer is Gramaje. Gramaje, on the other hand, denied the claim of illegal dismissal. She shifted the blame on respondent claiming that the latter in fact abandoned his work.

The LA gave credence to respondents narration of the circumstances of the case. Said conclusion was affirmed by the CA. We find no reason to depart from such findings.

Abandonment cannot be inferred from the actuations of respondent. When he discovered that his time card was off the rack, he immediately inquired from his supervisor. He later sought the assistance of his counsel, who wrote a letter addressed to Polyfoam requesting that he be re-admitted to work. When said request was not acted upon, he filed the instant illegal dismissal case. These circumstances clearly negate the intention to abandon his work.

Petitioners failed to show any valid or authorized cause under the Labor Code which allowed it to terminate the services of respondent. Neither was it shown that respondent was given ample opportunity to contest the legality of his dismissal. No notice of termination was given to him. Clearly, respondent was not afforded due process. Having failed to establish compliance with the requirements of termination of employment under the Labor Code, the dismissal of respondent was tainted with illegality.[55] Consequently, respondent is entitled to reinstatement without loss of seniority rights, and other privileges and to his full backwages inclusive of allowances and to his other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of his actual reinstatement. However, if reinstatement is no longer feasible as in this case, separation pay equivalent to one month salary for every year of service shall be awarded as an alternative.[56] Thus, the CA is correct in affirming the LAs award of separation pay with full backwages and other monetary benefits.

• Permissible job contracting vis-à-vis labor-only contracting
• The test of independent contractorship: totality of facts and circumstances
• One who claims to be an independent contractor has the burden of proving substantial capital and/or investment
• Independent contractor carries on an independent business
• A finding of labor-only contracting creates an employer-employee relationship between the "principal" and the employee
• Abandonment of work must be inferred from the actuations of the employee

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MIGRANT WORKERS AND OVERSEAS FILIPINOS ACT OF 1995

(RA 8042)

I. PURPOSE

To institute the policies of overseas employment and establish a higher standard of protection and promotion of the welfare of migrant workers, their families and overseas Filipinos in distress, and for other purposes

II. DEFINITION OF TERMS (Sec. 3)

MIGRANT WORKER – a person who is to be engaged, is engaged or has been engaged in a renumerated activity in a state of which he or she is not a legal resident to be used interchangeably with overseas Filipino worker

OVERSEAS FILIPINOS – refers to dependents of migrant workers and other Filipino nationals abroad who are in distress

III. ILLEGAL RECRUITMENT (II)

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Triple Eight Integrated Services, Inc. vs. NLRC

G.R. No. 129584, December 3, 1998

• LABOR LAW: Disease as Ground for Dismissal, requisites: (1) the disease must be such that employee’s continued employment is prohibited by law or prejudicial to his health as well as to the health of his co-employees; and (2) there must be a certification by competent public authority that the disease is of such nature or at such a stage that it cannot be cured within a period of 6 months with proper medical treatment.
• LABOR LAW: same; The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy on the protection of labor.
• PRIVATE INTERNATIONAL LAW: Lex Loci Contractus: Established is the rule that lex loci contractus (the law of the place where the contract is made) governs in this jurisdiction.  There is no question that the contract of employment in this case was perfected here in the Philippines.
• PRIVATE INTERNATIONAL LAW: Law of the Forum vis-a-vis Public Policy: Settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the forum’s public policy. Here in the Philippines, employment agreements are more than contractual in nature.  The Constitution itself, in Article XIII Section 3, guarantees the special protection of workers.

FACTS:

Osdana, a Filipino citizen, was recruited by Triple Eight for employment with the latter’s principal, Gulf Catering Company (GCC), a firm based in the Kingdom of Saudi Arabia. The employment contract (originally as “food server” but later changed to “waitress”) was executed in the Philippines but was to be performed in Riyadh. Once in Riyadh, however, Osdana was made to perform strenuous tasks (washing dishes, janitorial work), which were not included in her designation as a waitress. Because of the long hours and strenuous nature of her work, she suffered from Carpal Tunnel Syndrome, for which she had to undergo surgery. But during her weeks of confinement at the hospital for her recovery, she was not given any salary. And after she was discharged from the hospital, GCC suddenly dismissed her from work, allegedly on the ground of illness. She was not given any separation pay nor was she paid her salaries for the periods when she was not allowed to work. Thus, upon her return to the Philippines, she filed a complaint against Triple Eight, praying for unpaid and underpaid salaries, among others.

The LA ruled in her favour, which ruling NLRC affirmed. Hence, this petition for certiorari.

ISSUE:

• Whether or not Osdana was illegally dismissed
• If so, whether or not she is entitled to award for salaries for the unexpired portion of the contract

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ANTI-SEXUAL HARASSMENT ACT OF 1995 Primer

(RA 7877)

I. PURPOSE (Sec. 2)

The State shall value the dignity of every individual, enhance the development of it human resources, guarantee full respect for human rights, and uphold the dignity of workers, employees, applicants for employment, students or those undergoing training, instruction or education. Towards this end, all forms of sexual harassment in the employment, education or training environment are hereby declared unlawful.

II. SEXUAL HARASSMENT, DEFINED (Sec. 3)

Work, education or training-related sexual harassment is committed by an employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act

III. HOW COMMITTED

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Cadalin vs. POEA

G.R. No. L-104776, Dec. 5, 1994

• GENERAL RULE: A foreign procedural law will not be applied in the forum.
• EXCEPTION: When the country of the forum has a "borrowing statute," the country of the forum will apply the foreign statute of limitations.
• EXCEPTION TO THE EXCEPTION: The court of the forum will not enforce any foreign claim obnoxious to the forum's public policy.

FACTS:

Cadalin et al. are overseas contract workers recruited by respondent-appellant AIBC for its accredited foreign principal, Brown & Root, on various dates from 1975 to 1983. As such, they were all deployed at various projects in several countries in the Middle East as well as in Southeast Asia, in Indonesia and Malaysia. The case arose when their overseas employment contracts were terminated even before their expiration. Under Bahrain law, where some of the complainants were deployed, the prescriptive period for claims arising out of a contract of employment is one year.

ISSUE:

• Whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law

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Jurisdiction in Labor Cases

SOLE

- OJ:

1. Industry indispensable to national interest (Art. 263(g), LC)
2. Subsumed LA cases requiring expeditious resolution (Sec. 3(c), Rule VIII, NLRC Rules)
3. Visitorial and Enforcement Power (compliance order) (Art. 128)

- AJ:

1. RD – Visitorial and Enforcement Power (compliance order) (Art. 128, LC)
2. MA – Petition for Certification Election (Art. 259, LC)
3. BLRD – (EOJ) Registration and cancellation of registration of labor organization (Sec. 6, Rule IV, D.O. No. 40-03)
   

 MFR  CA (Certiorari 65 [60d])  SC (Review 45 [15d])

NLRC

- OJ:

1. Cases certified by the SOLE
2. TRO/Injunction against prohibited acts (Art. 218(e), LC) or enjoining acts in labor disputes (Art. 264, LC)

- AJ:

1. RD/AHO – Small money claims not exceeding P5,000 without claim for reinstatement (Art. 129, LC)
2. LA (Art. 217 (b) and Art. 233, LC)

 MFR  CA (Certiorari 65 [60d])  SC (Review 45 [15d])

VA

- EOJ:

1. Grievances arising from interpretation and implementation of CBA
2. Grievances arising from the interpretation and implementation of company personnel policies

- OTHER:
All other disputes submitted by both parties for voluntary arbitration

 CA (Appeal 43 [15d])

LA

1. Unfair labor practice
2. Termination disputes
3. When accompanied by a claim for reinstatement, all controversies filed by workers concerning wages, rates of pay, hours of work and other terms and conditions of employment
4. All claims for actual, moral, exemplary and other forms of damages arising out of an employer-employee relationship
5. Except Employee’s Compensation, social security, medicare and maternity benefits, all money claims arising from an employer-employee relationship, including household and domestic services, in an amount exceeding P5,000, regardless of whether or not it is accompanied by a claim for reinstatement
6. Cases involving the violation of Art. 264 or the commission of prohibited acts, including the legality of strikes and lockout (except if certified/assumed by SOLE)
7. Money claims and termination disputes of Overseas Filipino Workers (RA 8042, July 15, 1995)

 NO MFR (any MFR filed shall be treated as an appeal)
 NLRC (Appeal [10cd]) but reinstatement is self-executory

BLRD

- OJ:

1. Registration of labor federation (Art. 231, LC)
2. Cancellation of registration of labor federation (Art. 231, LC)

 SOLE (Appeal [10d])

- AJ:

1. RD – Registration and cancellation of registration of labor organization (Sec. 6, Rule IV, D.O. No. 40-03)
2. RD – Registration and deregistration of CBA (Sec. 5, Rule XVII, D.O. No. 40-03)
3. MA – inter-union and intra-union disputes (Sec. 16, Rule XI, D.O. No. 40-03)

 Final and executory

RD

• Visitorial and Enforcement Power (compliance order) (Art. 128, LC)

 MFR (7cd)  SOLE (Appeal [10cd]) (if appeal by employer, post surety or cash bond)

• Small money claims not exceeding P5,000 without claim for reinstatement (Art. 129, LC)

 NLRC (Appeal [5cd])  CA (Certiorari 65 [60d])  SC (Review 45 [15d])

• Registration and cancellation of registration of labor organization (Art. 235, LC; Sec. 4, Rule IV and Sec. 5, Rule XI, D.O. No. 40-03)

 BLRD (Appeal [10d])

• Registration and deregistration of CBA (Sec. 1, Rule XVII, D.O. No. 40-03)

 BLRD (Appeal [10d])

MA

• Petition for certification election (Arts. 256, 257 and 258, LC)

 SOLE (Appeal [10d])

• Inter-union and intra-union disputes (Sec. 5, Rule XI, D.O. No. 40-03) – concurrent with RD when no MA available

 BLRD (Appeal [10d])

AHO

Small money claims not exceeding P5,000 without claim for reinstatement (Art. 129, LC)

 NLRC (Appeal [5cd]) (appeal fee of P150 and employer post surety or cash bond)

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Termination of Employment

Security of Tenure (Art. 279) – right of employees to be secure in their employment and not to be removed except for a just or authorized cause

WHO ARE ENTITLED:

1. under the Constitution – all workers
2. under the Labor Code – regular employees
3. but even project, seasonal or contract employees are entitled to security of tenure for the duration of the project, season or contract

EFFECTS OF ILLEGAL DISMISSAL:

1. reinstatement
2. no loss of seniority rights and other privileges
3. full backwages, inclusive of allowances
4. other benefits or monetary equivalent computed from time his compensation was withheld from him up to the time of his actual reinstatement

Q: When is reinstatement no longer possible?
A: Reinstatement may no longer be possible if due to strained relations between the worker and the employer, reinstatement is not practicable. In that case, worker is entitled to separation pay in lieu of reinstatement. Another instance is if employee suffers from a disability which impairs his earning capacity or he has attained the age of retirement. When the position has already been abolished, reinstatement is no longer possible. Other such reasons are closure of department or section or of the entire business, sale, bankruptcy, insolvency, etc.

Kinds of Employment

1. Regular – where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer (Art. 280, par. 1)
- reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer

2 KINDS OF REGULAR EMPLOYEES:

• by nature of work
• by years of service

2. Project – employment is fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee (Art. 280, par. 1)

3. Seasonal – where work or services to be performed is seasonal in nature and the employment is for the duration of the season (Art. 280, par. 1)

4. Fixed-Term – employment is only for a specified period of time; he is not regular but is deemed regular in two senses: (a) nature of his work is necessary or desirable in the principal business of the employer; and (b) he enjoys security of tenure during the limited time of his employment

5. Casual – not covered by the preceding paragraph; employee who has rendered at lease one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists (Art. 280, par. 2)
- “principle of repeated hiring”

6. Probationary – not exceeding six months from the date the employee started working (Art. 281)
- EXCEPTION:

• apprenticeship agreement stipulating a longer period
• employees in private schools

- FULL-TIME TEACHER: 3 consecutive years of satisfactory service (primary to high school); 6 consecutive years of satisfactory service (tertiary level)

Full-time Teacher – one whose total working days is devoted to the school, has no other regular remunerative employment, and is paid on a regular monthly basis regardless of the number of teaching hours; and that in college, the normal teaching load of a full-time teacher shall be 18 hrs/month

- REQUIREMENTS:

• the employee must be informed of his probationary status at the time of engagement, otherwise he is considered regular from the beginning
• the employee must be informed of the reasonable standards at the time of his engagement, otherwise he is considered regular from the beginning
• if allowed to work beyond the probationary period, he shall be considered regular

Just Causes for Termination (Art. 282) and Procedure

GROUNDS: (code: SW2GF CO)
1. serious misconduct

Misconduct – improper or wrongful conduct; 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

- to be serious, must be of such grave and aggravated character and not merely trivial and unimportant and must be in connection with the employee’s work to constitute a just cause for his separation

2. willful disobedience
- insubordination

- REQUISITES:

• reasonable and lawful order
• sufficiently known to the employee
• in connection with his duties

3. gross and habitual neglect

Gross Negligence – want or absence of or failure to exercise slight care or diligence or the entire absence of care

4. fraud
5. willful breach of the employer’s trust
6. commission of a crime or offense
7. other analogous causes
- e.g. dangerous drugs law, closed-shop agreement, illegal acts during strike, knowingly participating in illegal strike, defiance of RTWO, sexual harassment

PROCEDURE (2-notice Rule):

1. written notice to worker, specifying ground for termination with opportunity to be heard
2. hearing or conference; investigation
3. written notice of termination

NOTA BENE: Non-compliance with the 2-notice rule will make the employer liable for nominal damages in the amount of P30,000.

Authorized Causes and Procedure

1. closure of establishment and reduction of personnel (Art. 283)

• installation of labor-saving device
• redundancy – where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise
• retrenchment to prevent losses - cost-cutting measure made immediately necessary by business reduction or reverses
• closing or cessation of operation

SEPARATION PAY:
- INSTALLATION/REDUNDANCY: 1 mo pay/1 mo pay for every yr of service, whichever is higher
- RETRENCHMENT/CLOSURE: 1 mo pay/1/2 mo pay for every yr of service, whichever is higher

NOTA BENE: A fraction of at least 6 mos is equivalent to 1 mo.

2. disease (Art. 284)
- employee suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees

- REQUISITE: certification by competent public health authority that disease is of such nature or at such a stage that it cannot be cured within a period of 6 mos even with proper medical treatment

- 1 mo pay/1/2 mo pay for every year of service, whichever is higher

PROCEDURE:

1. written notice to employee 30d prior to date
2. written notice to regional office of DOLE 30d prior to date

NOTA BENE: Non-compliance with the notice, there is violation of due process, even if the dismissal is valid because it is for an authorized cause. The employer is liable to pay nominal damages of P50,000.

Consequence of Termination by Employer

1. if employer does not comply with due process, liable to pay nominal damages
2. employer must pay separation pay

4 KINDS OF SEPARATION PAY:

• separation pay under Art. 283 and Art. 284
• separation pay as financial assistance, as an act of social justice, even in cases of legal dismissal under Art. 282
• separation pay in lieu of reinstatement
• separation pay as an employment benefit

Termination by Employee (Art. 285)

1. without just cause – 30d written notice; if without notice, employer may hold employee for damages
2. just causes

• serious insult
• inhuman and unbearable treatment
• commission of a crime or offense
• other causes analogous

Constructive Dismissal – a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay; amounts to illegal dismissal

- distinguish from “floating status” or suspension of employment under Art. 286 because it is temporary in nature; if the suspension is for more than 6 mos, then it amounts to constructive dismissal

Art. 286 WHEN EMPLOYMENT NOT DEEMED TERMINATED

The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

NOTA BENE: A case for illegal dismissal within the 6-month period is premature. The employee must wait until the period expires before filing a case for illegal dismissal.

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Strikes and Lockouts

Kinds of Concerted Activities (Art. 263)
1. strikes – temporary stoppage of work by the concerted action of employees as a result of a labor or industrial dispute

• General Strike – extends over a whole community, province, state or country; an extended form of sympathy strike, intended to put pressure upon the government or to paralyze present economic and social systems
• Local Strike – undertaken by workers in a particular enterprise, locality or occupation
• Sit-down Strike – when a group of employees or others interested in obtaining a certain objective in a particular business forcibly take over possession of the property of such business, establish themselves within the plant, stop its production and refuse access to the owners or to the others desiring to work
• Slowdown – willful reduction in the rate of work by a group of employees for the purpose of restricting the output of the employer
• Partial Strike – “quickie” strike; takes the form of intermittent, unannounced work stoppage, including slowdowns, unauthorized extension of rest period and walkouts for portions of a shift or for entire shifts
• Primary Strike – declared by the employees who have a direct and immediate interest, whether economic or otherwise
• Secondary Strike – coercive measures adopted by workers against an employer connected by product or employment with alleged unfair labor conditions or practices
• Economic Strike – to force wage and other concessions from the employer, which he is not required by law to grant
• ULP Strike – against the ULP of the employer, usually for the purpose of making him desist from further committing such practices
• Sympathetic Strike – the strike employees have no demands or grievances of their own, but strike for the purpose of directly or indirectly aiding others, without direct relation to the advancement of the interest of the strikers

2. picketing – presence of striking workers or their union brothers who pace back and forth before the place of business of an employer
- not generally subject to injunction because a part of exercise of freedom of speech, EXCEPT if blocking the ingress to and egress from the workplace or public thoroughfare

3. lockout – temporary refusal of an employer to furnish work as a result of a labor or industrial dispute

Assumption of Jurisdiction by SOLE (Art. 263 (g))– applicable when strikes or lockout occur or is likely to occur in an industry indispensable to the national interest; SOLE may decide it or certify the same to the NLRC for compulsory arbitration; within 24 hours from knowledge

2 EFFECTS OF ASSUMPTION OF JURISDICTION:

1. enjoin the strike (automatic)
2. if there are prohibited acts committed, SOLE may issue injunction

PROCEDURE:
1. notice of strike or lockout at least 30d prior to the DOLE
- EXCEPT: if ULP, notice of 15d is sufficient; if union-busting, then no 15d cooling-off period

2. during cooling-off period, DOLE shall exert all efforts at mediation and conciliation to effect a voluntary settlement

3. 7-day strike ban is mandatory - if the strike vote was arrived at within the 30-day period, add the 7 days after the termination of such period; if it was after the 30-day period, then wait 7 days from the time strike vote was reported before going on strike

4. after lapse of period, strike or lockout may be declared
- STRIKE: approved by majority of union members by secret ballot
- LOCKOUT: approved by majority of BOD members by secret ballot

Prohibited Activities (Art. 264)

1. strikes or lockout declared without first having bargained collectively or notice
2. no strike or lockout after assumption of jurisdiction or after certification to the NCMB
3. reinstatement with full backwages if worker is terminated as a consequence of unlawful lockout
4. union officer who knowingly participates in an illegal strike or knowingly participates in commission of illegal acts during strike
5. worker who knowingly participates in commission of illegal acts during strike may be terminated; but mere participation in illegal strike, no termination of worker
6. obstruct, impede or interfere with by force, violence, coercion or threats or intimidation any peaceful picketing by employees, not allowed
7. no strike-breakers
8. police force shall keep out of the picket lines UNLESS actual violence or other criminal acts occur therein
9. no acts of violence, coercion or intimidation or obstruct the free ingress to or engress from the employer’s premises for lawful purposes, or obstruct public thoroughfares

NOTA BENE: Third parties who are affected by commission of any prohibited acts may go to the regular courts for relief of injunction. This is the only time when the regular court may issue injunction in a labor dispute.

ADDENDUM: If the union members and employer have both committed prohibited acts during strike, they are in pari delicto and therefore, no termination but only suspension of employment.

6 FACTORS OF AN ILLEGAL STRIKE:

1. statutory prohibition
2. procedural requirements
3. purpose of strike (economic strikes not allowed)
4. means and methods
5. violation of injunction
6. agreement of the parties

- “no-strike” provision in CBA
- But stipulation is only valid as to economic provisions, not to ULP

STRIKEABLE GROUNDS:

• collective bargaining deadlock
• employer’s ULP

NOTA BENE: ULP under Art. 248 is strikeable. ULP under Art. 249 is not strikeable, since it results in intra/inter-union dispute, EXCEPT termination of employee as a result of the enforcement of the closed-shop provision of the CBA.

3 KINDS OF DEADLOCKS:

1. when there’s no CBA yet - bargaining deadlock with management is strikeable
2. when there’s CBA and 3 yrs. has expired – bargaining deadlock on economic provisions is not strikeable, but ULP is strikeable
3. 5 yrs. after CBA is entered into – bargaining deadlock is strikeable since there’s no CBA

Arrest and Detention (Art. 266)
- no union members or union organizers may be arrested or detained for union activities without previous consultation with the SOLE

- EXCEPT:

• national security
• public peace
• commission of a crime

- prosecutors must first secure clearance from the DOLE or Office of the President before taking cognizance of complaints for preliminary investigation and filing in court of corresponding information

- criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC

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Grievance Machinery and Voluntary Arbitration

Grievance Machinery and Voluntary Arbitration – machinery for the adjustment and resolution of grievances arising from the interpretation and implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies (Art. 260)

Grievance – a feeling of discontent before it is manifested into verbal or written complaint

Collective Bargaining Agreement (CBA) – contract between legitimate labor union and the employer concerning wages, hours of work, and all other terms and conditions of employment in a bargaining unit

2 COMPONENTS OF GRIEVANCE MACHINERY:
1. grievances arising from the interpretation and implementation of CBA

• parties shall name and designate in advance a voluntary arbitrator or a procedure for the selection of voluntary arbitrators
• organized establishments only since there is a CBA
• GRIEVANCE COMMITTEE: if parties don’t agree; created within 10d from signing of CBA

2. grievances arising from the interpretation or enforcement of company personnel policies

PROCEDURE (organized establishments):

1. Grievance machinery as agreed in the CBA
2. if the grievance remains unresolved, automatic referral to voluntary arbitration within 7 calendar days as prescribed in the CBA
3. if CBA does not provide VA or procedure for selection of VA, the NCMB shall designate the VA

NOTA BENE: The CBA is the law between the parties so if there is a grievance, the parties may be compelled to submit the case to voluntary arbitration, pursuant to the contract stipulation. There is no inconsistency.

Zipper Clause – a stipulation in a CBA indicating that issues that could have been negotiated upon but not contained in the CBA cannot be raised for negotiation when the CBA is already in effect; the CBA is complete agreement

Substitutionary Doctrine – employees cannot revoke the validly executed CBA with their employer by the simple expedient of changing their bargaining agent

Benguet Consolidated, Inc. vs. Employees & Workers Union-PAFLU, G.R. No. L-24711, April 30, 1968

SUBSTITUTIONARY DOCTRINE: The doctrine only provides that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase “said new agent would have to respect said contract” must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof.

Voluntary Arbitration

2 PRIMARY FUNCTIONS:

1. to orderly dispose of disputes
2. to provide a foundation for stable labor-management relations

QUALIFICATIONS OF VA (accredited by NCMB):

1. Filipino citizen residing in the Philippines
2. Bachelor’s Degree
3. at least 5 yrs. experience in labor-management relations
4. completion of a training course on voluntary arbitration conducted by the Board
5. good moral character, noted for impartiality, probity and has not been civilly, criminally and administratively adjudged guilty of any offense involving moral turpitude as evidenced by a duly sworn affidavit

JURISDICTION OF VA:
1. EOJ (Art. 261) – all unresolved grievance arising from the interpretation or implementation of the CBA and those arising from the interpretation or enforcement of company personnel policies

EXCEPTION (LA):

• if both parties don’t submit to the VA
• members of minority union
• religious objectors
• non-union members
• those excluded by the closed-shop agreement

2. OTHER (Art. 262) – upon agreement of parties, all other labor disputes, including ULP and bargaining deadlocks

NOTA BENE: Violations of the CBA, except those gross in character, are not ULP. “Gross violations of CBA” mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

ADDENDUM: Termination disputes are under the jurisdiction of the LA. However, termination disputes related to the interpretation/implementation of the CBA (e.g. closed-shop agreement) or company personnel policies are cognizable by the VA.

PROCEDURE (Art. 262-A):

1. 20 calendar days to decide from submission of dispute to voluntary arbitration
2. 10 calendar days from receipt of copy of award, decision is final and executory
3. writ of execution upon motion of any interested party
4. no motion for recon, but may be appealed by certiorari to CA within 60d under Rule 65 (grave abuse of discretion)

VA’s FEE, HOW DETERMINED (Art. 262-B):

1. nature of the case
2. time consumed in hearing the case
3. professional standing of the VA
4. capacity to pay of the parties
5. fees provided for in the Revised Rules of Court

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