Paulino Ungos III

Lawyer | Law Professor | Author

Tag: decision

  • Use of a Person’s HIV-Positive Condition as a Ground for Dismissal

    Triple A alleged that sometime in 2017, he was hired as a Cleaning Laborer by Saraya Al Jazerah Contracting Est. (the foreign employer), through its agent, Bison Management Corporation, under a two-year employment contract with a monthly salary of One Thousand Five Hundred Saudi Riyal. He was deployed to the Kingdom of Saudi Arabia (KSA) on October 18, 2017 and commenced work thereafter.

    Triple A narrated that In January of 2019 — after working for fifteen months, he underwent a routine medical examination and was found positive for Human Immunodeficiency Virus (HIV). On this basis, the foreign employer terminated his employment because under the laws of the KSA, an HIV-positive individual is considered unfit to work.

    After his repatriation to the Philippines on February 8, 2019, Triple A filed a complaint on March 1, 2019 for illegal dismissal, discrimination, money claims, damages, attorney’s fees, and legal interest against the employer.

    The Office of the Labor Arbiter dismissed triple A’s complaint for illegal dismissal but ruled that he was entitled to his unpaid salary, vacation leave pay, and attorney’s fees. In its Decision, the Office of the Labor Arbiter took cognizance of KSA’s policy of disallowing HIV-positive persons for employment. The Office of the Labor Arbiter added that Republic Act No. 8504 or the “Philippine AIDS Prevention and Control Act of 1998” is a local law that should apply only within the Philippines and not to KSA.

    Triple A filed a Memorandum of Partial Appeal before the National Labor Relations Commission, asserting that he was illegally dismissed from employment.

    The Commission resolved the partial appeal in triple A’s favor and declared that he was illegally dismissed.

    The motion for reconsideration filed by the employer was denied by the Commission.

    Thus, the employer filed a petition for certiorari before the Court of Appeals.

    The Court of Appeals denied the employer’s petition since it did not find any abuse of discretion on the part of the Commission. The Court of Appeals agreed with the Commission in that Philippine law governs the terms of the employment contract as well as the rights of the employee under the principle of lex loci contractus. The Court of Appeals also cited Section 35 of Republic Act No. 8504, which provides that discrimination in any form from pre-employment to post-employment, including hiring, promotion or assignment, based on the actual, perceived or suspected HIV status of an individual is prohibited. Termination from work on the sole basis of actual, perceived or suspected HIV status is deemed unlawful. The Court of Appeals reasoned that since the law categorically prohibits the use of a person’s HIV-positive condition as a ground for dismissal, no valid cause attended triple A’s termination from employment.

    The Court of Appeals denied the employer’s motion for reconsideration.

    Thus, the employer filed a petition for review with the Supreme Court assailing the Decision and Resolution of the Court of Appeals.

    Was triple A illegally dismissed from employment?

    The Supreme Court ruled in the affirmative.

    The Supreme Court began by highlighting the State’s promise to protect Filipino workers, whether here or abroad, under Section 3 of Article XIII of the Constitution. The Court stated that the constitutional guarantee of security of tenure extends to Filipino overseas contract workers. Employees are not stripped of their security of tenure when they move to work in a different jurisdiction.

    The Supreme Court noted the employer’s invocation of the principle of pacta sunt servanda based on the “Agreement on Labor Cooperation for General Workers Recruitment and Employment Between the Department of Labor and Employment of the Republic of the Philippines and the Ministry of Labor and Social Development of the Kingdom of Saudi Arabia” (Agreement on Labor Cooperation), which provides that the Department of Labor and Employment of the Republic of the Philippines shall ensure that the recruited general workers satisfy health requirements and are free of all communicable diseases by virtue of thorough medical examinations through reliable medical facilities accredited by both governments.

    However, the Supreme Court found the employer’s argument untenable. According to the Court, such argument was belied by the employer’s own representation that prior to his deployment and as part of the requirements, triple A underwent a medical examination and received a clean bill of health and that he acquired HIV after working in the KSA for more than one year.

    The Court remarked that it will not engage in an academic discussion on the principle of pacta sunt servanda where the case is essentially one for illegal dismissal of an OFW.

    The Court rather stressed that the principle of lex loci contractus applies in that Philippine laws generally govern overseas employment contracts. The Court also stated that as a narrow exception, the parties may agree that a foreign law shall govern, but subject to the concurrence of the following requisites:

    • That it is expressly stipulated in the overseas employment contract that a specific foreign law shall govern;
    • That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on evidence;
    • That the foreign law stipulated in the overseas employment contract must not be contrary to law, morals, good customs, public order, or public policy of the Philippines; and
    • That the overseas employment contract must be processed through the POEA.

    The Supreme Court acknowledged that the first and fourth requisites were present. However, it discovered that the more important second and third requisites were absent.

    Although the employer was able to present the Agreement on Labor Cooperation, certain documents, and a news article about a KSA envoy seeking stricter HIV/AIDS testing for OFWs, the Court underscored that a copy of the purported foreign law was not presented.

    The Court added that even if the KSA policy which disallows HIV-positive persons from employment were truly undeniable and all over the internet, prevailing jurisprudence dictates that if the foreign law stipulated is contrary to law, morals, good customs, public order, or public policy, then Philippine laws shall govern.

    The Court continued that contractual stipulation is not a bar to applicability of Philippine law. The labor relationship between an OFW and his or her foreign employer as much affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship.

    The Supreme Court reminded that Republic Act No. 8504 had already been repealed by Republic Act No. 11166 at the time of triple A’s repatriation. Section 49 (a) of Republic Act No. 11166 makes it unlawful for employees to be terminated from work on the sole basis of their HIV status.

    The Court stated that since Philippine law categorically prohibits the use of a person’s HIV-positive condition as a ground for dismissal, the inescapable conclusion is that there was no valid cause to terminate triple A, and that doing so amounted to illegal dismissal.

    The Court observed that while it is true that disease may be a ground for termination under Article 299 of the Labor Code of the Philippines, the employer in this case conceded that an HIV-positive condition is not yet an illness/disease.

    The Court concluded that since there was no other reason proffered for triple A’s dismissal apart from his HIV status, the Court upheld the Court of Appeals ruling that the Commission did not commit grave abuse of discretion in finding that triple A was illegally dismissed.

    Further reading:

    • Bison Management Corp. v. AAA, G.R. No. 256540, February 14, 2024.

  • The Law Prescribes the Parties’ Employment Relationship

    Rico and six other people alleged that they were engaged on different dates as fitness trainers by Fitness First Phil., Inc., a fitness company.

    Rico and his co-workers narrated that as fitness trainers, they sold and marketed the company’s physical health training programs and packages. With the company’s equipment, they also conducted actual training sessions for their clients and were paid fixed monthly salaries, 13th month pay, and commissions.

    However, the company later reclassified them as freelance trainers. Although it still paid their salaries, the company discontinued paying their other labor benefits, i.e., 13th month pay, overtime pay, holiday pay, and rest day pay.

    Furthermore, the company allowed them to work on their own time as long as they trained clients for at least 90 hours per month and Php80,000.00 worth of physical training packages. If Rico and his co-workers fail to meet the quota, the same translates to salary deduction, or worse, disciplinary action such that repeated failure to meet the quota may subject them to warning, suspension, and even termination of their engagement.

    Soon after, the company required Rico and his co-workers to register their alleged freelance business to comply with tax regulations. Should Rico and his co-workers refuse to comply, they were penalized with a 20% deduction in their commission and termination or non-renewal of their freelance agreement. Despite such penalties, Rico and his co-workers did not comply with the company’s requirements since they believed they were its employees.

    As a result, the company revoked its offer of higher commission. It also offered Rico and his co-workers the chance to revert to being instructors. Moreover, the company ignored Rico and his co-workers’ request to enjoy the benefits of being both an instructor and a freelance trainer.

    Believing this was an instance of constructive dismissal, Rico and his co-workers filed a complaint against the company for illegal dismissal, regularization, and other monetary claims.

    The company countered that Rico and his co-workers were independent contractors who were not required to observe fixed work hours. According to the company, Rico and his co-workers were required to observe relevant house rules in dealing with their clients, conduct 90 hours of training, and guarantee a minimum fixed monthly sale.

    The company added that its employment arrangement with Rico and his co-workers is distinguished from that of its fitness instructors, who were required to work nine hours a day, six days a week.

    The company explained that all trainers start as full-time fitness instructors. According to the company, a progressive commission scheme allows instructors who have obtained a certain skill and training to be promoted as freelance personal trainers to take advantage of the higher commissions and flexible working hours. It also mentioned that a freelance personal trainer though may revert to being an instructor by manifesting his or her decision to the human resource department.

    The company acknowledged that it required Rico and his co-workers to register their freelance business with an offer of higher commission in compliance with tax regulations and that only 62 of its freelance trainers complied with the requirement.

    Although the company revoked its offer of higher commission, it offered Rico and his co-workers the chance to revert to being instructors. However, the latter insisted on enjoying the benefits of both an instructor and a freelance trainer.

    In its Decision, the Office of the Labor Arbiter declared Rico and his co-workers as independent contractors and denied their claims.

    It held that the selection of Rico and his co-workers based on their expertise indicated their nature as independent contractors.

    It added that Rico and his co-workers voluntarily signed the freelance agreement, successively renewed it for years, and were paid on a commission basis. It also noted that Rico and his co-workers were responsible for paying and remitting their respective monthly contributions to the Social Security System without fail and timely filing the required income tax returns. Finally, it found that both parties may terminate the agreement with or without cause.

    It continued that even if the parties’ relationship were gauged under the power of control test, Rico and his co-workers would still be considered independent contractors. This was because, as freelance trainers, they were not required to report for work on a fixed schedule, and they controlled the time and manner they conducted physical training with their respective clients.

    The National Labor Relations Commission and the Court of Appeals agreed with the finding that Rico and his co-workers were not employees of the company.

    Rico and his co-workers elevated their case to the Supreme Court, insisting that they were regular employees of the company.

    Were Rico and his co-workers independent contractors?

    The Supreme Court ruled in the negative and declared Rico and his co-workers as employees of the company.

    The Supreme Court began by stating that there is no inflexible rule to determine if one is an employee or an independent contractor. According to the Court, the relationship must be characterized based on the circumstances of each case.

    The Court then discussed that a person’s employment status is not defined by what the parties say it should be. Rather, the employment relationship of parties is prescribed by law. When the employment status is in dispute, the employer bears the burden of proving that the person whose service it pays for is an independent contractor rather than a regular employee with or without fixed terms. The rule is that where a person who works for another performs his or her job more or less at his or her own pleasure, in the manner he or she sees fit, is not subject to definite hours or conditions of work, and is compensated according to the result of his or her efforts and not the amount thereof, no employer-employee relationship exists.

    An independent contractor, the Court expounded, carries on a distinct and independent business and undertakes to perform the job, work, or service on one’s own account and under one’s own responsibility according to one’s own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Independent contractors consist of individuals with unique skills and talents that set them apart from ordinary employees and whose means and work methods are free from the employer’s control. Under this arrangement, there is no trilateral relationship but a bilateral relationship because a principal directly engages independent contractors. An independent contractor enjoys independence and freedom from the control and supervision of his or her principal as opposed to an employee who is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished.

    The Court went on to employ a two-tiered test to resolve the issue: the four-fold test and the economic dependence test.

    Under the four-fold test, to establish an employer-employee relationship, four factors must be proven:

    • employer’s selection and engagement of the employee;
    • payment of wages;
    • power to dismiss; and
    • power to control the employee’s conduct.

    Regarding the power of hiring, the Court found that the company initially engaged Rico and his co-workers as fitness consultants, and on different dates, they transitioned to become freelance personal trainers. However, the Court clarified that an engagement based on talents and skills does not necessarily prevent a person from achieving regular employment status, especially when he or she is repeatedly engaged as an independent contractor on a fixed term in an effort to circumvent security of tenure.

    On the payment of wages, the Court found that based on the Freelance Personal Trainer Agreement, Rico and his co-workers were paid on a commission basis. Again, the Court clarified that the Labor Code of the Philippines explicitly mentions commissions as one of the forms of paying wages, or anything paid as remuneration of earnings to employees.

    On the power to dismiss, the Court found that although the Freelance Personal Trainer Agreement mentioned that the parties may voluntarily terminate the same with or without cause, the power to dismiss actually rests with the company. For instance, the company held the power to dismiss the freelance personal trainer if it became manifest that the latter was unqualified or unfit to discharge his or her duties.

    The Court then remarked that the company’s power to terminate Rico and his co-workers is better understood concurrently with the company’s power of control.
    The Court stated that under the four-fold test, the right to control is the dominant factor in determining whether one is an employee or an independent contractor. The so-called control test is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control the end to be achieved and the manner and means to reach that end.

    In this regard, the Court held that Rico and his co-workers did not perform their tasks at their own pleasure and in the manner they saw fit. This was based on the following findings:

    First, as personal trainers, Rico and his co-workers performed tasks necessary and desirable to the company’s principal business of providing health programs/packages — to conduct physical training to its clients.

    Second, to ensure the quality of services, Rico and his co-workers were required to attend all educational training sessions and other such events pertaining to the company. In fact, the company kept track of the performance of Rico and his co-workers, and some of them were even lauded for their exemplary performance.

    Third, even if It assessed the company’s power of control vis-à-vis the Freelance Personal Trainer Agreement, it would reach the same conclusion because although the Agreement guaranteed that Rico and his co-workers shall be free of control in the marketing and conduct of the physical health training packages, the following portions of such Agreement negate the alleged absence of control on the part of the company.

    One, upon engagement, Rico and his co-workers were bound to
    -diligently perform and assume their duties;
    -be assigned to any health club managed by the company;
    -observe company rules and regulations; and
    -attend company educational training sessions.

    Two, Rico and his co-workers were required to guarantee a set number of monthly sales and conduct a set block of time for physical training programs/packages.

    And three, the company reserved the right to unilaterally revise the Minimum Performance Standards even without notice.

    In addition, the Court further discussed that even if It applied the economic dependence test, the conclusion would be the same. The Court reiterated the following circumstances of the whole economic activity laid down in Francisco v. National Labor Relations Commission1G.R. No. 170087, 31 August 2006 in considering the determination of the relationship between employer and employee:

    • extent to which the services performed are an integral part of the employer’s business;
    • extent of the worker’s investment in equipment and facilities;
    • nature and degree of control exercised by the employer;
    • worker’s opportunity for profit and loss;
    • amount of initiative, skill, judgment[,] or foresight required for the success of the claimed independent enterprise;
    • permanency and duration of the relationship between the worker and the employer; and
    • degree of dependency of the worker upon the employer for his continued employment in that line of business.

    Here, the Court found that Rico and his co-workers acted as personal trainers, marketed physical health packages and were paid commissions for the sale of such packages. The Court also found that Rico and his co-workers were wholly dependent upon the company for their continued employment as they were prohibited from providing training outside the company. The exclusivity clause, said the Court, only strengthened the finding that Rico and his co-workers were regular employees of the company.

    Further reading:

    • Escauriaga v. Fitness First, Phil., Inc., G.R. No. 266552, 22 January 2024.

  • Effect of the Death of a Complainant to a Pending Suit for Illegal Dismissal

    On September 2, 2010, Florencio was employed as a driver by a taxi company.
    Florencio filed a constructive dismissal complaint with the National Labor Relations Commission on October 29, 2013, but he passed away while the case was still pending.
    Emma, the widow of deceased Florencio, filed an Omnibus Motion (For Substitution and Extension of Time to File Position Paper).

    When Emma was able to file a position paper, she claimed that Florencio was constructively dismissed from employment since he was placed on indefinite floating status. Emma added that the floating status was conditioned upon the payment of a penalty of Php6,000.00, which he could not raise because he was not allowed to work.

    The taxi company countered that the complaint for constructive dismissal did not involve property or property rights. Thus, it did not survive the death of Florencio, and Emma could no longer pursue it.

    The taxi company also denied that Florencio was constructively dismissed, and instead averred that Florencio was an on-call taxi driver who stopped driving after failing to remit boundary payments in 2013. The taxi company asserted that no documentary evidence supported the allegations in the complaint.

    This case reached the Supreme Court.

    On the issue of illegal dismissal, the Court ruled that Florencio, through Emma, failed to prove the fact of his dismissal. According to the Court, there was no evidence as to the nature of the supposed suspension, as well as the circumstances of the alleged constructive dismissal. Neither was there documentary proof to substantiate the claim that the taxi company required Florencio to pay Php6,000.00, and that, due to his alleged nonpayment, he was not permitted to work. For the Court, the charge of constructive dismissal was not established.

    In this case, the Court looked into a matter that was not raised as an issue in the petition filed before it. According to the Court, the present case presented the opportunity to clarify the effect of the death of a complainant to a pending suit for illegal dismissal.

    The Court mentioned the case of Fontana Development Corp. v. Vukasinovic1Fontana Development Corp. v. Vukasinovic, G.R. No. 222424, September 21, 2016. which characterized a complaint for illegal dismissal as one that involves injury to the person and, thus, does not survive the death of the employee.

    According to the Court, the application or use of the classification of ordinary civil actions as to cause or foundation on the effect of death of any of the parties to a pending action, as ruled in Fontana Development Corp., involved an inherent acknowledgment that such classification properly applies to labor complaints for illegal dismissal.

    In the present case, the Court scrutinized the propriety of applying such classification to a labor complaint. It asked:

    Should a complaint for illegal dismissal be analyzed through the lens that one views an ordinary civil action — classified as either one that involves injury to the person or one that primarily affects property or property rights?

    The Court answered in the negative. The Court ruled that a complaint for illegal dismissal may not be classified, like an ordinary civil action, as to cause or foundation for purposes of determining the effect of death of any of the parties to the case.

    The Court laid down two reasons.

    • First, an employment contract is one imbued with public interest.

    The Court explained that the Civil Code of the Philippines declares that the relations between capital and labor are not merely contractual. It is, in fact, one impressed with public interest.2 Article 1700

    Accordingly, the interest involved in an employment contract is not merely private and individual, but also public.

    Considering that such contractual relations are imbued with public interest, the enforcement of rights and obligations under such employment contract is also of public interest. Concomitantly, any violation of the employment contract would necessarily be of public interest.

    • Second, an illegal dismissal is a violation of the Labor Code of the Philippines and its implementing rules and regulations.

    The Court noted that it is easy to mistake a complaint for illegal dismissal as one that is personal to the complainant, the alleged illegally dismissed employee.

    The Court, however, pointed out that such characterization fails to take into consideration an important matter in that when an employer illegally dismisses an employee, said employer is essentially violating a statute.

    The Labor Code of the Philippines expressly upholds the constitutionally guaranteed right to security of tenure by ordaining that a regular employee may not be terminated from service except for just or authorized cause.3Article 294, formerly Article 279 Thus, an illegal dismissal — a dismissal without just or authorized cause — is not only a violation of the contractual relations between the employer and the employee but is, in fact, a violation of the Labor Code of the Philippines and its implementing rules and regulations.

    The Court said that these two important considerations, which affect the very nature of a complaint for illegal dismissal, separate and distinguish it from the realm of mere contractual obligations normally implicated in a civil complaint. These considerations are of such character and weight that a complaint for illegal dismissal should not and cannot be classified in the same manner as ordinary civil actions.

    In this regard, the Court highlighted the dual character of a complaint for illegal dismissal. It stated that it is an action predicated upon an injury to the rights of the plaintiff, the purportedly illegally dismissed employee. One’s employment is a right and its violation is an injury. At the same time, the award arising from the finding of illegal dismissal — the payment of backwages — is not merely for redress of a private right, but a command for the employer to make public reparation for his or her violation of the Labor Code.

    The Court added if one couples this dual character with the public interest imbued in labor contractual relations, it would be evident that complaints for illegal dismissal cannot be classified as to cause or foundation in the same manner as ordinary civil actions insofar as the death of any of the parties and its effects are concerned. To do so would be to oversimplify the nature of a complaint for illegal dismissal and, in the process, ignore certain characteristics of illegal dismissal complaints which distinguish and prevent them from fitting said mold of ordinary civil actions.

    The Court thus ruled that substitution by the heirs of the deceased complainant in a pending complaint for illegal dismissal should be allowed. This approach respects and breathes life to the public interest imbued in contractual relations between the employer and the employee. Further, it allows for public reparation by the employer in case he or she is found to have violated the Labor Code.

    Further reading:

    • Nedira v. NJ World Corp., G.R. No. 240005, December 6, 2022.

  • But They Agreed to be Engaged as Independent Contractors

    Chrisden and several other persons alleged that in February 2016, Lazada E-Services, Philippines, Inc. (Lazada), a business which claims to facilitate the sale of goods between its sellers and buyers, hired them to work as riders. As riders, Chrisden and his group were primarily tasked to pick up items from sellers and deliver them to Lazada’s warehouse. Each of them signed an Independent Contractor Agreement which states that they will be engaged for one year and paid a service fee. They were to use their privately-owned motorcycles in their trips.

    Chrisden and his group narrated that sometime in January 2017, a Lazada dispatcher told them that they have been removed from their usual routes and will no longer be given any schedules. Despite this development, they still went to the office and waited for three days to be given new tasks, but no work schedules came. They soon learned that their routes were already given to other riders.

    Aggrieved by the events, Chrisden and his group filed a complaint before the National Labor Relations Commission against Lazada for illegal dismissal, illegal deduction, money claims, with claims for moral and exemplary damages and attorney’s fees.

    Lazada denied that Chrisden and his group were its employees. It maintained that Chrisden and his group were independent contractors. Lazada concluded that Chrisden and his group cannot claim backwages, separation pay, and other benefits considering that they are not regular employees.

    The Office of the Labor Arbiter ruled that no employer-employee relationship existed between Lazada and Chrisden and the co-riders.

    The Office of the Labor Arbiter found that the respective Independent Contractor Agreements of Chrisden and his group clearly stated that no employer-employee relationship existed between them and Lazada. The said Office also determined that Chrisden and his group had control over the means and methods of their work since they provided their own vehicles and were free to choose the means of transport, delivery routes and working hours.

    The Office of the Labor Arbiter added that Lazada only required goods to be delivered promptly and in good condition. While the said Office acknowledged that Lazada gave out rules and regulations on the delivery of goods, it ruled that this did not amount to control over the means and methods by which Chrisden and his group accomplished their work.

    Thus, the Office of the Labor Arbiter dismissed the complaint for lack of jurisdiction.

    On appeal, the National Labor Relations Commission affirmed the Office of the Labor Arbiter’s ruling.

    Chrisden and his group filed a petition with the Court of Appeals, but their petition was dismissed outright.

    Chrisden and his group then elevated their case to the Supreme Court.

    Were Chrisden and his group regular employees of Lazada?

    The Supreme Court ruled in the affirmative.

    The Court reiterated the following established principles:

    Consistent with the constitutional recognition that labor is a primary social economic force, full protection to labor is a social policy enshrined in Article XIII, Section 3 of the Constitution. The provision guarantees the right of workers to security of tenure, among others. One’s employment is a property right which cannot be revoked without due process.

    Under Philippine laws, the nature of employment of a worker is prescribed by law, regardless of what the contract and the parties present it to be. Furthermore, employment contracts are not ordinary contracts because they are imbued with public interest.

    The applicable provisions of the law are deemed incorporated into the contract and the parties cannot exempt themselves from the coverage of labor laws simply by entering into contracts. Thus, regardless of the nomenclature and stipulations of the contract, the employment contract must be read consistent with the social policy of providing protection to labor.

    To determine the existence of an employer-employee relationship, the Court employs a two-tiered test:

    Under the four-fold test, to establish an employer-employee relationship, four factors must be proven:

    • the employer’s selection and engagement of the employee;
    • the payment of wages;
    • the power to dismiss; and
    • the power to control the employee’s conduct.

    The Court identifies the power of control is the most significant factor in the four-fold test.

    The right to control extends not only over the work done but over the means and methods by which the employee must accomplish the work. The power of control does not have to be actually exercised by the employer. It is sufficient that the employer has a right to wield the power.

    However, not all rules imposed upon the worker is an indication of control. When rules are intended to serve as general guidelines to accomplish the work, it is not an indicator of control.

    When the control test is insufficient, the economic realities of the employment are considered to get a comprehensive assessment of the true classification of the worker.

    The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as:

    • the extent to which the services performed are an integral part of the employer’s business;
    • the extent of the worker’s investment in equipment and facilities;
    • the nature and degree of control exercised by the employer;
    • the worker’s opportunity for profit and loss;
    • the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise;
    • the permanency and duration of the relationship between the worker and the employer; and
    • the degree of dependency of the worker upon the employer for his continued employment in that line of business.

    Regarding classifications of employment, the Court referred to Article 295 of the Labor Code of the Philippines which provides four classifications, namely:

    • regular;
    • project;
    • seasonal; and
    • casual.

    Employees who perform activities which are necessary or desirable in the usual business of the employer may be regular, project, or seasonal employees. Of the three, project and seasonal employees are generally engaged to perform tasks which only lasts for a specific period and duration. Meanwhile, casual employees are those who perform work which are not usually necessary or desirable for the employer’s business.

    The Court explained that activities which are considered usually necessary or desirable in the employer’s business generally depends on the industry. There must be a reasonable connection between the work performed by the employee and the usual trade or business of the employer.

    The Court mentioned Brent School, Inc. v. Zamora as a case which recognized another employment classification referred to as fixed-term.

    Said the Court, fixed-term employment is an arrangement wherein an employee is hired for a specific period. In fixed-term employment, the work performed may also be necessary or desirable to the usual business of the employer. Fixed-term employments are recognized by law for projects with pre-determined completion or generally in a work where a fixed term is essential and natural appurtenance.

    The Court then discussed that in order for fixed-term employment to be valid, either of these circumstances must be proven:

    • The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
    • It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.

    These criteria presume that an employee, on account of special skills or market forces, is in a position to make demands upon the prospective employer. The parity of standing between the employer and employee indicates that the employee needs less protection than that of the ordinary worker. In determining whether the fixed-term employment is valid, the burden of proof lies with the employer to show that it deals with the employee in more or less equal terms. The recognition of fixed-term employment in Brent remains an exception rather than the general rule.

    In the present case, the Court declared that Chrisden and his group were regular employees of Lazada.

    According to the Court, Chrisden and his group satisfied the four-fold test.

    • First, Chrisden and his group were directly employed by Lazada as evidenced by the Independent Contractor Agreements they signed;
    • Second, as indicated in the said Agreement, Chrisden and his group received their salaries from Lazada. Chrisden and his group were paid by Lazada the amount of P1,200.00 for each day of service;
    • Third, Lazada had the power to dismiss Chrisden and his group. In their contract, Lazada can immediately terminate the Agreement for breach of its material provisions.; and
    • Fourth, Lazada had control over the means and methods of the performance of the work of Chrisden and his group, as explicitly mentioned in their Agreement and as reflected in the way the work of Chrisden and his group was carried out. Lazada required the accomplishment of a route sheet which kept track of the arrival, departure, and unloading time of the items. Chrisden and his group shouldered a penalty of P500.00 on top of an item’s actual value should it get lost. Chrisden and his group were also required to submit trip tickets and incident reports to Lazada.

    The Court added that even if it considered the foregoing factors as mere guidelines, the circumstances of the whole economic activity between Lazada and Chrisden and his group, nonetheless, confirmed the existence of an employer-employee relationship. Stated otherwise, the Court found that Chrisden and his group satisfied the economic dependence test.

    Although Lazada insisted that the delivery of items was only incidental to its business as it was mainly an online platform where sellers and buyers transact, the Court found that the delivery of items by Chrisden and his group was clearly integrated in the services it offered. The Court even noticed Lazada’s admission that it had different route managers to supervise the delivery of the products from the sellers to the buyers. But this only confirmed that Lazada had taken steps to facilitate not only the transaction of the seller and buyer in the online platform but also the delivery of the items.

    The Court also looked into the contention of Lazada that it could have left the delivery of the goods to the sellers and buyers. However, the Court disregarded said contention as this was not the business model it actually implemented.

    The Court further found that Chrisden and his group were required by Lazada to use their own motor vehicles and other equipment and supplies in the delivery of the items. Moreover, Chrisden and his group were found to have no control over their own profit or loss because they were paid a set daily wage. There were also found to have no control over their own time and they could not offer their service to other companies as Lazada could demand their presence from time to time.

    For the Court, Chrisden and his group were economically dependent on Lazada for their livelihood and their continued engagement in its line of business.

    At this point, the Court rejected Lazada’s assertion that the Independent Contractor Agreements of Chrisden and his group explicitly stipulated that the absence of an employer-employee relationship between them. According to the Court, the protection of the law afforded to labor precedes over the nomenclature and stipulations of the Contract. The Independent Contractor Agreements of Chrisden and his group signed was not as ordinary as Lazada purported it to be. Thus, it was patently erroneous for the labor tribunals to reject an employer-employee relationship simply because the Independent Contractor Agreements stipulated the non-existence of the employment relation.

    The Court then rebuffed Lazada’s contention that Chrisden and his group were independent contractors.

    The Court set forth the following relevant principles:

    An independent contractor is defined as one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under one’s own responsibility according to one’s own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.

    Laws and jurisprudence recognize two types of contractors:

    • legitimate job contractors under Article 106 of the Labor Code of the Philippines; and
    • independent contractors who possess unique skills and talent and whose contracts are governed by the Civil Code of the Philippines.

    The Court stressed that when the status of the employment is in dispute, the employer bears the burden to prove that the workers are independent contractors rather than regular employees.

    In the present case, the Court ruled that Lazada failed to establish that Chrisden and his group fell under any of the categories of independent contractors, based on the following findings:

    • First, Chrisden and his group were not hired by a contractor or subcontractor as both parties’ submitted that they were directly engaged by Lazada; and
    • Second, the work performed by Chrisden and his group did not require a special skill or talent. Picking up and delivering goods from warehouse to buyers did not call for a specific expertise. There was also no showing that Chrisden and his group were hired due to their unique ability or competency.

    Finally, the Court could not consider Chrisden and his group as regular employees with a fixed-term employment. The Court stated that fixed-term employment as enunciated in Brent presupposes an employee who is more or less on equal footing with an employer. It applies only in exceptional cases where the employee has bargaining power on account of a special skill or the market force.

    In the present case, the Court found that Lazada neither demonstrated nor argued this and had even failed to allege as to how the terms and conditions of their contracts were agreed upon.

    Having been declared regular employees of Lazada, the Court accordingly ordered the reinstatement of Chrisden and his group, as well as the payment of their backwages.

    Further reading:

    • Ditiangkin, et al. v. Lazada, et al., G.R. No. 246892, September 21, 2022.

  • But the Employee Assaulted a Co-Worker Inside Company Premises

    On September 15, 2008, the employer, a rent-a-car company, hired Reynaldo for the position of driver for transporting tourists to their destination.

    Reynaldo was in the employ of the company for seven years. He had no derogatory record. However, on the night of February 12, 2015, Reynaldo was involved in misconduct for the first time in his career.

    On such date, Reynaldo engaged in a heated argument with a co-employee, Felix. According to Reynaldo, he left the work premises after his shift, but he had to return to retrieve his personal belongings. Upon arrival at the work premises, Reynaldo chanced upon Felix, whom he claimed was staring sharply at him. Reynaldo stated that he accosted Felix and asked if there was a problem. Felix fired back and asked Reynaldo the same question. A heated argument with shoving then ensued. Another employee, Jose, broke up the melee and led Reynaldo away from Felix.

    The employer company, however, countered that Reynaldo was drunk when he confronted Felix to the point of boxing and strangling the latter that the two of them had to be restrained by its security guards. It claimed that Reynaldo refused to be controlled, until Jose arrived, and led Reynaldo outside the garage.

    After the submission of various written explanations, the employer company placed Reynaldo under preventive suspension and conducted an administrative hearing. The employer company later concluded that Reynaldo violated its Code of Discipline for fighting with a co-employee inside the work premises. Thus, Reynaldo was terminated from employment on March 20, 2015.

    Aggrieved, Reynaldo filed a complaint for illegal dismissal against the employer company.

    The Office of the Labor Arbiter found that Reynaldo was not illegally dismissed from employment because fighting with a co-employee within work premises was considered by the employer company as serious misconduct and a valid ground for termination of his employment.

    The National Labor Relations Commission affirmed the ruling of the Office of the Labor Arbiter.

    The Court of Appeals reversed the findings of the labor tribunals and found that Reynaldo was illegally dismissed from employment since what transpired between Reynaldo and Felix was a petty quarrel that merely involved shoving or slight pushing. The Court of Appeals found that, except for a minor scratch in Reynaldo’s knee, the incident did not cause bodily harm. It was also found that the said incident did not in any manner interfere with the work of fellow employees, or the operations of the business. For the Court of Appeals, the penalty of dismissal imposed upon Reynaldo was too harsh and not commensurate with the act he committed.

    Thus, it declared the illegality of the dismissal of Reynaldo from employment and his entitlement to reinstatement and backwages.

    The employer company elevated its case to the Supreme Court.

    Was Reynaldo illegally dismissed from employment?

    The Supreme Court ruled in the affirmative.

    The Court found that Reynaldo did not commit serious misconduct to warrant his dismissal from employment.

    Jurisprudence1Empas v. Mariwasa Siam Ceramics, Inc., G.R. No. 246176, December 7, 2021. dictates that misconduct is generally defined 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.

    Under Article 297 of the Labor Code of the Philippines, an employer may terminate the services of an employee on the ground of serious misconduct committed in connection with or relative to the performance of his duties.2Relevant portions of the Article states: Art. 297. Termination by Employer. — An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of lawful orders of his employer or representative in connection with his work; x x x

    Jurisprudence3Empas v. Mariwasa Siam Ceramics, Inc., G.R. No. 246176, December 7, 2021. also teaches that in labor cases, misconduct, as a ground for dismissal, must be serious or of such grave and aggravated character and not merely trivial or unimportant. To justify termination on the ground of serious misconduct, the following requisites must concur:

    • the misconduct must be serious;
    • it must relate to the performance of the employee’s duties, showing that the employee has become unfit to continue working for the employer; and
    • it must have been performed with wrongful intent.

    In the present case, the Court found that none of the requisites for serious misconduct was present. It agreed with the finding of the Court of Appeals that only a petty quarrel involving shoving or slight pushing transpired between Reynaldo and Felix. According to the Supreme Court, the same was nipped in the bud by the intervention of Jose and the security guards on duty. The incident neither caused work stoppage nor posed a threat to the safety of the other employees. Furthermore, the employer company never established how Reynaldo’s misconduct had adversely affected its business, or how Reynaldo had become unfit to continue working for the company. For the Supreme Court, no just cause supported the termination of Reynaldo’s employment.

    The Court cited Article 294 of the Labor Code of the Philippines, which states that illegally dismissed employees are entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent from the time their compensation was withheld from them up to the time of their actual reinstatement. The Court stated that Reynaldo deserved no less.

    Further reading:

    • G & S Transport Corp. v. Medina, G.R. No. 243768, September 5, 2022.

  • Based on Two Supreme Court Decisions, the Contractor Is Legitimate

    Rico alleged that on October 2, 2002, PPI Holdings, Inc. (PPI), the sole franchisee of Pizza Hut in the Philippines, hired him as a messenger for its human resources department, and later on, for its accounting department.

    Rico stated that his employment was transferred to a manpower agency, a certain Human Resources, Inc., and subsequently, to Consolidated Buildings Maintenance, Inc. (CBMI), now Atalian Global Services.

    Rico also stated that despite such transfer, nothing changed with his employment in that he continued to be PPI’s messenger in its accounting department until CBMI sent him, along with other coworkers, a letter dated August 1, 2016 informing him of the termination of his services with PPI.

    Rico thus filed an illegal dismissal case with money claims against PPI, CBMI, and their owners, arguing that he was a regular employee of PPI for having worked with it for 14 years, and that there was no just cause for his dismissal.

    PPI denied having an employer-employee relationship with Rico. It posited that Rico was merely assigned to it by CBMI, a legitimate contractor that had rendered janitorial, sanitation, warehousing services, and allied services to PPI until the termination of their latest Contract of Services Agreement on September 1, 2016. Invoking the service agreement with CBMI, PPI averred that it was CBMI which relayed the company rules, regulations, and working terms and conditions upon Rico’s engagement, and which paid Rico’s salary, Social Security System, Pag-IBIG, and PhilHealth contributions.

    For its part, CBMI acknowledged Rico as its employee assigned to PPI. It asserted that it is a legitimate contractor engaged in the business of providing janitorial, kitchen, elevator maintenance, and allied services to various entities, including PPI. However, while it recognized Rico’s employment, CBMI denied having terminated his services. Instead, it alleged that Rico, along with his other co-employees, was merely placed on floating status when it decided to terminate its latest service contract with PPI effective September 1, 2016 due to certain financial disagreements. Hence, for CBMI, Rico’s complaint should be dismissed for being prematurely filed.

    The Office of the Labor Arbiter considered CBMI as a legitimate contractor based on the following documents:

    • CBMI Securities and Exchange Commission (SEC) Registration;
    • CBMI Company Profile;
    • Contracts of Services entered into with PPI for several years;
    • CBMI Certificates of Registration with the Department of Labor and Employment under such Department’s Orders numbered 18-A, Series of 2011 and 18-02, Series of 2002; and
    • Audited Financial Statement filed with the SEC showing substantial capital or investment.

    The Office of the Labor Arbiter further found that, as stipulated in the service agreements, CBMI carried out its work/service independently from its principal in accordance with its own means, method, and manner.

    Nonetheless, the Office of the Labor Arbiter ruled that Rico was PPI’s regular employee as it found no evidence of the existence of an employer-employee relationship between CBMI and Rico. Such Office found that Rico’s 14 years of service with PPI, performing tasks which are usually necessary or desirable to PPI’s main business as messenger, proved that Rico was PPI’s employee. Since PPI failed to present any just or authorized cause in terminating his employment, the Office of the Labor Arbiter directed PPI to reinstate Rico and held PPI and CBMI solidarily liable for payment of his backwages.

    PPI filed a partial appeal from the Office of the Labor Arbiter’s Decision, insisting that Rico was not its employee but that of CBMI, which is a legitimate contractor as found by said Office.

    The National Labor Relations Commission ruled that CBMI is a labor-only contractor. The Commission found that, despite proof of substantial capitalization, there was no showing that CBMI carried on an independent business or undertook the performance of its service contracts according to its own manner and method, free from PPI’s control and supervision. The Commission added that the contracts of services between PPI and CBMI clearly showed that CBMI undertook to merely supply manpower. The Commission further added that CBMI’s registration with the DOLE as an independent contractor was not conclusive of such status.

    Further, the Commission agreed with the Office of the Labor Arbiter’s ruling that Rico was PPI’s regular employee. The Commission found that Rico’s job as a messenger was necessary and vital to PPI’s business as the only franchisee of Pizza Hut, which requires food and kitchen services, sanitation, delivery, warehousing, commissary, and related services for its various restaurants. The Commission also took note of Rico’s 14 years of uninterrupted service with PPI.

    Finally, the Commission upheld the Office of the Labor Arbiter’s finding that PPI failed to adduce evidence that Rico’s dismissal was for a just or authorized cause, and that procedural due process was observed in his dismissal from employment.

    When the case reached the Court of Appeals, such Court declared CBMI as a legitimate contractor, based solely on two cases decided by the Supreme Court concerning PPI and CBMI, specifically, Consolidated Building Maintenance, Inc. v. Asprec, Jr.1G.R. No. 217301, June 6, 2018 and Philippine Pizza, Inc. v. Cayetano.2G.R. No. 230030, August 29, 2018] On that premise, the Court of Appeals concluded that Rico was CBMI’s direct employer. Nevertheless, the Court of Appeals sustained the labor tribunals’ uniform ruling that Rico was illegally dismissed from employment.

    Rico filed a petition for review on certiorari to assail the ruling of the Court of Appeals.

    Did PPI and CBMI engage in labor-only contracting?

    The Supreme Court ruled that PPI and CBMI engaged in labor-only contracting.

    The Court began by stating that outsourcing of services is not totally prohibited in the Philippines. It pointed out that Articles 106 to 109 of the Labor Code of the Philippines, Department of Labor and Employment Orders numbered 18-02, Series of 2002 and 18-A, Series of 2011, or the implementing rules in force at the time of Rico’s employment, provided the legal basis for service contracting and delineated the situations when it is not permitted. Considering such laws and rules, the Court stated that the following must be considered in determining whether CBMI was a legitimate contractor or engaged in labor-only contracting:

    • registration with the proper government agencies;
    • existence of substantial capital or investment;
    • service agreement that ensures compliance with all the rights and benefits under labor laws;
    • nature of the activities performed by the employees, i.e., if they are usually necessary or desirable to the operation of the principal’s company or directly related to the main business of the principal within a definite predetermined period; and
    • the exercise of the right to control the performance of the employees’ work.3Barretto v. Amber Golden Pot Restaurant, G.R. No. 254596-97, November 24, 2021

    In the present case, the Supreme Court found the certificates of registration, financial statements, and service agreements insufficient in supporting PPI and CBMI’s claim of legitimate contracting. The Court mentioned the following reasons:

    • A certificate of registration as an independent contractor is not conclusive evidence of such status, as such registration merely prevents the legal presumption of being a labor-only contractor from arising;4Daguinod v. Southgate Foods, Inc., G.R. No. 227795, February 20, 2019
    • It is settled that, despite proof of substantial capital, a contractor is still considered engaged in labor-only contracting whenever it is established that the principal actually controls the manner of the employee’s work;5Mago v. Sun Power Manufacturing Limited, G.R. No. 210961, January 24, 2018 and
    • The true nature of the relationship between the principal, contractor, and employee cannot be dictated by mere expedience of a unilateral declaration in a contract;6Daguinod v. Southgate Foods, Inc., G.R. No. 227795, February 20, 2019

    The Supreme Court added that the totality of attendant circumstances led to a finding that PPI and CBMI engaged in labor-only contracting.

    First, there was no evidence that CBMI carried on an independent business or undertook the performance of its service contracts according to its own manner and method, free from the control and supervision of PPI. While the various service agreements between PPI and CBMI contained the latter’s undertaking for the employees’ qualification and training, hiring and payroll, as well as their supervision, discipline, suspension or termination, said clauses were still but empty words that hardly helped PPI’s case, in absence of concrete proof that CBMI indeed carried on an independent business.

    Second, there was also no evidence that CBMI hired Rico. In fact, there was no contract of employment showing that Rico was an employee of CBMI, nor were there records submitted in evidence to show such relationship.

    Third, the fact that PPI exercised the right of control over Rico’s work was clear and unmistakable. As messenger, Rico had been performing his tasks at PPI’s premises for about fourteen (14) years. All those times, all the tools and equipment which he used in the performance of his work were owned by PPI and the latter’s managers and supervisors controlled his work inside the company premises.

    Fourth, the various contract of services executed between PPI and CBMI, which spanned for several years from 1999 to 2012, showed that CBMI undertook to supply manpower only.

    And fifth, Rico’s job as messenger was necessary and vital to PPI’s business as the Philippine franchisee of Pizza Hut which requires waitering, food and kitchen services, sanitation, delivery, warehousing, commissary and related services for its various restaurants. Otherwise, Rico would not have been repeatedly and continuously hired by PPI for fourteen (14) years. The Court stressed that such repeated and continuing need for the performance of the job is sufficient evidence of the necessity, if not indispensability, of the activity to the business.

    The Supreme Court added that the Court of Appeals gravely erred in declaring CBMI as a legitimate contractor solely on the basis of the pronouncements in Consolidated Building Maintenance, Inc. v. Asprec, Jr.7G.R. No. 217301, June 6, 2018 and Philippine Pizza, Inc. v. Cayetano.8G.R. No. 230030, August 29, 2018]

    The Supreme Court emphasized that the principle of stare decisis cannot be applied in determining whether one is engaged in permissible contracting or otherwise, since such characterization should be based on the distinct features of the relationship between the parties, and the totality of the facts and attendant circumstances of each case, then measured against the terms of and criteria set by the statute.9San Miguel Foods, Inc. v. Rivera, G.R. No. 220103, January 31, 2018 and 7K Corp. v. National Labor Relations Commission, G.R. No. 148490, November 22, 2006, 537 PHIL 664-681 Specifically, the Court mentioned while those two cases also involved PPI and CBMI, the nature of work and treatment of employment of the employees in those cases may be different from Rico’s. Hence, the Court found it necessary to independently determine Rico’s case, which was aptly undertaken by the Commission in this case.

    The Supreme Court further pointed out that the Court of Appeals merely made inference from previous cases without reference to the evidence on hand in concluding that CBMI was a legitimate contractor, and as such was Rico’s direct employer. The Supreme Court reiterated that the totality of the facts and the surrounding circumstances of the case must be considered in distinguishing prohibited contracting from permissible contracting.10Philippine Pizza, Inc. v. Cayetano, G.R. No. 230030, August 29, 2018]

    With the finding that CBMI was a labor-only contractor, such company was considered as a mere agent of PPI, which, in turn, was deemed to be Rico’s employer. Consequently, PPI and CBMI were held solidarily liable for payment of Rico’s awards.

    This is because of the established principle that in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.11San Miguel Corp. v. MAERC Integrated Services Inc., G.R. No. 144672, July 10, 2003, 453 PHIL 543-576

    Further reading:

    • Conjusta v. PPI Holdings, Inc., G.R. No. 252720, August 22, 2022.

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  • But the President’s Approval of the Grant of CBA Benefits Was Presumed Under Article 4

    On March 20, 2012, the Clark Development Corporation, the operating arm of the Bases Conversion Development Authority, tasked to manage the Clark Special Economic Zone, executed a renegotiated collective bargaining agreement with its supervisory employees’ union.

    The collective bargaining agreement contained economic terms in favor of the supervisory employees, specifically the grant of additional annual union leave, bereavement leave, salary increases, uniform allowance, monthly Personal Economic Relief Allowance and a signing bonus. Said agreement also granted free use of guesthouses, use of a service vehicle, as well as the reproduction and distribution of the agreement to all members of the supervisory employees’ union.

    However, the Governance Commission for Government-Owned and -Controlled Corporations (Governance Commission) opined that the collective bargaining agreement violated Section 9 of Executive Order No. 7, which was signed by the Philippine President on September 8, 2010. Section 9 imposed a moratorium on increases in the salaries, allowances, incentives and other benefits in Government-Owned and -Controlled Corporations unless specifically authorized by the Philippine President.

    The Governance Commission stated that the Philippine President has not given Clark Development Corporation the authority to renegotiate the collective bargaining agreement with the supervisory employees’ union and to grant the union members increases or additional benefits.

    Furthermore, the Bases Conversion Development Authority recommended that Clark Development Corporation defer or renegotiate its collective bargaining agreement with the supervisory employees’ union should it fail to prove the financial sustainability of the economic terms of such agreement.

    On August 1, 2012, the supervisory employees’ union filed before the National Conciliation and Mediation Board a complaint against Clark Development Corporation for its failure to implement the collective bargaining agreement.

    On November 5, 2012, the Accredited Voluntary Arbitrator ruled in favor of the supervisory employees’ union and upheld the economic terms or grant of benefits in the collective bargaining agreement. According to the Accredited Voluntary Arbitrator, Section 10 of Executive Order No. 7, Series of 2010, suspended the grant of allowances, bonuses, incentives, and other perks to members of the boards of directors/trustees of Government-Owned and -Controlled Corporations, but only until December 31, 2010. The Accredited Voluntary Arbitrator also held that the approval of the Philippine President in the grant of additional benefits was presumed under the rule on liberal construction in favor of labor under Article 4 of the Labor Code of the Philippines.

    Aggrieved, Clark Development Corporation elevated the case to the Court of Appeals through a petition for review.

    On April 8, 2013, the Court of Appeals affirmed the Accredited Voluntary Arbitrator’s findings. The Court of Appeals explained that Executive Order No. 7, Series of 2010, does not apply to Clark Development Corporation, as well as to the supervisory employees’ union. The Court of Appeals added that the Philippine President’s approval of the grant of additional benefits was presumed in line with the principle that all doubts should be resolved in favor of labor.

    Clark Development Corporation filed its petition for review on certiorari before the Supreme Court and asserted that the Court of Appeals and the Accredited Voluntary Arbitrator erred in allowing the grant of additional benefits to the supervisory employees’ union.

    Clark Development Corporation asserted the following:

    • The economic terms of the collective bargaining agreement were invalid and cannot be enforced because these were renegotiated without the approval of the Philippine President.
    • The GOCC Governance Act of 2011 gave the Philippine President the authority to fix the Government-Owned and -Controlled Corporations’ compensation framework.
    • Corollarily, approval of additional benefits by the Philippine President cannot be presumed.

    By contrast, the supervisory employees’ union contended that:

    • The collective bargaining agreement was the law between the parties and must be respected.
    • The collective bargaining agreement was renegotiated consistent with the employees’ rights to organization and collective bargaining.
    • Executive Order No. 7, Series of 2010, was not applicable to Government-Owned and -Controlled Corporations without original charter.
    • The GOCC Governance Act of 2011 recognized the vested rights of government employees to their salaries.

    In the meantime, the Governance Commission moved to intervene in the proceedings and argued that:

    • The collective bargaining agreement contravened Executive Order No. 7, Series of 2010, and the GOCC Governance Act of 2011.
    • The moratorium on the grant of additional benefits remained effective pending the promulgation and approval of the compensation and position classification system for Government-Owned and -Controlled Corporations.
    • In any event, there were no factual and legal bases to presume the consent of the Philippine President on the collective bargaining agreement’s economic provisions.

    Were the additional benefits granted to the supervisory employees under the collective bargaining agreement valid?

    The Supreme Court ruled in the negative.

    The Supreme Court began with the settled rule that the right of government employees to self-organization is not as extensive as in the right of private employees. It then mentioned that the right of government employees to collective bargaining and negotiation is subject to limitations, in that only the terms and conditions of government employment not fixed by law can be negotiated.

    The Supreme Court pointed out that in order to control the grant of excessive salaries, allowances, incentives, and other benefits, Executive Order No. 7, Series of 2010, particularly Section 9, has imposed a moratorium on the grant of additional salaries and allowances to employees and officers of Government-Owned and -Controlled Corporations until specifically authorized by the Philippine President.

    The Supreme Court stressed that the clause “until specifically authorized by the Philippine President” is not in the nature of an exception. Rather, the clause provides for the situation where the Philippine President, deems it proper to lift the moratorium. According to the Supreme Court, the use of the preposition “until” before the phrase “specifically authorized by the Philippine President” denotes that the moratorium continues up to a particular time, i.e., when the President authorizes anew the grant of the prohibited increases.

    On this score, the Supreme Court took judicial notice that the Philippine President has not lifted the moratorium. The Court thus ruled that the economic terms of the collective bargaining agreement executed by the Clark Development Corporation with its supervisory employees’ union on March 20, 2012 were void for violating the law.

    The Supreme Court noted the reliance of the Accredited Voluntary Arbitrator and the Court of Appeals upon Section 10 of Executive Order No. 7, Series of 2010. The Supreme Court, however, pointed out that Section 10 is inapplicable to the supervisory employees’ union of Clark Development Corporation, as the said section pertains to members of the Board of Directors/Trustees of Government-Owned and -Controlled Corporations.

    The Supreme Court then declared as erroneous the exclusion by the Court of Appeals of Clark Development Corporation from the coverage of Executive Order No. 7, Series of 2010. This was because nothing in the law makes any express distinction between Government-Owned and -Controlled Corporations with original charter, and those incorporated under the Corporation Code. For the Supreme Court, Executive Order No. 7, Series of 2010, applies to all Government-Owned and -Controlled Corporations regardless of the manner of creation.

    The Supreme Court added that although the GOCC Governance Act of 2011 authorizes the Governance Commission to develop a compensation and position classification system applicable to all officers and employees of Government-Owned and -Controlled Corporations, such system is subject to approval of the Philippine President.

    In the present case, the Supreme Court found that the Governance Commission did not give its favorable recommendation on the renegotiation of additional benefits by Clark Development Corporation and the supervisory employees’ union. The Supreme Court noted that the Governance Commission even opined that the collective bargaining agreement violated Section 9 of Executive Order No. 7, Series of 2010.

    The Supreme Court then highlighted that on March 22, 2016, the Philippine President issued Executive Order No. 203, Series of 2016, which disallowed the Governing Boards of all covered Government-Owned and -Controlled Corporations, whether Chartered or Non-chartered, to negotiate with their officers and employees the economic terms of their collective bargaining agreements.

    For the Supreme Court, such provision supports the finding that the moratorium under Executive Order No. 7, Series of 2010, has remained effective pending the promulgation and approval of the compensation framework for all the Government-Owned and -Controlled Corporations. The Court found no factual and legal bases for the Court of Appeals and the Accredited Voluntary Arbitrator to presume that the Philippine President approved the renegotiated economic provisions of the collective bargaining agreement between Clark Development Corporation and its supervisory employees’ union.

    The Supreme Court emphasized that the construction in favor of labor only applies when there are doubts in the interpretation and implementation of the provisions of the Labor Code of the Philippines and its implementing rules and regulations. The Supreme Court stated that the language of Section 9 of Executive Order No. 7, Series of 2010, on the moratorium on increases in rates of salaries and other benefits is unambiguous. Consequently, the Supreme Court emphasized that the law must be interpreted following its plain and obvious meaning and applied according to its express terms. For the Supreme Court, the law requires the Philippine President’s consent as to additional benefits effectively lifting the moratorium, and any presumption of such approval is unwarranted.

    The Supreme Court concluded that Clark Development Corporation had valid reason not to implement the increases in salaries and benefits as provided in the renegotiated collective bargaining agreement. This is because the law has fixed the terms and conditions of government employment, and any contract that violates the law is void and cannot be a source of rights and obligations.

    Further reading:

    • Clark Development Corp. v. Association of CDC Supervisory Personnel Union, G.R. No. 207853, March 30, 2022.

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  • A Liberal Interpretation of the Rules Is Primarily Granted for the Employee’s Favor

    Sometime in 2012, several stockholders of the employer bank complained about the discrepancies in the amounts of the purchase price of stock subscriptions appearing in the original receipts as against the duplicate copies issued by the said bank. The anomaly involved several millions of pesos collected from stockholders of the employer bank which, if not corrected, will certainly tarnish the image and integrity of the latter.

    Acting on this anomaly, the employer bank conducted an investigation and confirmed the irregularities. It discovered that in the original receipts given to the stockholders, the stated price of shares ranged from Php250.00 to Php275.00, but in the duplicate copies retained by the employer bank, only Php100.00 was indicated. It also found that the original receipts were signed by the then president of the employer bank, while the duplicate copies were signed either by its then treasury head or branch manager.

    Thus, to comply with regulations mandating the prompt report of anomalies to the Bangko Sentral ng Pilipinas (BSP), the Board of Directors of the employer bank approved a Report on Crimes and Losses and directed Ariel — its Compliance Officer — to certify the same. However, Ariel refused to certify the report, reasoning that no independent investigation was conducted, and that he cannot completely validate the same for lack of material data and evidence. Ariel further remarked that he was being pressured to certify the report.

    Thereafter, Ariel claimed that instead of furnishing him the hard copies of the reports and relevant attachments to enable him to verify and certify the same, the employer bank issued him two show cause orders and put him on preventive suspension for neglect of duty. Meanwhile, the employer bank contended that several administrative hearings were scheduled to hear the side of Ariel, which he ignored.

    On March 25, 2013, Ariel filed a complaint against the employer bank for illegal suspension and money claims. This complaint was subsequently amended to include illegal dismissal, in view of the eventual termination of his employment.

    The employer bank did not file a position paper during the proceedings before the Office of the Labor Arbiter.

    The Office of the Labor Arbiter then ruled that the dismissal of Ariel was without a valid cause and that he was denied due process for having been summarily dismissed.

    The National Labor Relations Commission reversed the ruling of the Office of the Labor Arbiter. It adopted a liberal interpretation of procedural rules, relaxed the same and held that substantial justice must prevail over technicalities. Thus, it allowed the employer bank to submit countervailing evidence even on appeal. On the substantial issue, the National Labor Relations Commission found that Ariel was not illegally dismissed, since the employer bank was able to discharge the burden of proving that it had a just cause to terminate Ariel’s employment.

    The Court of Appeals affirmed the Decision of the National Labor Relations Commission. The said Court found no grave abuse of discretion on the part of the National Labor Relations Commission in relaxing its procedural rules. For the Court of Appeals, the failure of the employer bank to file a Position Paper and submit evidence was justified and satisfactorily explained, since it was neither given summons, nor notified of the scheduled preliminary conference and further hearings after Ariel filed his amended complaint. On the substantive issue, the Court of Appeals ruled that Ariel was validly dismissed for a just and valid cause.

    Ariel elevated his case to the Supreme Court to assail the decision of the Court of Appeals.

    Ariel asserted that the Court of Appeals abused its discretion amounting to lack or excess of jurisdiction:

    • in upholding the National Labor Relation Commission’s liberal application of the procedural rules in favor of the employer bank; and
    • in ruling that he was validly dismissed from employment.

    Was the liberal application of the procedural rules in favor of the employer bank warranted?

    Apart from its finding that Ariel was illegally dismissed from employment, the Supreme Court ruled that the the National Labor Relations Commission and the Court of Appeals erred in allowing the employer bank to present evidence on appeal.

    The Supreme Court reiterated established principles from jurisprudence and experts by stating that due process is a malleable concept anchored on fairness and equity. At its core is simply the reasonable opportunity for every party to be heard. What is required is not actual hearing but a real opportunity to be heard. Thus, one who refuses to appear at a hearing is not thereby denied due process if a decision is reached without waiting for him. Likewise, the requirement of due process can be satisfied by subsequent due hearing.

    In the present case, the Supreme Court ruled that the employer bank had been accorded ample opportunity to present its side during the proceedings before the Office of the Labor Arbiter based on the following findings:

    • The employer bank unjustifiably missed at least two hearing dates: that on June 4, 2013, and that on June 19, 2013. With regard to the hearing on June 19, 2013, the Supreme Court stated that the employer bank missed the hearing despite having been directed to attend by the Office of the Labor Arbiter;
    • The employer bank, at this point, had already obtained a copy of the amended complaint which would have enabled it to intelligently respond. According to the Court, the issuance of the summons would have been a mere superfluity;
    • The employer bank’s absences were unexplained; and
    • If the employer bank truly held sacred its right to due process, it should have wasted no time nor missed no opportunity to assert such right as early as during the initial stages of the proceedings. It should have at least pleaded for the Office of the Labor Arbiter to reopen the proceedings and admit its position paper, if there ever was one. At the very least, the employer bank was well-aware that a complaint was filed against it and failed to be proactive in the proceedings. The Court sensed employer bank’s cavalier attitude and remarked that it reeked of negligence and disrespect to duly instituted authorities and rules of procedures, which it could never tolerate.

    While commending the National Labor Relations Commission and the Court of Appeals in upholding substantial justice, the Supreme Court reminded them such principle must always be balanced with respect and honest efforts to comply with procedural rules.

    The Court stated that it cannot always be about substantial justice, especially to the point of disrespect and utter disregard to procedural rules. Imperative justice requires correct observance of indispensable technicalities precisely designed to ensure its proper dispensation. It cannot be overemphasized that procedural rules have their own wholesome rationale in the orderly administration of justice. Justice has to be administered according to the Rules in order to obviate arbitrariness, caprice, or whimsicality. It must never be forgotten that, generally, the application of the rules must be upheld, and the suspension or even mere relaxation of its application, is the exception.

    In this regard, the Court emphasized the policy that although in labor cases, strict adherence to the technical rules of procedure is not required, this liberal policy should still be subject to rules of reason and fairplay. The liberality of procedural rules is qualified by two requirements:

    • a party should adequately explain any delay in the submission of evidence; and
    • a party should sufficiently prove the allegations sought to be proven.

    The reason for these requirements, said the Court, is that the liberal application of the rules before quasi-judicial agencies cannot be used to perpetuate injustice and hamper the just resolution of the case. Neither is the rule on liberal construction a license to disregard the rules of procedure.

    In the present case, the Court highlighted the fact the employer bank failed to adequately explain and justify their non-participation in the proceedings before the Office of the Labor Arbiter.

    For the Court, the application of a more liberal policy was unwarranted, contrary to the rulings of the National Labor Relations Commission and the Court of Appeals.

    At any rate, the Court maintained that the employer bank in the present case is not entitled to be accorded a liberal interpretation of the rules; the same being primarily granted for the employee’s favor, and not the employer.

    The Court explained that the principles embodied by all prevailing labor rules, legislations, and regulations are derived from the Constitution, which intensely protects the working individual and deeply promotes social justice.1Article II, Section 18 of the 1987 Constitution provides: “SECTION 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.” Meanwhile, Article XIII, Section 3 states: “SECTION 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.” Lastly, Article 4 of PD 442 or the Labor Code, provides: Article 4. Construction in favor of labor. — All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.” The measures embedded in our legal system which accord specific protection to labor stems from the reality that normally, the laborer stands on unequal footing as opposed to an employer. Indeed, the labor force is a special class that is constitutionally protected because of the inequality between capital and labor. In fact, labor proceedings are so informally and, as much as possible, amicably conducted and without a real need for counsel, perhaps in recognition of the sad fact that a common employee does not or have extremely limited means to secure legal services nor the mettle to endure the extremely antagonizing and adversarial atmosphere of a formal legal battle. Thus, in the common scenario of an unaided worker, who does not possess the necessary knowledge to protect his rights, pitted against his employer in a labor proceeding, the former cannot be expected to be perfectly compliant at all times with every single twist and turn of legal technicality. The same, however, cannot be said for the latter, who more often than not, has the capacity to hire the services of a counsel. As an additional aid therefore, a liberal interpretation of the technical rules of procedure may be allowed if only to further bridge the gap between an employee and an employer.

    The Court clarified that it is not saying that the rules may never be relaxed in favor of the employer, and that every labor dispute will be automatically decided in favor of labor. In certain cases, of course, a liberal approach to the rules may be had even if it favors the employer. Such allowance, however, must be measured against standards stricter than that imposed against the worker, and only in compelling and justified cases where the employer will definitely suffer injustice should such liberal interpretation be disallowed. The Supreme Court stated that such was not the situation of the employer bank in the present case.

    Further reading:

    • Reyes v. Rural Bank of San Rafael (Bulacan), Inc., G.R. No. 230597, March 23, 2022.

  • He Is Not Our Employee

    Gerome alleged that he was hired by JTA Packing Corporation (JTA) on December 26, 2014 as an all-around driver.

    He narrated that on September 5, 2016, an officer of JTA maltreated him, prevented him from leaving the company premises, and threatened his life. Gerome no longer reported to work.

    Believing that his continued employment became impossible, unbearable, and unlikely, Gerome filed a complaint for illegal dismissal against his employer on January 30, 2017.

    JTA contended that Gerome was not its employee, as established by the following documents which never included Gerome’s name:

    • copies of its alpha list of employees as filed with the Bureau of Internal Revenue (BIR) for the years 2014-2016;
    • payroll monthly reports and 13th month pay it paid for the years 2015-2016;
    • reports on Social Security System (SSS) contributions of its employees remitted for the years 2015-2016;
    • PhilHealth remittance reports on contributions of its employees in 2016; and
    • Pag-IBIG fund membership and registration/remittance forms indicating the names of its employees and their contributions for the period of 2015-2016.

    On June 28, 2017, the Office of the Labor Arbiter rendered a Decision which declared the existence of an employer-employee relationship between Gerome and JTA. It then ruled that Gerome was constructively dismissed because his continued employment with JTA was rendered impossible due to fear after the September 5, 2016 incident of maltreatment and detention.

    On appeal, the National Labor Relations Commission reversed and set aside the Decision of the Office of the Labor Arbiter. It dismissed the complaint for lack of employer-employee relationship between Gerome and JTA.

    One reason was that the pay slips submitted by Gerome failed to reveal who issued the same. The Commission also discovered discrepancies on the dates of their issue in that the pay slips dated back as early as March 2014 contrary to Gerome’s claim that he was hired in December of the same year.

    The other reason was that JTA’s documentary evidence showed that Gerome was not among its employees.

    The Court of Appeals affirmed the ruling of the National Labor Relations Commission, in view of Gerome’s failure to substantiate his claim that he is an employee of JTA.

    Gerome elevated his case to the Supreme Court.

    Was Gerome an employee of JTA?

    The Supreme Court ruled in the negative.

    The Court reiterated the settled rule that allegations in the complaint must be duly proven by competent evidence and that the burden of proof is on the party making the allegation. In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established. In this regard, the “four-fold test” determines the existence of an employer-employee relationship, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power to control the employee’s conduct.

    In the present case, the Court stressed that since it was Gerome who was claiming to be an employee of JTA, he had the burden of proving the existence of an employer-employee relationship. The Court found that Gerome failed to discharge this burden.

    Gerome did not present any employment contract or company identification card to prove Gerome’s employment with JTA. According to the Court, in a business establishment, an identification card is usually provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it.

    The pay slips presented by Gerome bore no indication that the amount he allegedly received came from JTA. The Court pointed out that the pay slips submitted by Gerome even showed that he had been receiving compensation as early as February 2014, when he had claimed that he was hired by JTA months later, or on December 26, 2014. The Court said that this wide gap between February 2014 and December 2014 was not a trivial inconsistency.

    Furthermore, there were no deductions from Gerome’s supposed salary such as withholding tax, SSS, PhilHealth or Pag-IBIG Fund contributions which were usual deductions from employees’ salaries.

    On the other hand, the following voluminous documentary evidence submitted by JTA, which were duly signed by its authorized representative and stamp received by the concerned government agencies, indubitably showed that Gerome was not among its employees:

    • the alpha list of employees submitted to the Bureau of Internal Revenue for the years during which Gerome claims to have been employed by JTA;
    • the payroll monthly reports; and
    • the remittances made by JTA of its employees’ monthly contributions to the SSS, PhilHealth and Pag-IBIG Fund.

    As to the power of control, the Court acknowledged that the purported driver’s itineraries presented by Gerome prescribed the manner by which his work as a driver is to be carried out. However, the Court found that the said driver’s itineraries were not signed by JTA’s authorized personnel and contained discrepancies on JTA’s name and address. For the Court, the driver’s itineraries were insufficient to establish the element of control.

    The Court accordingly denied Gerome’s petition for lack of merit.

    Further reading:

    • Ginta-Ason v. J.T.A. Packaging Corp., G.R. No. 244206, March 16, 2022.

  • Jurisdiction of the Labor Arbiter and the POEA

    Mike and Ryan alleged that on May 11, 2011, they were hired by The W Construction through its agent, U R Employed International Corporation, as construction workers in Malaysia. They entered into a two-year employment contract with a monthly salary of 800 Malaysian Ringgit.

    Mike and Ryan narrated that upon their arrival in Malaysia, the broker who fetched them from the airport took their passports. They were made to live in a place with unsafe living conditions. Also, they worked beyond regular hours without pay. Later, they discovered that they only had tourist visas, and that the employer was hiding them from the authorities because they did not have work permits.

    Mike and Ryan claimed that they reported their living and working conditions to their broker, but their grievances were unheeded.

    Mike and Ryan stated that they were left without any other recourse, which was why on August 14, 2011, Ryan sent an e-mail to the editorial of a Philippine newspaper company, narrating their experience and seeking assistance.

    Mike and Ryan continued that in the last week of August 2011, the employer’s human relations officer questioned them about the e-mail sent to the Philippine newspaper company. On September 13, 2011, a supervisor informed them about the termination of their employment. The employer told them that they were processed for repatriation and would be sent home on September 15, 2011. However, they were only repatriated sometime in November 2011. In the meantime, the employer cut off their food supply.

    On December 5, 2011, Mike and Ryan filed a complaint for illegal dismissal and money claims against their employer.

    Initially, the complaint was dismissed without prejudice because both parties failed to submit their respective position papers. On March 26, 2012, the complaint was reinstated upon a Motion to Revive filed by Mike and Ryan.

    The employer denied the allegations of Mike and Ryan. The employer countered that Mike voluntarily resigned from his job, while Ryan was dismissed from employment on the ground of grave misconduct when he sent a derogatory email to a Philippine newspaper company. The employer further submitted a summary of pay slips to prove that Mike and Ryan were properly paid their salary and benefits.

    The Office of the Labor Arbiter found that Mike and Ryan were constructively dismissed due to the unbearable and unfavorable working conditions set by the employer. They were awarded reimbursement of placement fees, backwages until the end of their employment contracts, damages, and attorney’s fees. Ryan’s claims for overtime pay and illegal deductions were denied for being unsubstantiated. Mike’s claim of illegal deduction was given credence by the Office of the Labor Arbiter.

    The National Labor Relations Commission denied the employer’s appeal and affirmed the ruling of the Office of the Labor Arbiter.

    The employer sought recourse before the Court of Appeals, ascribing grave abuse of discretion on the part of the National Labor Relations Commission.

    Record revealed that before Mike and Ryan filed their complaint with the Office of the Labor Arbiter, they also filed a complaint with the Philippine Overseas Employment Administration against the employer and its agent for violation of the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers. The complaint alleged the same set of facts in the complaint before the Office of the Labor Arbiter and were supported by the same affidavits. The complaint filed before the Philippine Overseas Employment Administration was dismissed for failure of Mike and Ryan to substantiate their allegations and attend the scheduled hearings. Mike and Ryan appealed the dismissal to the Department of Labor and Employment, which issued an order dismissing their appeal.

    Regarding the petition assailing the ruling of the National Labor Relations Commission, the Court of Appeals dismissed the same since it found substantial evidence to prove that respondents were illegally dismissed.

    The employer then elevated its case to the Supreme Court. It pointed out that the other complaint filed by Mike and Ryan before the Philippine Overseas Employment Administration had been dismissed. The employer thus posited that it was erroneous for the Court of Appeals to not consider the orders issued by the Philippine Overseas Employment Administration and the Department of Labor and Employment, when Mike and Ryan alleged the same facts in their complaint filed before the Office of the Labor Arbiter.

    Was the Court of Appeals correct in dismissing the employer’s petition?

    The Supreme Court ruled in the affirmative because no basis supported the argument that the Office of the Labor Arbiter should have considered the orders issued by the Philippine Overseas Employment Administration and the Department of Labor and Employment in the adjudication of the complaint filed by Mike and Ryan before the Office of the Labor Arbiter.

    The first reason discussed by the Supreme Court was that the Philippine Overseas Employment Administration could not have prevented the Office of the Labor Arbiter from ruling on the complaint of Mike and Ryan. Stated otherwise, the Doctrine of Primary Jurisdiction did not apply.

    The Supreme Court discussed that the Doctrine of Primary Jurisdiction, also known as the Doctrine of Prior Resort, is the power and authority vested by the Constitution or by statute upon an administrative body to act upon a matter by virtue of its specific competence. The Doctrine of Primary Jurisdiction prevents the court from arrogating unto itself the authority to resolve a controversy which falls under the jurisdiction of a tribunal possessed with special competence.

    The Supreme Court further discussed that Primary Jurisdiction does not necessarily denote Exclusive Jurisdiction. Primary Jurisdiction applies where a claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of the issues to the administrative body for its review.

    In the present case, the Supreme Court found that while Mike and Ryan alleged the same set of facts and submitted the same affidavits before the Office of the Labor Arbiter and the Philippine Overseas Employment Administration, the complaints raised different causes of action. Specifically, the complaint filed before the Office of the Labor Arbiter involved the issue of illegal dismissal and various money claims, while the Philippine Overseas Employment Administration complaint involved administrative disciplinary liability for violation of the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers. For the Supreme Court, the Doctrine of Primary Jurisdiction could not have applied.

    The second reason discussed by the Supreme Court was that in some instances, an administrative body is granted primary jurisdiction, concurrent with another government agency or the regular court.

    However, the Supreme Court found that a review of the respective jurisdictions of the Philippine Overseas Employment Administration and the Office of the Labor Arbiter reveals that these administrative bodies do not have concurrent jurisdiction.

    The Supreme Court mentioned that Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, provides that the Office of the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary, and other forms of damage. On the other hand, Section 6, Part A, Rule X of the Implementing Rules and Regulations of Republic Act No. 10022 provides that the Philippine Overseas Employment Administration exercises administrative jurisdiction arising out of violations of rules and regulations and administrative disciplinary jurisdiction over employers, principals, contracting partners, and overseas Filipino workers.

    For the Supreme Court, the jurisdiction of these administrative bodies does not in any way intersect as to warrant the application of the doctrine of primary jurisdiction. Accordingly, said the Supreme Court, the appreciation by the Philippine Overseas Employment Administration and Office of the Labor Arbiter of the complaints should be limited to matters falling within their respective jurisdictions, and only insofar as relevant to the resolution of the controversies presented before them.

    The third reason discussed by the Supreme Court was that the finality of the Order issued by the Department of Labor and Employment had no effect on the resolution of the present petition. For the Supreme Court, the Doctrine of Immutability of Judgments does not apply to this case.

    Under the Doctrine of Immutability of Judgments, all the issues between the parties are deemed resolved and laid to rest once a judgment becomes final. No other action can be taken on the decision except to order its execution. The decision becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land.

    In the present case, the Supreme Court found that the Order of the Department of Labor and Employment, which had become final, settled the issue of whether the employer and its agent violated the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers. It did not involve the issue of the illegal dismissal and money claims lodged by Mike and Ryan with the Office of the Labor Arbiter. To reiterate, the Supreme Court found that the finality of the Order issued by the Department of Labor and Employment had no effect on the resolution of the present petition.

    Further reading:

    • U R Employed International Corp. v. Pinmiliw, G.R. No. 225263, March 16, 2022.