LABOR STANDARDS CASES HELD:
Labor Arbiter Augusto L. Villanueva We pronounced in those cases that technicality should not be allowed to
SSCR
FERNANDO G. MANAYA, petitioner, vs. ALABANG COUNTRY CLUB,
INCORPORATED, respondent.
FACTS:
Fernando Manaya was initially hired by the ACCI as a maintenance helper.
He was later designated as company electrician. He continued to work for the
respondent until 22 August 1998 when ACCI informed him that his services were no
longer required by the company.
Hence, he filed a complaint before the Labor Arbiter. Fernando alleged that
he was forcibly and illegally dismissed without cause and without due process on 22
August 1998.
LABOR ARBITER:
WHEREFORE, premises considered, complainant Fernando G. Manaya is
hereby found to be a regular employee of Alabang Country Club, Inc. His dismissal
from the service having been effected without just and valid cause and without the
due observance of due process is hereby declared illegal. Consequently, respondent
Alabang Country Club, Inc. is hereby ordered to reinstate complainant to his former
position without loss of seniority rights and other benefits appurtenant thereto with
full back wages in the partial amount of P160,724.48.
NLRC:
PREMISES CONSIDERED, instant appeal DISMISSED for failure to
perfect appeal within the statutory period of appeal. The Decision is now final and
executory.
The NLRC held that the failure to perfect an appeal within the statutory
period is not only mandatory but jurisdictional. The appeal having been belatedly
filed, the Decision of the Labor Arbiter had become final and executor.
CA:
Respondent filed a Petition for Certiorari under Rule 65 of the Rules of
Court before the Court of Appeals. In a Decision dated 9 May 2005, the Court of
Appeals granted the petition and ordered the NLRC to give due course to
respondents appeal of the Labor Arbiters Decision. Petitioner filed a Motion for
Reconsideration which was denied by the Court of Appeals in a Resolution.
ISSUE:
WON the Court of Appeals properly gave due course to the petition of the
respondent before it.
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
stand in the way of equitably and completely resolving the rights and obligations of
the parties. In all these, the Court allowed liberal interpretation given the
extraordinary circumstances that justify a deviation from an otherwise stringent rule.
Clearly, emphasized in these cases is that the policy of liberal interpretation is
qualified by the requirement that there must be exceptional circumstances to allow
the relaxation of the rules. Absent exceptional circumstances, we adhere to the rule
that certain procedural precepts must remain inviolable, like those setting the periods
for perfecting an appeal or filing a petition for review, for it is doctrinally entrenched
that the right to appeal is a statutory right and one who seeks to avail oneself of that
right must comply with the statute or rules. The rules, particularly the requirements
for perfecting an appeal within the reglementary period specified in the law, must be
strictly followed as they are considered indispensable interdictions against needless
delays and for orderly discharge of judicial business. Furthermore, the perfection of
an appeal in the manner and within the period permitted by law is not only
mandatory but also jurisdictional and the failure to perfect the appeal renders the
judgment of the court final and executory. Just as a losing party has the right to file
an appeal within the prescribed period, the winning party also has the correlative
right to enjoy the finality of the resolution of his/her case. In this particular case, we
adhere to the strict interpretation of the rule for the following reasons:Firstly, in this
case, entry of judgment had already been made which rendered the Decision of the
Labor Arbiter as final and executory. Secondly, it is a basic and irrefragable rule that
in carrying out and in interpreting the provisions of the Labor Code and its
implementing regulations, the workingmans welfare should be the primordial and
paramount consideration. The interpretation herein made gives meaning and
substance to the liberal and compassionate spirit of the law enunciated in Article 4 of
the Labor Code that all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and regulations shall
be resolved in favor of labor. Indeed, there is no room for liberality in the instant
case as it would render futile the very purpose for which the principle of liberality is
adopted. As so rightfully enunciated, the liberal interpretation in favor of labor
stems from the mandate that the workingmans welfare should be the primordial and
paramount consideration. This Court has repeatedly ruled that delay in the
settlement of labor cases cannot be countenanced. Not only does it involve the
survival of an employee and his loved ones who are dependent on him for food,
shelter, clothing, medicine and education; it also wears down the meager resources
of the workers to the point that, not infrequently, they either give up or compromise
for less than what is due them. Without doubt, to allow the appeal of the respondent
as what the Court of Appeals had done and remand the case to the NLRC would only
result in delay to the detriment of the petitioner. In Narag v. National Labor
Relations Commission, citing VirJen Shipping and Marine Services, Inc. v. National
Labor Relations Commission, we held that delay in most instances gives the
employers more opportunity not only to prepare even ingenious defenses, what with
well paid talented lawyers they can afford, but even to wear out the efforts and
meager resources of the workers, to the point that not infrequently the latter either
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give up or compromise for less than what is due them. Nothing is more settled in our
jurisprudence than the rule that when the conflicting interest of loan and capital are
weighed on the scales of social justice, the heavier influence of the latter must be
counterbalanced by the sympathy and compassion the law must accord the
underprivileged worker. Thirdly, respondent has not shown sufficient justification to
reverse the findings of the Labor Arbiter as affirmed by the NLRC.
CAROLINA CLEMENTE, petitioner, vs. GOVERNMENT SERVICE
INSURANCE SYSTEM Department of Health (Dagupan City) and
EMPLOYEES' COMPENSATION COMMISSION, respondents.
FACTS:
Pedro Clemente, was a janitor in the Department of Health for 10 years. He
was hospitalized from November 3 to 14, 1976 due to his ailment of 'nephritis,' He
was also found to be suffering from such ailments as portal cirrhosis and leprosy,
otherwise known as Hansen's Disease.
On November 14, 1976, Pedro Clemente died of uremia due to nephritis.
Thereafter, Carolina filed with the GSIS a claim for employees' compensation under
the Labor Code, as amended. However, GSIS denied the claim because the ailments
of her husband are not occupational diseases taking into consideration the nature of
his work and/or (sic) or were not in the least causally related to his duties and
conditions of work.
Carolina requested for reconsideration of the GSIS' denial of her claim,
stating that the ailments of her husband were contracted in the course of employment
and were aggravated by the nature of his work.
Acting upon petitioner's request for reconsideration, the GSIS, reiterated its
previous denial of her claim.
ECC:
On October 26, 1977, respondent ECC affirmed the GSIS' action of denial
and rendered its own decision dismissing petitioner's claim. ECC's decision was
anchored upon the findings that the ailments are not listed as occupational diseases;
that there was no substantial evidence of causal connection; and that, in fact, the
evidence was that the deceased had already contracted the Hansen's disease before
his employment.
ISSUE:
WON ECC is correct from denying the claim for death benefits filed by
Carolina Clemente.
HELD:
NO. The husband of the Carolina worked in a skin clinic. As janitor of the
Ilocos Norte Skin Clinic, Mr. Clemente was exposed to different carriers of viral and
bacterial diseases. He had to clean the clinic itself where patients with different
illnesses come and go. He had to put in order the hospital equipments that had been
used. He had to dispose of garbage and wastes that accumulated in the course of each
working day. He was the employee most exposed to the dangerous concentration of
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
infected materials, and not being a medical practitioner, least likely to know how to
avoid infection. It is, therefore, not unreasonable to conclude that Mr. Clemente's
working conditions definitely increased the risk of his contracting the
aforementioned ailments. This Court has held in appropriate cases that the
conservative posture of the respondents is not consistent with the liberal
interpretation of the Labor Code and the social justice guarantee embodied in the
Constitution in favor of the workers. It clashes with the injunction in the Labor Code
(Article 4, New Labor Code) that, as a rule, doubts should be resolved in favor of the
claimant employee.
COLGATE PALMOLIVE PHILIPPINES, Inc., petitioners,
vs. HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES
UNION, respondents.
FACTS:
On March 1, 1985, the respondent Union filed a Notice of Strike with the
Bureau of Labor Relations (BLR) on ground of unfair labor practice consisting of
alleged refusal to bargain, dismissal of union officers/members; and coercing
employees to retract their membership with the union and restraining non-union
members from joining the union. After efforts at amicable settlement proved
unavailing, the Office of the MOLE, upon petition of petitioner assumed jurisdiction
over the dispute pursuant to Article 264 (g) of the Labor Code.
Petitioner pointed out that the allegations regarding dismissal from
employment due to union membership were false. It also averred that the suspension
and eventual dismissal of the three employees were due to infractions committed by
them and that the management reserves the right to discipline erring employees.
Petitioner also assailed the legality of the Union, among others.
MOLE:
The minister rendered its decision, ruling that there was no merit in the
Unions complaint. It also ruled that the three dismissed employees were not
without fault but nonetheless ordered the reinstatement of the same. At the same
time, respondent Minister directly certified the respondent Union as the collective
bargaining agent for the sales force in petitioner company and ordered the
reinstatement of the three salesmen to the company on the ground that the employees
were first offenders.
ISSUE:
WON Respondent Minister committed a grave abuse of discretion when he
directly certifled the Union solely on the basis of the latter's selfserving assertion that
it enjoys the support of the majority of the sales force in petitioner's company.
HELD:
YES. The petition merits our consideration. The procedure for a
representation case is outlined in Arts. 257260 of the Labor Code, in relation to the
provisions on cancellation of a Union registration under Arts. 239240 thereof, the
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main purpose of which is to aid in ascertaining majority representation. The
requirements under the law, specifically Secs. 2, 5, and 6 of Rule V, Book V of the
Rules Implementing the Labor Code are all calculated to ensure that the certified
bargaining representative is the true choice of the employees against all contenders.
The Constitutional mandate that the State shall "assure the rights of the workers to
selforganization, collective bargaining, security of tenure and just and humane
conditions of work," should be achieved under a system of law such as the
aforementioned provisions of the pertinent statutes. When an overzealous official
bypasses the law on the pretext of retaining a laudable objective, the intendment or
purpose of the law will lose its meaning as the law itself is disregarded. When
respondent Minister directly certified the Union, he in fact disregarded this
procedure and its legal requirements. There was therefore failure to determine with
legal certainty whether the Union indeed enjoyed majority representation. Contrary
to the respondent Minister's observation, the holding of a certification election at the
proper time is not necessarily a mere formality as there was a compelling legal
reason not to directly and unilaterally certify a union whose legitimacy is precisely
the object of litigation in a pending cancellation case filed by certain "concerned
salesmen," who also claim majority status. Even in a case where a union has filed a
petition for certification elections, the mere fact that no opposition is made does not
warrant a direct certification. More so as in the case at bar, when the records of the
suit show that the required proof was not presented in an appropriate proceeding and
that the basis of the direct certification was the Union's mere allegation in its position
paper that it has 87 out of 117 regular
salesmen. In other words, respondent Minister merely relied on the selfserving
assertion of the respondent Union that it enjoyed the support of the majority of the
salesmen, without subjecting such assertion to the test of competing claims
EMELITA NICARIO, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, MANCAO SUPERMARKET, INC. AND/OR MANAGER,
ANTONIO MANCAO, respondents.
FACTS:
Emelita Nicario, was employed in Mancao Supermarket, on June 6, 1986 as
a salesgirl and was later on promoted as sales supervisor. However, Mancao
Supermarket terminated her services on February 7, 1989.
Thus, complaint for illegal dismissal with prayer for backwages, wage
differential, service incentive leave pay, overtime pay, 13th month pay and unpaid
wages was filed by Nicario before the National Labor Relations Commission.
LABOR ARBITER:
WHEREFORE, in view of the foregoing, judgment is rendered directing
respondent Mancao Supermarket, Inc., and/or Mr. Antonio Mancao to pay
complainant Emelita Nicario the sum of P40,393.15 representing unpaid service
incentive leave pay, thirteenth month pay, overtime pay, and rest day for the entire
period of employment. All other claims are dismissed for lack of merit.
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NLRC:
Affirmed in toto Labor Arbiter decision. However, in a resolution dated
December 21, 1995, NLRC modified its earlier resolution by deleting the award for
overtime pay.
ISSUE:
WON Emelita is entitled to overtime pay.
HELD:
YES. It is a well settled doctrine, that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in
favor of the latter. It is a time honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence, or in the interpretation
of agreements and writing should be resolved
in the formers favor. The policy is to extend the doctrine to a greater number of
employees who can avail of the benefits under the law, which is in consonance with
the avowed policy of the State to give maximum aid and protection of labor. This
rule should be applied in the case at bar, especially since the evidence presented by
private respondent company is not convincing. Accordingly, we uphold the finding
that petitioner rendered overtime work, entitling her to overtime pay.
ST. THERESAS SCHOOL OF NOVALICHES
FOUNDATION and ADORACION ROXAS, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and
ESTHER REYES, respondents.
FACTS:
Adoracion Roxas is the president of St.Theresas School of Novaliches
Foundation. She hired Esther Reyes, on a contract basis, for the period from June 1,
1991 to March 31, 1992. However, Esther commenced work on May 2, 1991. During
the said period of employment, Esther became ill. She went on a leave of absence
from February17 to 21 and from February 24 to 28, 1992, such leave of absence
having been duly approved by Roxas. On March 2, 1992, Esther reported for work,
but she only stayed in her place of work from 6:48 to 9:38 a.m. Thereafter, she never
returned. Petitioners theorize that the Esther abandoned her work. On March 25,
1992, Adoracion sent Esther a letter by registered mail, informing her that her
contract, due to expire on March 31, 1992, would not be renewed. Thus, Esther filed
a complaint against the herein petitioners for unfair labor practice based on
harassment, illegal dismissal, 13th monthpay, allowances, removal of desk and chair
from place of work, and refusal to communicate, moral and exemplary damages.
LABOR ARBITER:
WHEREFORE, responsive to the foregoing, judgment is hereby ordered
declaring complainant dismissal from the service illegal. Respondent is hereby
ordered to reinstate complainant to her former position without loss of seniority
rights and to pay for full backwages from the time of dismissal to her actual
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reinstatement in the amount of P76,701. Respondent is hereby ordered to pay
complainant P25,000 as moral damages and P10,000 by way of exemplary damages.
Respondent are further assessed attorneys fees of 10% of the award.
NLRC:
WHEREFORE, all premises considered, the decision of the Labor Arbiter
is hereby reversed and set aside and another one rendered, declaring the separation of
Esther Reyes from service legal and valid. However, respondent is directed to pay
the backwages of herein complainant from November 12, 1993 up to the date of the
promulgation of this Resolution.
ISSUE:
WON Esther is entitled to backwages.
HELD:
NO. Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period provided the same is entered into by the
parties, without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstance vitiating consent. It does not
necessarily follow that where the duties of the employee consist of activities usually
necessary or desirable in the usual business of the employer, the parties are forbidden
from agreeing on a period of time for the performance of such activities. There is
thus nothing essentially contradictory between a definite period of employment and
the nature of the employees duties. It goes without saying that contracts of
employment govern the relationship of the parties. In this case, private respondents
contract provided for a fixed term of nine (9) months, from June 1, 1991 to March
31, 1992. Such stipulation, not being contrary to law, morals, good customs, public
order and public policy, is valid, binding and must be respected. The term
backwages has been defined as that for earnings lost by a worker due to his illegal
dismissal. Backwages are generally granted on grounds of equity. Payment thereof is
a form of relief that restores the income lost by reason of such unlawful dismissal. It
is not private compensation or damages, but is awarded in furtherance and
effectuation of the public objectives of the Labor Code. Nor is it a redress of a
private right but, rather, in the nature of a command to the employer to make public
reparation for dismissing an employee, either due to the formers unlawful act or bad
faith. Jurisprudence is filled to the brim with cases wherein backwages were awarded
to an employee illegally dismissed. But where, as in this case of a pitiful employee
rendered hapless by her lawyers inaction or ignorance, the dismissal has been
adjudged valid and lawful, the challenged award of backwages is decidedly improper
and contrary to law and jurisprudence.
PRUDENCIO BANTOLINO, NESTOR ROMERO, NILO ESPINA, EDDIE
LADICA, ARMAN QUELING, ROLANDO NIETO, RICARDO
BARTOLOME, ELUVER GARCIA, EDUARDO GARCIA and NELSON
MANALASTAS, petitioners, vs. COCACOLA BOTTLERS PHILS., INC.,
respondent.
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
FACTS:
Prudencio Bantolino, Nestor Romero, Nilo Espina, Eddie Ladica, Arman
Queling, Rolando Nieto, Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and
Nelson Manalastas were employees of CocaCola. They further maintained that when
the company replaced them and prevented them from entering the company
premises, they were deemed to have been illegally dismissed. On 15 February 1995
62 employees of CocaCola Bottlers, filed a complaint against CocaCola for unfair
labor practice through illegal dismissal, violation of their security of tenure and the
perpetuation of the Cabo System. They thus prayed for reinstatement with full
back wages, and the declaration of their regular employment status. For failure to
prosecute as they failed to either attend the scheduled mandatory conferences or
submit their respective affidavits, the claims of 52 complainant employees were
dismissed.
LABOR ARBITER:
Rendered a decision ordering the company to reinstate complainants to their
former positions with all the rights, privileges and benefits due regular employees,
and to pay their full back wages which, with the exception of Prudencio Bantolino
whose back wages must be computed upon proof of his dismissal as of 31 May 1998,
already amounted to an aggregate of P1,810,244.00.
NLRC:
Sustained the finding of the Labor Arbiter that there was indeed an
employer-employee
relationship between the complainants and respondent company when itaffirmed in
toto the latters decision.
CA:
Although affirming the finding of the NLRC that an employer-employee
relationship existed between the contending parties, nonetheless agreed with
respondent that the affidavits of some of the complainants, namely, Prudencio
Bantolino, Nestor Romero, Nilo Espina, Ricardo Bartolome, Eluver Garcia, Eduardo
Garcia and Nelson Manalastas, should not have been given probative value for their
failure to affirm the contents thereof and to undergo cross examination. As a
consequence, the appellate court dismissed their complaints for lack of sufficient
evidence.
ISSUE:
WON the Rules of Court should apply in the case.
HELD:
The petition is impressed with merit. The issue confronting the Court is not
without precedent in jurisprudence. The oft-cited case of Rabago v. NLRC squarely
grapples a similar challenge involving the propriety of the use of affidavits without
the presentation of affiants for cross examination. In that case, we held that the
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argument that the affidavit is hearsay because the affiants were not presented for
cross examination is not persuasive because the rules of evidence are not strictly
observed in proceedings before administrative bodies like the NLRC where decisions
may be reached on the basis of position papers only. In Rase v. NLRC, this Court
likewise sidelined a similar challenge when it ruled that it was not necessary for the
affiants to appear and testify and be cross examined by counsel for the adverse party.
To require otherwise would be to negate the rationale and purpose of the summary
nature of the proceedings mandated by the Rules and to make mandatory the
application of the technical rules of evidence. Southern Cotabato Dev. and
Construction Co. v. NLRC succinctly states that under Art. 221 of the Labor Code,
the rules of evidence prevailing in courts of law do not control proceedings before
the Labor Arbiter and the NLRC. Further, it notes that the Labor Arbiter and the
NLRC are authorized to adopt reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law and procedure,
all in the interest of due process. We find no compelling reason to deviate therefrom.
To reiterate, administrative bodies like the NLRC are not bound by the technical
niceties of law and procedure and the rules obtaining in courts of law. Indeed, the
Revised Rules of Court and prevailing jurisprudence may be given only stringent
application, i.e., by analogy or in a suppletory character and effect. The submission
by respondent, citing People v. Sorrel, that an affidavit not testified to in a trial, is
mere hearsay evidence and has no real evidentiary value, cannot find relevance in the
present case considering that a criminal prosecution requires a quantum of evidence
different from that of an administrative proceeding. Under the Rules of the
Commission, the Labor Arbiter is given the discretion to determine the necessity of a
formal trial or hearing. Hence, trial type hearings are not even required as the cases
may be decided based on verified position papers, with supporting documents and
their affidavits.
PFIZER, INC. VS. GALAN
FACTS: Respondent Edwin V. Galan was an employee of petitioner Pfizer, Inc., a
drug manufacturer. He was initially hired in August 1982 as a professional sales
representative, commonly known as a medical representative. He was a recipient of
several company awards, which eventually resulted in his promotion as District
Manager for Mindanao in 1996. He continued to reap more awards as he exceeded
sales targets. In September 1997, respondent was recalled to Manila to meet with his
superiors. In the meeting, the sales manager of Pfizer, Inc., issued a memorandum
requiring him to explain his alleged unauthorized use of, and questionable expense
claims made on, the company vehicle, as well as the doubtful liquidation of his cash
advance of US$5,000 for a recent official trip to Indonesia. After the submission of
his explanation, a formal hearing on the charges was set.On October 1998, after the
conclusion of the hearing, respondent received a notice of termination signedby
Pfizers co-petitioner Ma. Angelica B. Lleander. Thecause for his dismissal was loss
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
of trust and confidence.Respondent then filed a complaint for illegal dismissal
against petitioners before the National Labor Relations Commission (NLRC)
Regional Arbitration Branch No. 9 in Zamboanga City. He demanded his
reinstatement or separation pay; the payment of back wages, thirteenthmonth pay,
and bonuses;the reimbursement of expenses and incentives;andthe payment of moral
and exemplary damages and attorneys fees.
Labor Arbiter Rhett Julius Plagata declared that respondent was illegally dismissed
and ordered Pfizer, Inc., to pay him back wages, separation pay, thirteenth month
pay, incentives and bonuses, reimbursement of expenses and attorneys fees.
Petitioners appealed from the decision to the NLRC in Cagayan de Oro City.NLRC
affirmed the decision of the Labor Arbiter. Petitioners filed a motion for
reconsideration, which was denied by the NLRC.
ISSUE:W/N the technical rules are binding
HELD:In Systems Factors Corporation v. NLRC we declared that the amendment
introduced under A.M. No. 00203SC is procedural or remedial in character, as it
does not create new or remove vested rights, but only operates in furtherance of the
remedy or confirmation of rights already existing. It is settled that procedural laws
may be given retroactive effect to actions pending and undetermined at the time of
their passage, there being no vested rights in the rules of procedure. Thus, the said
amendment may be given a retroactive effect. We reiterated this ruling in Unity
Fishing Development Corporation v. Court of Appeals.
SONZA VS. ABS-CBN BROADCASTING CORPORATION
FACTS: In May 1994, respondent ABSCBN Broadcasting Corporation
(ABSCBN) signed an Agreement (Agreement) with the Mel and Jay
Management and Development Corporation (MJMDC). ABSCBN was represented
by its corporate officers while MJMDC was represented by SONZA, as President
and General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer.
Referred to in the Agreement as AGENT,MJMDC agreed to provide SONZAs
services exclusively to ABSCBN as talent for radio and television.
ABSCBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for
the first year and P317,000 for the second and third year of the Agreement.
ABSCBN would pay the talent fees on the 10th and 25th days of the month.
On 30 April 1996, SONZA filed a complaint against ABSCBN before the
Department of Labor and Employment, National Capital Region in Quezon City.
SONZA complained that ABSCBN did not pay his salaries, separation pay, service
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incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts
due under the Employees Stock Option Plan (ESOP).
The Labor Arbiterdenied the motion to dismiss and directed the parties to filetheir
respective position papers.The Labor Arbiter rendered his Decision dated 8 July
1997 dismissing the complaint for lack of jurisdiction.
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a
Decision affirming the Labor Arbiters decision.
SONZA filed a motion for reconsideration, which the NLRC denied in its Resolution
dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court
of Appeals assailing the decision and resolution of the NLRC. On 26 March 1999,
the Court of Appeals rendered a Decision dismissing the case.
ISSUE: W/N the Policy Instruction No. 40 issued by then Minister of Labor Blas
Oplehas the force and effect of law which settled the status of workers in the
broadcast industry.
HELD: No.Under this policy, the types of employees in the broadcast industry are
thestation and program employees. Policy Instruction No. 40 is a mere executive
issuance which does not have the force and effect of law. There is no legal
presumption that Policy Instruction No. 40 determines SONZAs status. A mere
executive issuance cannot exclude independent contractors from the class of service
providers to the broadcast industry. The classification of workers in the broadcast
industry into only two groups under Policy Instruction No. 40 is not binding on this
Court, especially when the classification has no basis either in law or in fact.
NATIONAL SERVICE CORPORATION VS. NLRC
FACTS: Eugenia C. Credo was an employee of the National Service Corporation
(NASECO), a domestic corporation which provides security guards as well as
messengerial, janitorial and other similar manpower services to the Philippine
National Bank (PNB) and its agencies. She was first employed with NASECO as a
lady guard on 18 July 1975. Through the years, she was promoted to Clerk Typist,
then Personnel Clerk until she became Chief of Property and Records, on 10 March
1980.
Sometime before 7 November 1983, Credo was administratively charged by Sisinio
S. Lloren, Manager of Finance and Special Project and Evaluation Department of
NASECO, stemming from her noncompliance with Llorens memorandum, dated 11
October 1983, regarding certain entry procedures in the companys Statement of
Billings Adjustment.On 7 November 1983, Credo was called to meet Arturo L.
Perez, then Acting General Manager of NASECO, to explain her side before Perez
and NASECOs Committee on Personnel Affairs in connection with the
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
administrative charges filed against her.After said meeting, on the same date, Credo
was placed on Forced Leave status for 15 days. Before the expiration of said 15day
leave, or on 18 November 1983, Credo filed a complaint, with the Arbitration
Branch, NationalCapital Region, Ministry of Labor and Employment, Manila,
against NASECO for placing her on forced leave without due process. On 6
December 1983, Credo filed a supplemental complaint for illegal dismissal, alleging
absence of just or authorized cause for her dismissal and lack of opportunity to be
heard.
On 9 May 1984, the labor arbiter rendered a decision: 1) dismissing Credos
complaint, and 2) directing NASECO to pay Credo separation pay equivalent to one
half months pay for every year of service. Both parties appealed to respondent
National LaborRelations Commission (NLRC) which, on 28 November 1984,
rendered a decision: 1) directing NASECO to reinstate Credo to her former position,
or substantially equivalent position, with six (6) monthsbackwages and without loss
of seniority rights and other privileges appertaining thereto, and 2) dismissing
Credos claim for attorneys fees, moral and exemplary damages. As a consequence,
both parties filed their respective motions for reconsideration, which the NLRC
denied in a resolution of 16 January 1985.
ISSUE: W/NNLRC has jurisdiction to order Credos reinstatement.
HELD: Yes.NASECO cites National Housing Corporation vs. Juco, where this
Court held that There should no longer be any question at this time that employees
of Government-owned or controlled corporations are governed by the civil service
law and civil service rules and regulations.
It would appear that, in the interest of justice, the holding in said case should not be
given retroactive effect, that is, to cases that arose before its promulgation on
17January 1985. To do otherwise would be oppressive to Credo and other employees
similarly situated, because under the same 1973 Constitution but prior to the ruling
in National Housing Corporation vs. Juco, this Court had recognized the applicability
of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over,
disputes involving terms and conditions of employment in government owned or
controlled corporations, among them, the National Service Corporation (NASECO).
NLRC has jurisdiction on the ground that it is the 1987 Constitution that governs
because it is the Constitution in place at the time of the decision. Furthermore, we
ruled that the new phrase with original charter means that government owned and
controlled corporations refer to corporations chartered by special law as
distinguished from corporations organized under the Corporation Code. Thus,
NASECO which had been organized under the general incorporation statute and a
subsidiary of the National Investment Development Corporation, which in turn was a
subsidiary of the Philippine National Bank, is excluded from the purview of the Civil
Service Commission.
Page 6
JUCO VS. NATIONAL LABOR RELATIONS COMMISSION
FACTS: Petitioner Benjamin C. Juco was hired as a project engineer of respondent
National Housing Corporation (NHC) from November 16, 1970 to May 14, 1975. On
May 14, 1975, he was separated from the service for having been implicated in a
crime of theft and/or malversation of public funds.
On March 25, 1977, petitioner filed a complaint for illegal dismissal against the
NHC with the Department of Labor.
On September 17, 1977, the Labor Arbiter rendered a decision dismissing the
complaint on the ground that the NLRC had no jurisdiction over the case. Petitioner
then elevated the case to the NLRC which rendered a decision on December 28,
1982, reversing the decision of the Labor Arbiter.
Dissatisfied with the decision of the NLRC, respondent NHC appealed before this
Court and on January 17, 1985 and was granted.
On January 6, 1989, petitioner filed with the Civil Service Commission a complaint
for illegal dismissal, with preliminary mandatory injunction. On April 11, 1989, the
Civil Service Commission issued an order dismissing the complaint for lack of
jurisdiction.
On April 28, 1989, petitioner filed with respondent NLRC a complaint for illegal
dismissal with preliminary mandatory injunction against respondent NHC.On May
21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday ruled that
petitioner was illegally dismissed from his employment by respondent as there was
evidence in the record that the criminal case against him was purely fabricated,
prompting the trial court to dismiss the charges against him. Hence, he concluded
that the dismissal was illegal as it was devoid of basis, legal or factual.
On June 1, 1990, respondent NHC filed its appeal before the NLRC and on March
14, 1991, the NLRC promulgated a decision which reversed the decision of Labor
Arbiter Manuel R. Caday on the ground of lack of jurisdiction.
ISSUE: W/N NLRC has jurisdiction over the case.
HELD: Yes.In the case at bench, the National Housing Corporation is a government
owned corporation organized in 1959 in accordance with Executive Order No. 399,
otherwise known as the Uniform Charter of Government Corporation, dated January
1, 1959. Its shares of stock are and have been one hundred percent (100%) owned by
the Government from its incorporation under Act 1459, the former corporation law.
The government entities that own its shares of stock are the Government Service
Insurance System, the Social Security System, the Development Bank of the
Philippines, the National Investment and Development Corporation and the Peoples
Homesite and Housing Corporation. Considering the fact that the NHA had been
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
incorporated under Act 1459, the former corporation law, it is but correct to say that
it is a government owned or controlled corporation whose employees are subject to
the provisions of the Labor Code.
The rule now is that the Civil Service covers only government owned or controlled
corporations with original charters.Having been incorporated under the Corporation
Law, its relations with its personnel are governed by the Labor Code and come under
the jurisdiction of the National Labor Relations Commission. Petitioners have been
tossed from one forum to another for a simple illegal dismissal case. It is but apt that
we put an end to his dilemma in the interest of justice.
AUSTRIA VS. NATIONAL LABOR RELATIONS COMMISSION
FACTS: Private Respondent Central Philippine Union Mission Corporation of the
Seventh Day Adventists (herein after referred to as the SDA) is a religious
corporation duly organized and existing under Philippine law and is represented in
this case by the other private respondents, officers of the SDA. Petitioner, on the
other hand, was a Pastor of the SDA until 31 October 1991, when his services were
terminated.
The records show that petitioner Pastor Dionisio V. Austria worked with the SDA
for twenty eight (28) years from 1963 to 1991.He began his work with the SDA on
15 July 1963 as a literature evangelist, selling literature of the SDA over the island of
Negros. From then on, petitioner worked his way up the ladder and got promoted
several times. In January, 1968, petitioner became the Assistant Publishing Director
in the West Visayan Mission of the SDA. In July, 1972, he was elevated to the
position of Pastor in the West Visayan Mission covering the island of Panay, and the
provinces of Romblon and Guimaras. Petitioner held the same position up to 1988.
Finally, in 1989, petitioner was promoted as District Pastor of the Negros Mission of
the SDA and was assigned at Sagay, Balintawak and Toboso, Negros Occidental,
with twelve (12) churches under his jurisdiction. In January, 1991, petitioner was
transferred to Bacolod City. He held the position of district pastor until his services
were terminated on 31 October 1991.
On various occasions from August up to October, 1991, petitioner received several
communications3 from Mr.Eufronio Ibesate, the treasurer of the Negros Mission
asking him to admit accountability and responsibility for the church tithes and
offerings collected by his wife, Mrs.Thelma Austria, in his district which amounted
to P15,078.10, and to remit the same to the Negros Mission. On 17 October 1991,
petitioner received a letter inviting him and his wife to attend the Executive
Committee meeting at the Negros Mission Conference Room on 21 October 1991, at
nine in the morning. To be discussed in the meeting were the non-remittance of
church collection and the events that transpired on 16 October 1991, when petitioner
and Pastor Buhat had a heated argument.
A fact finding committee was created to investigate petitioner. For two (2) days,
from October 21 and 22, the fact finding committee conducted an investigation of
Page 7
petitioner. Petitioner received a letter of dismissal, citing misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and habitual
neglect of duties, and commission of an offense against the person of employers
duly authorized representative, as grounds for the termination of his services.
Reacting against the adverse decision of the SDA, petitioner filed a complaint on 14
November 1991, before the Labor Arbiter for illegal dismissal against the SDA and
its officers and prayed for reinstatement with backwages and benefits, moral and
exemplary damages and other labor law benefits. On 15 February 1993, Labor
Arbiter Cesar D. Sideo rendered a decision in favor of petitioner.
The SDA, through its officers, appealed the decision of the Labor Arbiter to the
National Labor Relations Commission. In a decision, dated 26 August 1994, the
NLRC vacated the findings of the Labor Arbiter.
Petitioner filed a motion for reconsideration of the above named decision. On 18 July
1995, the NLRC issued a Resolution reversing its original decision.
In view of the reversal of the original decision of the NLRC, the SDA filed a motion
for reconsideration of the above resolution. Notable in the motion for reconsideration
filed by private respondents is their invocation, for the first time on appeal, that the
Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the
constitutional provision on the separation of church and state since the case allegedly
involved an ecclesiastical affair to which the State cannot interfere.
The NLRC, without ruling on the merits of the case, reversed itself once again,
sustained the argument posed by private respondents and, accordingly, dismissed the
complaint of petitioner.
ISSUE:W/N the Labor Arbiter/NLRC has jurisdiction to try and decide the
complaint filed by petitioner against the SDA
HELD: Yes.The case at bar does not concern an ecclesiastical or purely religious
affair as to bar the State from taking cognizance of the same. The case at bar does
not even remotely concern any of the above cited examples. While the matter at hand
relates to the church and its religious minister it does not ipso facto give the case a
religious significance. Simply stated, what is involved here is the relationship of the
church as an employer and the minister as an employee. It is purely secular and has
no relation whatsoever with the practice of faith, worship or doctrines of the church.
In this case, petitioner was not excommunicated or expelled from the membership of
the SDA but was terminated from employment. Indeed, the matter of terminating an
employee, which is purely secular in nature, is different from the ecclesiastical act of
expelling a member from the religious congregation. Labor Arbiter and the NLRC,
has the right to take cognizance of the case and to determine whether the SDA, as
employer, rightfully exercised its management prerogative to dismiss an employee.
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
This is in consonance with the mandate of the Constitution to afford full protection
to labor.
Under the Labor Code, the provision which governs the dismissal of employees is
comprehensive enough to include religious corporations, such as the SDA, in its
coverage. Article 278 of the Labor Code on postemployment states that the
provisions of this Title shall apply to all establishments or undertakings, whether for
profit or not. Obviously, the cited article does not make any exception in favor of a
religious corporation. This is made more evident by the fact that the Rules
Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the
Termination of Employment and Retirement, categorically includes religious
institutions in the coverage of the law.
RUGA V. NLRC G.R. NOS. 7265461. JANUARY 22, 1990
FACTS: The petitioners were the fishermen crew members of 7/B Sandyman II, one
of several fishing vessels owned and operated by private respondent De Guzman
Fishing Enterprises which is primarily engaged in the fishing business with port and
office at Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing
vessel in various capacities, as follows:
Alipio Ruga and Jose Parma, patron/pilot; Eladio Calderon, chief engineer; Laurente
Bautu, second engineer; Jaime Barbin, master fisherman; pond fisherman; Philip
Cervantes and Eleuterio Barbin, fishermen.
For services rendered in the conduct of private respondents regular business of
trawl fishing, petitioners were paid on percentage commission basis in cash by one
Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received
thirteen percent (13%) of the proceeds of the sale of the fish catch if the total
proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise,
they received ten percent (10%) of the total proceeds of the sale. The patron/pilot,
chief engineer and master fisherman received a minimum income of P350.00 per
week while the assistant engineer, second fisherman, and fisherman winchman
received a minimum income of P260.00 per week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by
Jorge de Guzman, president of private respondent, to proceed to the police station at
Camaligan, Camarines Sur, for investigation on the report that they sold some of
their fish catch at mid sea to the prejudice of private respondent. Petitioners denied
the charge claiming that the same was a countermove to their having formed a labor
union and becoming members of Defender of Industrial Agricultural Labor
Organizations and General Workers Union (DIALOGWU) on September 3, 1983.
Page 8
On September 22, 1983, petitioners individually filed their complaints for illegal
dismissal and nonpayment of 13th month pay, emergency cost of living allowance
and service incentive pay, with the then Ministry (now Department) of Labor and
Employment, Regional Arbitration Branch No. V, Legaspi City, Albay. On October
24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman,
submitted its position paper denying the employeremployee relationship between
private respondent and petitioners on the theory that private respondent and
petitioners were engaged in a joint venture.
ISSUE: WON there exists employer-employee relationship
HELD: YES
In determining the existence of an employer employee relationship, the elements that
are generally considered are the following (a) the selection and engagement of the
employee; (b) The payment of wages; (c) The power of dismissal; And (d) the
employers power to control the employee with respect to the means and methods by
which the work is to be accomplished. The employment relation arises from contract
of hire, express or implied. In the absence of hiring, no actual employer employee
relation could exist.
Petitioner Alipio Ruga was hired on September 29, 1974 as patron/captain of the
fishing vessel; Eladio Calderon started as a mechanic on April 16, 1968 until he was
promoted as chief engineer of the fishing vessel; Jose Parma was employed on
September 29, 1974 as assistant engineer; Jaime Barbin started as a pilot of the
motor boat until he was transferred as a master fisherman to the fishing vessel 7/B
Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while
Eleuterio Barbin was hired as winchman on April 15, 1976.
Aside from performing activities usually necessary and desirable in the business of
private respondent, it must be noted that petitioners received compensation on a
percentage commission based on the gross sale of the fishcatch, i.e. 13% of the
proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed
during the fishing trip, otherwise only 10% of the proceeds of the sale. Such
compensation falls within the scope and meaning of the term wage as defined
under Article 97(f) of the Labor Code.
Furthermore, the fact that on mere suspicion based on the reports that petitioners
allegedly sold their fishcatch at midsea without the knowledge and consent of private
respondent, petitioners were unjustifiably not allowed to board the fishing vessel on
September 11, 1983 to resume their activities without giving them the opportunity to
air their side on the accusation against them unmistakably reveals the disciplinary
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
power exercised by private respondent over them and the corresponding sanction
imposed in case of violation of any of its rules and regulations.
The conduct of the fishing operations was undisputably shown by the testimony of
Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the control and
supervision of private respondents operations manager. Matters dealing on the
fixing of the schedule of the fishing trip and the time to return to the fishing port
were shown to be the prerogative of private respondent. While performing the
fishing operations, petitioners received instructions via a single side band radio from
private respondents operations manager who called the patron/pilot in the morning.
They are told to report their activities, their position, and the number of tubes of fish
catch in one day. Clearly thus, the conduct of the fishing operations was monitored
by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible for
disseminating the instructions to the crew members.
PERPETUAL HELP CREDIT COOPERATIVE, INC. VS. FABURADA G.R.
NO. 121948. OCTOBER 8, 2001
FACTS: On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo
and Harold Catipay, private respondents, filed a complaint against the Perpetual Help
Credit Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch,
Department of Labor and Employment (DOLE), Dumaguete City, for illegal
dismissal, premium pay on holidays and rest days, separation pay, wage differential,
moral damages, and attorneys fees. Forthwith, petitioner PHCCI filed a motion to
dismiss the complaint on the ground that there is no employer employee relationship
between them as private respondents are all members and co-owners of the
cooperative.
ISSUE: WON there exists employer-employee relationship
HELD: YES
In determining the existence of an employer employee relationship, the following
elements are considered: (1) the selection and engagement of the worker or the
power to hire; (2) the power to dismiss; (3) the payment of wages by whatever
means; and (4) the power to control the workers conduct, with the latter assuming
primacy in the overall consideration.
No particular form of proof is required to prove the existence of an employer
employee relationship. Any competent and relevant evidence may show the
relationship.
Page 9
The above elements are present here. Petitioner PHCCI, through Mr. Edilberto
Lantaca, Jr., its Manager, hired private respondents to work for it. They worked
regularly on regular working hours, were assigned specific duties, were paid regular
wages and made to accomplish daily time records just like any other regular
employee. They worked under the supervision of the cooperative manager. But
unfortunately, they were dismissed.
CHAVEZ VS. NATIONAL LABOR RELATIONS COMMISSION G.R. NO.
146530. JANUARY 17, 2005
FACTS: The respondent company, Supreme Packaging, Inc., is in the business of
manufacturing cartons and other packaging materials for export and distribution. It
engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25,
1984. As such, the petitioner was tasked to deliver the respondent companys
products from its factory in Mariveles, Bataan, to its various customers, mostly in
Metro Manila. The respondent company furnished the petitioner with a truck. Most
of the petitioners delivery trips were made at nighttime, commencing at 6:00 p.m.
from Mariveles, and returning thereto in the afternoon two or three days after. The
deliveries were made in accordance with the routing slips issued by respondent
company indicating the order, time and urgency of delivery. Initially, the petitioner
was paid the sum of P350.00 per trip. This was later adjusted to P480.00 per trip and,
at the time of his alleged dismissal, the petitioner was receiving P900.00 per trip.
Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent
companys plant manager, his (the petitioners) desire to avail himself of the benefits
that the regular employees were receiving such as overtime pay, nightshift
differential pay, and 13th month pay, among others. Although he promised to extend
these benefits to the petitioner, respondent Lee failed to actually do so. On February
20, 1995, the petitioner filed a complaint for regularization with the Regional
Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case
could be heard, respondent company terminated the services of the petitioner.
Consequently, on May 25, 1995, the petitioner filed an amended complaint against
the respondents for illegal dismissal, unfair labor practice and nonpayment of
overtime pay, nightshift differential pay, 13th month pay, among others.
The respondents, for their part, denied the existence of an employeremployee
relationship between the respondent company and the petitioner. They averred that
the petitioner was an independent contractor as evidenced by the contract of service
which he and the respondent company entered into. This contract of service was
dated December 12, 1984. It was subsequently renewed twice, on July 10, 1989 and
September 28, 1992. Except for the rates to be paid to the petitioner, the terms of the
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
contracts were substantially the same. The relationship of the respondent company
and the petitioner was allegedly governed by this contract of service.
ISSUE: WON there exists employer-employee relationship
HELD: YES
The elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the employers power to control the employees conduct. The
most important element is the employers control of the employees conduct, not
only as to the result of the work to be done, but also as to the means and methods to
accomplish it.
All the four elements are present in this case.
First. Undeniably, it was the respondents who engaged the services of the petitioner
without the intervention of a third party. Second. Wages are defined as
remuneration or earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to
be done, or for service rendered or to be rendered. That the petitioner was paid on a
per trip basis is not significant. This is merely a method of computing compensation
and not a basis for determining the existence or absence of employer employee
relationship. One may be paid on the basis of results or time expended on the work,
and may or may not acquire an employment status, depending on whether the
elements of an employer employee relationship are present or not. In this case, it
cannot be gainsaid that the petitioner received compensation from the respondent
company for the services that he rendered to the latter. Third. The respondents
power to dismiss the petitioner was inherent in the fact that they engaged the services
of the petitioner as truck driver. They exercised this power by terminating the
petitioners services albeit in the guise of severance of contractual relation due
allegedly to the latters breach of his contractual obligation. Fourth. As earlier
opined, of the four elements of the employeremployee relationship, the control test
is the most important. Compared to an employee, an independent contractor is one
who carries on a distinct and independent business and undertakes to perform the
job, work, or service on its own account and under its own responsibility according
to its own manner and method, 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.
Page 10
 Hence, while an independent contractor enjoys independence and freedom from the
control and supervision of his principal, an employee is subject to the employers
power to control the means and methods by which the employees work is to be
performed and accomplished. Although the respondents denied that they exercised
control over the manner and methods by which the petitioner accomplished his work,
a careful review of the records shows that the latter performed his work as truck
driver under the respondents supervision and control.
Their right of control was manifested by the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent company;
2. There was an express instruction from the respondents that the truck shall be used
exclusively to deliver respondent companys goods;
3. Respondents directed the petitioner, after completion of each delivery, to park the
truck in either of two specific places only, to wit: at its office in Metro Manila at
2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan;
and 4. Respondents determined how, where and when the petitioner would perform
his task by issuing to him gate passes and routing slips.
On the other hand, the Court is hard put to believe the respondents allegation that
the petitioner was an independent contractor engaged in providing delivery or
hauling services when he did not even own the truck used for such services.
Evidently, he did not possess substantial capitalization or investment in the form of
tools, machinery and work premises. Moreover, the petitioner performed the delivery
services exclusively for the respondent company for a continuous and uninterrupted
period of ten years.
FRANCISCO VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. 170087. AUGUST 31, 2006
FACTS: In 1995, petitioner was hired by Kasei Corporation during its incorporation
stage. She was designated as Accountant and Corporate Secretary and was assigned
to handle all the accounting needs of the company. She was also designated as
Liaison Officer to the City of Makati to secure business permits, construction permits
and other licenses for the initial operation of the company. Although she was
designated as Corporate Secretary, she was not entrusted with the corporate
documents; Neither did she attend any board meeting nor required to do so. She
never prepared any legal document and never represented the company as its
Corporate Secretary. However, on some occasions, In 1996, petitioner was
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
designated Acting Manager. As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management administration functions;
represent the company in all dealings with government agencies, especially with the
Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city
government of Makati; and to administer all other matters pertaining to the operation
of Kasei Restaurant which is owned and operated by Kasei Corporation. 7 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, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner
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 Corporation. Timoteo
Acedo, the designated Treasurer, convened a meeting of all employees of Kasei
Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in
charge of all BIR matters. Thereafter, Kasei Corporation 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. Petitioner was not paid her midyear bonus
allegedly because the company was not earning well. On October 2001, petitioner
did not receive her salary from the company. She made repeated follow ups with the
company cashier but she was advised that the company was not earning well. 10 On
October 15, 2001, petitioner asked for her salary from Acedo and the rest of the
officers 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.
Private respondents averred that petitioner is not an employee of Kasei Corporation.
They alleged that petitioner was hired in 1995 as one of its technical consultants on
accounting matters and act concurrently as Corporate Secretary. As technical
consultant, petitioner performed her work at her own discretion without control and
supervision of Kasei Corporation. Petitioner had no daily time record and she came
to the office any time she wanted. The company never interfered with her work
except that from time to time, the management would ask her opinion on matters
relating to her profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a Board Resolution
designating her as technical consultant. The money received by petitioner from the
corporation was her professional fee subject to the 10% expanded withholding tax on
professionals, and that she was not one of those reported to the BIR or SSS as one of
the companys employees. Petitioners designation as technical consultant depended
solely upon the will of management. As such, her consultancy may be terminated
Page 11
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.
ISSUE: WON there exists employer-employee relationship
HELD: There has been no uniform test to determine the existence of an employer--
employee relation. 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.
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;
(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.
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;
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
(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;
(7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent on
the alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of
Kasei Corporation.
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 online inquiry system of the
SSS evinces the existence of an employer-employee relationship between petitioner
and respondent corporation. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latters
line of business.
Based on the foregoing, there can be no other conclusion that petitioner is an
employee of respondent Kasei Corporation. She was selected and engaged by the
company for compensation, and is economically dependent upon respondent for her
continued employment in that line of business. Her main job function involved
accounting and tax services rendered to respondent corporation on a regular basis
over an indefinite period of engagement. Respondent corporation hired and engaged
petitioner for compensation, with the power to dismiss her for cause. More
importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished. 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 back wages. Since the position of
petitioner as accountant is one of trust and confidence, and under the principle of
Page 12
strained relations, petitioner is further entitled to separation pay, in lieu of
reinstatement.
TELEVISION AND PRODUCTION EXPONENTS INC. VS. SERVANA
Topic: Elements of Employer-Employee Relationship
FACTS: TAPE or Television and Production Exponents Inc. is a domestic
corporation engaged in production of TV programs among which is Eat Bulaga.
Respondent Servana worked as a security guard for Tape from March 1987 until he
was terminated on March 3, 2000. In respondents complaint for illegal dismissal
and non-payment for benefits, he alleges that he was first employed by Agro-
Commercial Security Agency but was later absorbed by TAPE as a regular company
guard. He was informed on March 2, 2000 of his termination following TAPEs
decision to contract the services of a professional security agency and further claims
that benefits such as holiday pays as well as others were withheld from him and his
dismissal was without due process and was in violation of labor laws. TAPE
contends such allegations that respondent was merely an independent contractor
falling under talent group category and he was merely tasked to assist TAPE during
its live productions and was agreed upon that complainant would render his services
until such time TAPE contracted the services of a professional security agency.
ISSUE: Whether or not there exists an employer-employee relationship between
TAPE and Servana?
HELD: In determining the existence of employer-employee relationship, certain
factors must be considered such as (a) selection and engagement of employee; (b) the
payment of wages; (c) The power of dismissal;
and (d) the employers power to control the employee with respect to the means and
method by which the work is to be accomplished. The most important factor
involves the control test. Under the control test, there is an employer-employee
relationship when the person for whom the services are performed reserves the right
to control not only the end achieved but also the manner and means used to achieve
that end.
The elements are clear that first, the selection and hiring of petitioner was done by
private respondents with respondents admitted having engaged the services of
petitioner only in 1995 after TAPE severed its
relations with RPN Channel 9 and thus by informing petitioner through the
Memorandum dated 2 March 2000, that his services will be terminated as soon as the
services of the newly hired security agency begins, private respondents in effect
acknowledged petitioner to be their employee. For the right to hire and fire is another
important element of the employer employee relationship. Second. Payment of
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
wages is one of the four factors to be considered in determining the existence of
employer-employee relation. Payment as admitted by private respondents was given
by them on a monthly basis at a rate of P5, 444.44. Third of the four elements of the
employer-employee relationship is the control test. The bundy cards representing
the time petitioner had reported for work are evidence of private respondents control
over petitioner more particularly with the time he is required to report for work
during the noontime program of Eat Bulaga! If it were not so, petitioner would be
free to report for work anytime even not during the noontime program of Eat
Bulaga! from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a
talent. Precisely, he is being paid for being the security of Eat Bulaga! during the
abovementioned period. The daily time cards of petitioner are not just for mere
record purposes as claimed by private respondents. It is a form of control by the
management of private respondent TAPE.
With such factors present in the case at bar, the court finds the existence of an
employer-employee relationship between TAPE and Respondent Servana.
SAN MIGUEL CORP VS. NLRC
Topic: Requirements for Independent Contractor
FACTS: Maliksi in October 16, 1990 filed a case against SMC-Magnolia Division
and Philippine Software Services and Education Center (PHILSSEC) for them to
recognize him as a regular employee. In the same case he included the charge of
illegal dismissal when petitioners terminated his services later that month. Maliksis
employment record shows he served SMC alternately as budget head, accounting
clerk and acting clerk under Skillpower, Lipercon and PHILSSEC between 1981 up
to February 1985 for periods spread apart, or for at least three years and seven
months.
Respondent maintains that he is an employee of SMC-Magnolia and that Lipercon,
Skillpower, Inc. and PHILSSEC are labor-only contractors, none of which are his
employers. PHILSSEC on the other hand contends otherwise and states it catered
only to computerized accounting needs of businesses like SMC-Magnolia,
PHILSSECs principal function being that of manual control of data needed during
the computerization. PHILSSEC added that it controlled respondents work, paid his
salary and required him to report directly to it. Respondents termination was due to
the fact that the project was completed on October 31, 1990 with SMC alleging the
same facts that PHILSSEC exercised exclusive managerial prerogative over the
complainant as to hiring, payment of salary, dismissal and the control over his work.
It was interested only in the result of the work specified in the contract but not as to
the means and methods of accomplishing the same. PHILSSEC also contends that
since it has substantial capital of its own. What it markets to clients are computer
programs and training systems on computer technology and not the usual labor or
manpower supply to establishment concerns. Further, SMC states that respondents
service has no relation to the principal business of SMC, which is food and beverage.
Page 13

ISSUE: Whether or not Respondent Maliksi was a regular employee of SMC?
HELD: The courts find Respondent Maliksi is a regular employee of SMC. Lipercon
and Skillpower are labor-only contractors providing as they do personnel services to
the public for a fee. There is an employer-employee relationship and the Court gives
due deference to this factual findings of both the NLRC and the CA. Having served
SMC for an aggregate period of more than three (3) years through employment
contracts with these Lipercon and Skillpower, respondent should already be
considered as SMCs regular employee. The fact is that he was hired and re-hired by
SMC to perform administrative and clerical work that was necessary to SMCs
business on a daily basis.
In the case of Bustamante v. National Labor Relations Commission, the Court ruled
that petitioners were employees engaged to perform activities necessary in the usual
business of the employer. The contract for probationary employment was utilized by
respondent company as a chicanery to deny petitioners their status as regular
employees and to evade paying them the benefits attached to such status. They were
hired and re-hired in a span of from two to four years to do the same type of work
which conclusively shows the necessity of petitioners service to the respondent
companys business.
In relation to PHILSSEC, there was no need for respondent to be employed under the
formers computerization program to be considered a regular employee of SMC at
the time. SMC itself admits that respondents work under the computerization
program did not require the operation of a computer system, such as the software
program being developed by PHILSSEC. Respondents work under the PHILSSEC
project was mainly administrative in nature and necessary to the development of
SMCs business.
The facts of the case clearly show that respondent was tossed around from one
employment contract to another in order to circumvent labor laws. The act of hiring
and re-hiring workers over a period of time without considering them as regular
employees shows bad faith on the part of the employer making it liable to pay
damages.
LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA
PINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME
(LIKHA-PMPB)
VS. BURLINGAME CORPORATION
Topic: Requirements for Independent Contractor
FACTS: Petitioner Likha-PMPB filed a petition for certification election before
DOLE in which petitioner sought to represent rank-and-file promo employees of
respondent numbering around 70 claiming the non-existence of a union in the
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
establishment representing the rank-and-file promo employees. Respondents
however sought to dismiss the petition on the grounds of non-existence of employer-
employee relationship further alleging the petitioners members are actually
employees of F.Garil Manpower Services, a duly licensed local employment agency
evidenced by a copy of its contract for manpower services with the latter.
ISSUE: Whether or not F.Garil Manpower Services if an independent contractor or
labor-only contractor?
HELD: One of the requirements to be considered a legitimate job contractor is such
that there is substantial capitalization or investment in the form of tools, equipment,
machineries, work premises among others, a requisite in which F. Garils is lacking
in proof. Second of which was the work of the promo-girls was directly related to the
principal business or operation of Burlingame which is an essential activity to the
main business of the principal. Lastly, F.Garil did not carry on an independent
business or undertake the performance of its service contract according to its own
manner and method, free from the control and supervision of its principal,
Burlingame.
Also, there are indications in the contract that F. Garil was not left alone in the
supervision and control of its alleged employees, as such it can be concluded that F.
Garil was not an independent contractor since it did not carry a distinct business free
from the control and supervision of Burlingame. While the parties may freely
stipulate terms and conditions of a contract, such contractual stipulations should not
be contrary to law, morals, good customs, public order or public policy. A
contractual stipulation to the contrary cannot override factual circumstances firmly
establishing the legal existence of an employer- employee relationship.
Under this circumstance, there is no doubt that F. Garil was engaged in labor-only
contracting, and as such, is considered merely an agent of Burlingame. In labor-only
contracting, the law creates an employer-employee relationship 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. Since F. Garil is a labor-only contractor, the workers it supplied should be
considered as employees of Burlingame in the eyes of the law.
ALVIADO VS. PROCTER & GAMBLE
Topic: Requirements for Independent Contractor
FACTS: In the case at bar, Petitioners worked as merchandisers of P&G from
various dates allegedly starting as early as 1982 or as late as june 1991 to either May
5, 1992 or March 11, 1993. All of them individually signed employment contracts
with either Promm-GEM or SAPS for periods of roughly 5 months at a time assigned
at different outlets, supermarkets and stores handling P&G Products all the while
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receiving wages from Promm-Gem or SAPS. On December 1991, petitioners filed a
complaint against P&G for regularization and later included other matters such as
their subsequent dismissal as well as other benefits with damages. Petitioners in their
complaint insist that they are employees of P&G and further claiming they were
recruited by P&G Salesmen and were performing merchandising for P&G long
before the existence of Promm-Gem and SAPS and further claims that the latter
instructed them to fill up application forms in accordance with a so-called re-
alignment program and report to P&G agencies. The allegations are further
supported by P&Gs instigation of their dismissal from letters to SAPS as well as
assertions that Promm-Gem and SAPS are labor-only contractors providing only
manpower services to the client and finally stating that they had been engaged to
perform activities which were necessary in the usual business of P&G as such
making them regular employees. P&G however contests such allegations and states
the lack of employer-employee relationship because it was Promm-Gem or SAPS
that selected petitioners and engaged their services, paid their salaries, wielded
power of dismissal over them as well as power of control over their conduct of work.
They further support this contention by stating that the Labor Code itself neither
defines nor limits which services may be validly outsourced.
ISSUE: Whether or not the contracting of the companys core activities is allowed
under the labor code?
HELD: Yes, the outsourcing is valid. Though while the laws and implementing rules
dont prohibit job contracting, the law allows contracting arrangements for
performance of specific jobs, works or services. It is a management prerogative to
farm out any of its activities, regardless of whether such activity is peripheral or core
in nature however in order for outsourcing to be valid, it must be made to an
independent contractor because the labor rules expressly prohibit labor-only
contracting. Labor-only contracting exists where the contractor merely recruits,
supplies or places workers to perform a job, work or service for a principal and more
so must concur with the elements such as that the contractor or subcontractor does
not have substantial capital or investment which relates to the job, work or service to
be performed and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main
business of the principal or the contractor does not exercise the right to control over
the performance of the work of the employee.
In the case at bar, it is clear that Promm-Gem is not engaged in labor-only
contracting. It is a legitimate job contractor based on the fact that it has substantial
capital shows by financial statements as well as substantial investments in the form
of warehouses, office spaces, and vehicles as well as other clients besides P&G and
by providing its workers with uniforms and materials, the workers were considered
regular employees.
SAPS on the other hand is engaged in labor-only contracting for it does not have the
substantial capital like Promm-Gem as well as showing of substantial investment in
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
equipment, tools or other assets. Furthermore, petitioners activities which consisted
of merchandising and promotion for P&G products are directly related to the
manufacturing business.
COCA-COLA BOTTLERS V. NLRC (DESIRABLE UNNECESSARY)
FACTS: COCA COLA entered into a contract of janitorial services with Bacolod
Janitorial Services (BJS). Every year thereafter a service contract was entered into
between the parties under similar terms and conditions until about May 1994. Private
Respondent, Ramon B. Canonicato was hired as a casual employee of petitioner
Coca Cola assigned in bottling crew temporarily. He was terminated and later has
been hired as a painter in contractual projects which lasted 15 Years. On April 1991,
Canonicato was hired as a janitor by BJS which assigned him to Coca-cola
considering his familiarity.
Canonicato submitted a complaint seeking regularization pursuant to a compromise
agreement and never reported for work. BJS asked him to report and offered another
work. Later he was dismissed hence this complaint.
LA: Ruled in favor of CC & BJS
NLRC: Reversed
ISSUE/S: Is the janitorial services necessary and desirable in COCA COLAs trade
and business?
Is BJS an independent contractor?
HELD: Apparently is necessary and desirable to the trade or business of petitioner
COCA COLA. But this is inconsistent with our pronouncement in Kimberly
Independent Labor Union v. Drilon. Although janitorial services may be considered
directly related to the principal business of an employer, as with every business, we
deemed them unnecessary in the conduct of the employers principal business.
It is necessary to apply the four fold test. Notably, these are all found in the
relationship between BJS and Canonicato and not between Canonicato and petitioner
COCA COLA.
BJS satisfied all the requirements of a job contractor under the law which makes it an
independent contractor, namely,
Page 15
(a) the ability to carry on an independent business and undertake the contract work
on its own account under its own responsibility according to its own manner and
method, free from the control and direction of its principal or client in all matters
connected with the performance of the work except as to the results thereof; and,
(b) the substantial capital or investment in the form of tools, equipment, machinery,
work premises, and other materials which are necessary in the conduct of its
business.
MANILA WATER CO. V. PEA (LABOR CONTRACTING ONLY)
FACTS: Petitioner Manila Water Company, Inc. is one of the two private
concessionaires contracted by the Metropolitan Waterworks and
Sewerage System (MWSS) to manage the water distribution system in the East Zone
of Metro Manila. Under the Concession Agreement, petitioner undertook to absorb
former employees of the MWSS. Private respondents, being contractual collectors of
the MWSS, were among the 121 employees not included in the list; nevertheless,
petitioner engaged their services without written contract. Before the end of the three
month contract, the 121 collectors incorporated the Association Collectors Group,
Inc. (ACGI), which was contracted by petitioner to collect charges for the Balara
Branch. Later petitioner terminated the contract.
Respondents filed a complaint contending that they were petitioners employees as
all the methods and procedures of their collections were controlled by the latter.
ISSUE: whether ACGI is an independent contractor or a labor only contractor
HELD: First, ACGI does not have substantial capitalization or
investment in the form of tools, equipment, machineries, work premises, and other
materials, to qualify as an independent contractor. While it has an authorized capital
stock of P1,000,000.00, only P62,500.00 is actually paid in, which cannot be
considered substantial capitalization. The 121 collectors subscribed to four shares
each and paid only the amount of P625.00 in order to comply with the incorporation
requirements. Further, private respondents reported daily to the branch office of the
petitioner because ACGI has no office or work premises. In fact, the corporate
address of ACGI was the residence of its president, Mr. Herminio D. Pea.
Moreover, in dealing with the consumers, private
respondents used the receipts and identification cards issued by petitioner.
DAN GLORIA//KAT RAMIREZ//JESSICA BERNARDO//JOSEPH DE MESA//ARVIN FIGUEROA
Second, the work of the private respondents was directly related to the principal
business or operation of the petitioner. Being in the business of providing water to
the consumers in the East Zone, the collection of the charges therefor by private
respondents for the petitioner can only be categorized as clearly related to, and in the
pursuit of the latters business.
Lastly, ACGI did not carry on an independent business or
undertake the performance of its service contract according to its own manner and
method, free from the control and supervision of its principal, petitioner.
Consequently, ACGI was not an independent contractor since it did not carry a
distinct business free from the control and supervision of petitioner.
SAN MIGUEL CORPORATION V. ABALLA (EFFECT OF FINDING)
FACTS: SMC and Sunflower entered into a one year Contract of Services1
commencing on January 1, 1993, to be renewed on a month to month basis until
terminated by either party. Some of the services were janitorial, shrimp harvesting
and sanitation in Bacolod Shrimp Processing Plant. In Bacolod City, private
respondents prayed to be declared regular employees of SMC. A complaint for
illegal dismissal then followed.
LA: In favor of SMC & Sunflower
NLRC: Denied for lack of merit
CA: Decision Reversed
ISSUE/S: What is the liability determined as labor-only? Should the decision of LA
and NLRC be treated as conclusive?
HELD: There being a finding of labor-only contracting, liability must be
shouldered either by SMC or [Sunflower] or shared by both SMC however should be
held solely liable for [Sunflower] became nonexistent with the closure of the
aquaculture business of SMC.
The general rule, no doubt, is that findings of facts of an administrative agency
which has acquired expertise in the particular field of its endeavor are accorded great
weight on appeal. The rule is not absolute and admits of certain well recognized
exceptions, however. Thus, when the findings of fact of the labor arbiter and the
NLRC are not supported by substantial evidence or their judgment was based on a
Page 16
misapprehension of facts, the appellate court may make an independent evaluation of
the facts of the case.

EPARWA SECURITY AND JANITORIAL SERVICES V. LICEO DE

CAGAYAN UNIVERSITY

(LIABILITY OF INDIRECT EMPLOYER)

FACTS: Eparwa and LDCU, through their representatives, entered into a Contract
for Security Services.

Security guards whom Eparwa assigned to LDCU filed a complaint before NLRC for
underpayment of salary, legal holiday pay, 13th month pay, rest day, service
incentive leave and others.

LDCU made a crossclaim and prayed that Eparwa should reimburse LDCU for any
payment to the security guards.

LA: Eparwa & LDCU are solidarily liable

NLRC: LDCU shall reimburse Eparwa

CA: Reinstated LAs decision

ISSUE: Is LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay?

HELD: Creditors, such as the security guards, may collect from anyone of the
solidary debtors. Solidary liability does not mean that, as between themselves, two
solidary debtors are liable for only half of the payment. LDCUs ultimate liability
comes into play because of the expiration of the Contract for Security Services.
There is no privity of contract between the security guards and LDCU, but LDCUs
liability to the security guards remains because of Articles 106, 107 and 109 of the
Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in
the contract price because of the expiration of the contract, but Eparwas liability to
the security guards remains because of their employer-employee relationship. In lieu
of an adjustment in the contract price, Eparwa may claim reimbursement from
LDCU for any payment it may make to the security guards. However, LDCU cannot
claim any reimbursement from Eparwa for any payment it may make to the security
guards.

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