FRANCISCO vs. NLRC ANGELINA FRANCISCO CORPORATION, G.R. No.

170087 August 31, 2006

vs. et

NLRC,

KASEI al.

FACTS: In 1995, petitioner Angelina Francisco was hired by Kasei Corporation (Kasei) during its incorporation stage. She was designated as Accountant, Corporate Secretary and Liaison Officer of the company. In 1996, Francisco was designated Acting Manager to handle recruitment of all employees and perform management administration functions, represent the company in all dealings with government agencies, and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei. For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January 2001, Francisco was replaced as Manager. She alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei. The Treasurer convened a meeting of all employees and announced that Francisco was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. Thereafter, Kasei reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. She was not paid her mid-year bonus allegedly because the company was not earning well. In October 2001, she did not receive her salary from the company, made repeated follow-ups with the cashier but was advised that the company was not earning well. On October 15, 2001, she asked for her salary, but she was informed that she is no longer connected with the company. Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. Kasei Corporation claimed that Francisco was not their employee, having been designated as technical consultant who performed work at her own discretion without the control and supervision of the Corporation, and that her consultancy may be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation. To prove that petitioner was not an employee of the corporation, private respondents submitted a list of

employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji Corporation. ISSUES: Whether or not there was an employer-employee relationship between Francisco and Kasei Corporation; and whether Francisco was illegally dismissed. HELD: Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship. However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such

as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.

and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement. A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development. April 29, 1960 G.R. No. L-13778 PHILIPPINE EDUCATION CO., INC., petitioner, vs. UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU) and THE COURT OF INDUSTRIAL RELATIONS, respondents. The Philippine Education Company, Inc. is appealing the order of the Court of Industrial Relations, dated February 7, 1958, directing it to reinstate its former employee, Ernesto Carpio, to his former or equivalent position, without backpay, and from the resolution of the same court in banc, dated March 22, 1958, denying the companys motion for reconsideration. Ernesto Carpio and other employees of the company, members of the Union of Philippine Education Employees (NLU) joined a strike staged on January 16, 1953. After the labor dispute was settled, the Industrial Court ordered the reinstatement of the strikers, including Carpio. The company, however, opposed the reinstatement of Carpio for the reason that a criminal complaint had been filed against him in the Municipal Court of Manila for theft of magazines allegedly belonging to the company. He was convicted and sentenced to two months and one day of arresto mayor. On appeal to the Court of First Instance, Carpio was acquitted on the ground of reasonable doubt.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement. Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employeremployee relationship between petitioner and respondent corporation. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business. The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust

The question of Carpios reinstatement was heard by the Industrial Court where the parties submitted as evidence the transcript of the stenographic notes taken during the hearing in the criminal case before the Court of First Instance of Manila, the exhibits presented in said case, as well as the decisions of the Municipal Court convicting him, and that of the Court of First Instance acquitting him, or rather dismissing the case against him on reasonable doubt. After said hearing, the Industrial Court agreed with the finding of the Court of First Instance that the offense had not been proven beyond reasonable doubt and held that Carpios acquittal entitled him to reinstatement, though without backpay. We have examined the aforementioned evidence, and we are inclined to agree with the Municipal Court that Carpios guilt had been duly established. At least, the preponderance of evidence was against his innocence. The question for determination is whether the whether the acquittal of an employee, specially on the ground of reasonable doubt, in a criminal case for theft involving articles and merchandise belonging to his employer, entitles said employee to reinstatement. In the case of National Labor Organization of Employees and Laborers vs. Court of Industrial Relations, 95 Phil. 727; O.G. (9) 4219, we said: . . . the acquittal of a employee in a criminal case is no bar to the Court of Industrial Relations, after proper hearing, finding the same employee guilty of facts inimical to the interests of his employer and justifying loss of confidence in him by said employer, thereby warranting his dismissal or the refusal of the Company to reinstate him. The reason for this is not difficult to see. The evidence required by law to establish guilt and to warrant conviction in a criminal case substantially differs from the evidence necessary to establish responsibility or liability in a civil or non-criminal case. The difference is in the amount and weight of evidence and also in degree. In a criminal case, the evidence or proof must be beyond reasonable doubt while in a civil or non criminal case it is merely preponderance of evidence. In further support of this principle we may refer to Art. 29 of the New Civil Code (Rep. Act 386) which provides that when the accused in a criminal case is acquitted on the ground of reasonable doubt a civil action for damages for the same act or omission may be instituted where only a preponderance of evidence is necessary to establish liability. From all this it is clear that the Court of Industrial Relations was justified in denying the petition of Rivas and Tolentino for reinstatement in the cement company, because of their illegal possession of hand grenades intended by them for purposes of sabotage in connection with the strike on March 16, 1952. Then in the case of National Labor Union vs. Standard Vacuum Oil Company, 73 Phil. 279, the City

Fiscal refused to prosecute two employees charged with theft for lack of evidence and yet this Tribunal upheld their dismissal from the employer company on the ground that their employer had ample reason to distrust them. The relation of employer and employee, specially where the employee has access to the employers property in the form of articles and merchandise for sale, necessarily involves trust and confidence. If said merchandise are lost and said loss is reasonably attributed to said employee, and he is charged with theft, even if he is acquitted of the form of articles and merchandise for sale, necessarily involves trust and confidence. If said merchandise are lost and said loss is reasonably attributed to said employee, and he is charged with theft, even if he is acquitted of the charge on reasonable doubt, when the employer has lost its confidence in him, it would be highly unfair to require said employer to continue employing him or to reinstate him, for in that case the former might find it necessary for its protection to employ another person to watch and keep an eye on him. In the present case, Carpio was refused reinstatement not because of any union affiliation or activity or because the company has been guilty of any unfair labor practice. As already stated, Carpio was convicted in the Municipal Court and although he was acquitted on reasonable doubt in the Court of First Instance, the company had ample reason to distrust him. Under the circumstances, we cannot in conscience require the company to reemploy or reinstate him. In view of the foregoing, the appealed orders of the Industrial Court of February 7, 1958 and March 22, 1958 are hereby reversed. No costs.

Duncan vs. Glaxo Case Digest FACTS: Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract of employment signed by Tecson stipulates, among others, that he agrees to study and abide by the existing company rules; to disclose to management any existing future relationship by consanguinity or affinity with co-employees or employees with competing drug companies and should management find that such relationship poses a prossible conflict of interest, to resign from the company. Company's Code of Employee Conduct provides the same with stipulation that management may transfer the employee to another department in a noncounterchecking position or preparation for employment outside of the company after 6 months. Tecson was initially assigned to market Glaxo's products in the Camarines Sur-Camarines Norte area and entered into a romantic relationship with Betsy,

an employee of Astra, Glaxo's competition. Before getting married, Tecson's District Manager reminded him several times of the conflict of interest but marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors informed him of conflict of intrest. Tecson asked for time to comply with the condition (that either he or Betsy resign from their respective positions). Unable to comply with condition, Glaxo transferred Tecson to the Butuan-Surigao CityAgusan del Sur sales area. After his request against transfer was denied, Tecson brought the matter to Glaxo's Grievance Committee and while pending, he continued to act as medical representative in the Camarines Sur-Camarines Norte sales area. On Nov. 15, 2000, the National Conciliation and Mediation Board ruled that Glaxo's policy was valid... ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company is valid RULING: On Equal Protection Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies, and other confidential programs and information from competitors. The prohibition against pesonal or marital relationships with employees of competitor companies upon Glaxo's employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. That Glaxo possesses the right to protect its economic interest cannot be denied. It is the settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority. Corollarily, it has been held in a long array of US Supreme Court decisions that the equal protection clause erects to shield against merely privately conduct, however, discriminatory or wrongful. The company actually enforced the policy after repeated requests to the employee to comply with the policy. Indeed the application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee. On Constructive Dismissal Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is demotion in rank, or diminution in pay; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. None of these conditions are present in the instant case.

Case Title: Eastern Shipping Lines vs. POEA, Minister of Labor and Employment G.R. No.: G.R. No. 76633 Facts: Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo, Japan on March 15, 1985.His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2of the POEA. The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by the Social Security System and should have been filed against the State Fund Insurance. The POEA nevertheless assumed jurisdiction and after considering the position papers of the parties ruled in favor of the complainant. The petition is DISMISSED, with costs against the petitioner. The temporary restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered. Issue: 1. Whether or not the POEA had jurisdiction over the case as the husband was not an overseas worker. 2. Whether or not the validity of Memorandum Circular No. 2 itself as violative of the principle of non-delegation of legislative power. Held: 1. Yes. The Philippine Overseas Employment Administration was created under Executive Order No. 797, promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos and to protect their rights. It replaced the National Seamen Board created earlier under Article 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested with "original and exclusive jurisdiction over all cases, including money claims, involving employee-employer relations arising out of or by virtue of any law or contract involving Filipino contract workers, including seamen." These cases, according to the 1985Rules and Regulations on Overseas Employment issued by the POEA, include, claims for death, disability and other benefits arising out of such employment. The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA pursuant to its Memorandum Circular No. 2, which became effective on February 1,1984. This circular prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the hiring of Filipino seamen for overseas employment. 2. No. Memorandum Circular No. 2 is an administrative regulation. The model contractprescribed thereby has been applied in a significant number of the cases without challenge by theemployer. The power of the POEA (and before it the National Seamen Board) in requiring themodel

contract is not unlimited as there is a sufficient standard guiding the delegate in theexercise of the said authority. That standard is discoverable in the executive order itself which, increating the Philippine Overseas Employment Administration, mandated it to protect the rightsof overseas Filipino workers to "fair and equitable employment practices TAADA VS. TUVERA 146 SCRA 446 (December 29, 1986) FACTS: This is a motion for reconsideration of the decision promulgated on April 24, 1985. Respondent argued that while publication was necessary as a rule, it was not so when it was otherwise as when the decrees themselves declared that they were to become effective immediately upon their approval. ISSUES: Whether or not a distinction be made between laws of general applicability and laws which are not as to their publication; Whether or not a publication shall be made in publications of general circulation. HELD: The clause unless it is otherwise provided refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. This clause does not mean that the legislature may make the law effective immediately upon approval, or in any other date, without its previous publication. Laws should refer to all laws and not only to those of general application, for strictly speaking, all laws relate to the people in general albeit there are some that do not apply to them directly. A law without any bearing on the public would be invalid as an intrusion of privacy or as class legislation or as an ultra vires act of the legislature. To be valid, the law must invariably affect the public interest eve if it might be directly applicable only to one individual, or some of the people only, and not to the public as a whole. All statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin 15 days after publication unless a different effectivity date is fixed by the legislature. Publication must be in full or it is no publication at all, since its purpose is to inform the public of the content of the law. Article 2 of the Civil Code provides that publication of laws must be made in the Official Gazette, and not elsewhere, as a requirement for their effectivity. The Supreme Court is not called upon to rule upon the

wisdom of a law or to repeal or modify it if it finds it impractical. The publication must be made forthwith, or at least as soon as possible. J. Cruz: Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot faint, parry or cut unless the naked blade is drawn. NATIONAL SERVICE CORPORATION VS. NLRC G.R. No. L-69870 November 29, 1988 Facts: Eugenio Credo was an employee of the National Service Corporation. She claims she was illegally dismissed. NLRC ruled ordering her reinstatement. NASECO argues that NLRC has no jurisdiction to order her reinstatement. NASECO as a government corporation by virtue of its being a subsidiary of the NIDC, which is wholly owned by the Phil. National Bank which is in turn a GOCC, the terms and conditions of employment of its employees are governed by the Civil Service Law citing National Housing vs. Juco. Issue: Whether or not the employees of NASECO, a GOCC without original charter, are governed by the Civil Service Law. Held: NO. The holding in NHC v Juco should not be given retroactive effect, that is to cases that arose before its promulgation of Jan 17, 1985. To do otherwise would be oppressive to Credo and other employees similarly situated because under the 1973 Constitution but prior to the ruling in NHC vs. Juco, this court recognized the applicability of the Labor jurisdiction over disputes involving terms and conditions of employment in GOCC's, among them NASECO. In the matter of coverage by the civil service of GOCC, the 1987 Constitution starkly differs from the 1973 constitution where NHC vs. Juco was based. It provides that the "civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government owned or controlled corporation with original charter." Therefore by clear implication, the civil service does not include GOCC which are organized as subsidiaries of GOCC under the general corporation law.

PNOC-ENERGY vs. NLRC 222 SCRA 831

DEVELOPMENT

CORPORATION

Facts: In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and Construction Department, at Tongonan Geothermal Project, Ormoc City, Manuel S. Pineda decided to run for councilor of the Municipality of Kananga, Leyte, in the local elections scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position. Objection to Pinedas being a candidate while retaining his job in the PNOC-EDC was shortly thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte. Section 66 of the Election Code provides among others that officers and employees of GOCCs are considered as ipso facto resigned upon the filing of their certificate of candidacy. It was the argument of Pineda that PNOC-EDC was not created through a special law, it is not covered by the Civil Service Law and, therefore, not contemplated under Section 66 of the Election Code. Issue: Whether or not an employee in a government- owned or controlled corporation without an original charter falls within the scope of Section 66 of the Omnibus Election Code. Held: Yes. If a corporations capital stock is owned by the Government, or it is operated and managed by officers charged with the mission of fulfilling the public objectives for which it has been organized, it is a government-owned or controlled corporation even if organized under the Corporation Code and not under a special statute. Employees thereof, even if not covered by the Civil Service but by the Labor Code, are nonetheless employees in governmentowned or controlled corporation, and come within the letter of Section 66 of the Omnibus Election Code, declaring them ipso facto resigned from their office upon the filing of their certificate of candidacy.