LABOR CASES 4 -4.6ASIAN ALCOHOL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION, FOURTHDIVISION, CEBU CITY and ERNESTO A. CARIAS, ROBERTO C. MARTINEZ, RAFAEL H.SENDON, CARLOS A. AMACIO, LEANDRO O. VERAYO and ERENEO S. TORMO(G.R. No. 131108)PUNO,J.:Facts: The Parsons family,who originally owned the controlling stocks in Asian Alcohol Corporation(AAC), was driven by mounting business losses to sell their majority rights to Prior Holdings whichtook over its management and operation the following month.Prior Holding implemented organizational plan and other cost-saving measures. 117 employees outof a total workforce of360 were separated. 72 of them occupied redundant positions that wereabolished. Of these positions, 21held by union members and 51 by non-union members.Private respondents are among those union members whose positions were abolished due toredundancy. Carias, Martinez, and Sendon were water pump tenders; Amacio was a machine shopmechanic; Verayo was a briquetting plant operator while Tormo was a plant helper under him.Theywereall assignedat theRepair and Maintenance Sectionof thePulupandanplant.Theyreceived individual noticesof termination; were paid the equivalent ofone monthsalaryforevery year of service as separation pay, the money value of their unused sick, vacation,emergency and seniority leave credits, 13th month pay, medicine allowance, tax refunds, andgoodwill cash bonuses for those with at least 10 years of service. All of them executed swornreleases, waivers and quitclaims.Except for Verayo and Tormo, they all signed sworn statements of conformity to the companyretrenchment program. And except for Martinez, they all tendered letters ofresignation.Private respondents filed with the NLRC complaints forillegal dismissal with a prayer forreinstatement with backwages, moral damages and attorney's fees. They alleged that AsianAlcohol used the retrenchment program as a subterfuge for union busting. They claimed that theywere singled out for separation by reason of their active participation in the union. They alsoasseverated that AAC was not bankrupt asit has engaged in anaggressive scheme of contractualhiring.LA dismissed the complainants and held that thefact that respondent AAC incurred losses initsbusiness operations was not seriously challenged by the complainants. The fact that it incurredlosses in itsbusiness operations prior to the implementation of itsretrenchment program is amplysupported by the documents on records, indicating an accumulated deficit of P26,117,889.00.The law allowsan employer toretrench some of its employees toprevent ofits employees toprevent losses. Inthe case of respondent AAC, itimplemented its retrenchment program not onlyto prevent losses but to prevent further losses as it was then incurring huge losses in itsoperations.The dismissal of complainantson groundof redundancy/ retrenchmentwas perfectly valid orlegal.Private respondents appealed to the NLRC. NLRCruled that the positions ofprivate respondentswere not redundant for the simple reason that they were replaced by casuals. Thecompany at thetime of retrenchment was not then in the state of business reverses. There is therefore no reasonto retrench. . . . The alleged deficits of the corporation did not prove anything for the respondent.The financial statusshownin recordssubmittedwas beforePriorHoldings took over the operationand management of the corporation. This is no proof thatwhen the termination of complainant[s]took effect the company was experiencing losses or at least imminent losses. Possible future lossesdo not authorize retrenchmentRetrenchment and/or redundancy not having been proved, complainants, therefore, wereillegallydismissed.AAC moved for reconsideration of the foregoing decision. NLRC denied the motion.AAC filed in this Court a petition forcertiorariassailing both the decision of the NLRC and theresolution denying its reconsideration.Issues: W/N there wasno valid retrenchment thus making the dismissal of privaterespondentsillegal.Ruling: Negative.The rightof management to dismiss workersduring periodsof businessrecession and toinstalllabor saving devices to prevent losses is governed by Art. 283 of the labor Code, as amended.Retrenchment and redundancy are just causesfor the employer to terminate the services ofworkers to preserve the viability of the business.In exercising its right, however, managementmust faithfully comply with the substantive and procedural requirements laid down law andjurisprudence.The requirements for validretrenchmentwhich must be proved by clear and convincing evidenceare: (1) that the retrenchment is reasonably necessary and likely to prevent business losses,which, if already incurred, are not merelyde minimis, but substantial, serious, actual and real, or ifonly expected, are reasonably imminent as perceived objectively and ingood faith by theemployer; (2) that the employer served written notice both to the employees and to the DOLE atleast one month prior to the intend date of retrenchment; (3) that the employer pays theretrenched employees separation pay equivalent to one month pay or atleast 1/2 month pay forevery year of service, whichever is higher; (4) that the employer exercises its prerogative toretrench employees in good faith for the advancement of its interest of its interest and not todefeat or circumvent the employees' right to security of tenure; and (5) that the employer used fairand reasonable criteria in ascertaining who would be dismissed and who would be retained amongthe employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship forcertain workers.The conditionof businesslossesis normally shown by audited financialdocumentslike yearlybalance sheets and profit and loss statements as well as annual income tax returns. It is our rulingthat financial statements must be prepared and signed byindependent auditors. Unless dulyaudited, they can be assailed as self-serving documents. It is necessary that the employer alsoshow that its losses increased through a period of time and that the condition of the company isnot likely to improve in the near future.Private respondents never contested the veracity of the audited financial documents proffered byAsian Alcohol before the LA. Neither did they object to their admissibility. They show that petitionerhas accumulated losses amounting to P306,764,349.00 and showing nary a sign of abating in thenear future. The allegation of union busting isbereft of proof. Union and non-union members weretreated alike. The records show thatthe positions of 51other non-union members were abolisheddue to business losses.Article 283 of the Labor Code uses the phrase "retrenchment to prevent losses". This means thatretrenchment must be undertaken by the employer before losses are actually sustained. Theemployer need not keep all his employees until after his losses shall have materialized. Otherwise,the law could be vulnerable of attack as undue taking of property forthe benefit of another.Irrefutable was the fact that losses have bled Asian Alcohol incessantly over a span of severalyears. The law gives the new management every right to undertake measures to savethecompany from bankruptcy.We find that the reorganizational plan and comprehensive cost-saving program to turn thebusiness around were not designed to bust the union of the private respondents. Retrenched were117 employees. 72 of them including private respondents were separated because their positionshad become redundant. In this context, what may technically be considered asredundancy mayverily be considered as retrenchment measure. Their positions had to be declared redundant to cutlosses.Redundancy exists when the service capability of the work force is in excess of what is reasonablyneeded to meet the demands on the enterprise. A redundant position is one rendered superfluousby any number of factors, such asoverhiring of workers, decreased volume of business, droppingof a particular product line previously manufactured by the company or phasing out ofa serviceactivity priorly undertaken by the business.Under these conditions, the employer has no legalobligation to keep in its payroll more employees than are necessary for the operation of itsbusiness.For the implementation of aredundancyprogram to be valid, the employer must comply with thefollowing requisites: (1) written notice servedon both the employees and the Department of Laborand Employment at least one month prior to theintended date of retrenchment; (2) payment ofseparation pay equivalent to at least one month pay or at least one month pay for every year ofservice, whichever is higher; (3)good faith in abolishing the redundant positions; and (4)fair andreasonable criteria in ascertaining what positions are tobe declared redundant and accordinglyabolished.AAC did not own the land where the wells stood. It only leased them. The lease contract, which alsoprovided for a right of way leading to the site of the wells, was terminated. Also, the water from thewells had become salty due toextensive prawn farming nearby and could no longer be used byAAC for its purpose. The wells had to be closed and needless to say, the services of Carias,Martinez and Sendon had to be terminated on thetwin grounds of redundancy and retrenchment.The need for a briquettingplantoperatorceasedas theservices ofonlytwo 2helpers were allthatwas necessary to attend tothe much lesser amount of coal required torun the boiler. Thus, theposition of Verayo had to beabolished. Of the 3 briquetting helpers, Tormo was the oldest. Age,with the physical strength that comes withit, was particularly taken intoconsideration by themanagement team in deciding whom to separate. Hence, it was Tormo who was separated fromservice. The management choice rested on a rational basis.Amacio was among the 10 mechanics who manned the machine shop at the plant site.It was morecost efficient to maintain only 9mechanics. In choosing whom to separate among the ten (10)mechanics, the management examined employment records and reports todetermine the leastefficient among them. Amacio appeared the least efficient because of hispoor health condition.Not one of the private respondents refuted the foregoing facts. The characterization of positions asredundant is an exercise of business judgment on the part of the employers. It will be upheld aslong as it passes the test of arbitrariness.Private respondents failed to proffer any proofthat the management acted in a malicious orarbitrary manner in engaging the services of an independent contractor to operate the Laura wells.Absent such proof, the Court has no basis to interfere with thebona fidedecision ofmanagementto effect more economic and efficient methods of production.Private respondent now claim that they signed thequitclaims, waivers and voluntary resignationletters only to get their separation package. They maintain that in principle, they did not believethat their dismissal was valid.Generally,quit claims and releasesare contrary to public policy and therefore, void.Nonetheless, voluntary agreements that represent a reasonable settlement are binding on theparties and should not later be disowned. It is only where there is clear proof that the waiver waswangled from an unsuspecting or gullible person, or the terms ofthe settlement areunconscionable, that the law will step in to bail out the employee. While it is our duty to preventthe exploitation of employees, it also behooves us to protect the sanctity of contracts that do notcontravene our laws.Thereis noshowing that thequitclaims,waivers andvoluntaryresignationletterswereexecutedby the private respondents under force orduress. In truth, thedocuments embodied separationbenefits that were well beyond what thecompany was legally required to give private respondents.We note that out ofthe more than one hundred workers that were retrenched by Asian Alcohol,only these private respondents were notimpressed by the generosity of theiremployer. Their latecomplaints have no basis and deserves ourscant considerationManila Electric v. Quisumbing DigestManila Electric v. QuisumbingG.R. No. 127598 February 22, 2000

Facts:Members of the Private respondent union were dissatisfied with the terms of a CBA with petitioner. The parties in this case were ordered by the Sec. of Labor to execute a collective bargaining agreement (CBA) wherein.The CBA allowed for the increase in the wages of the employees concerned. The petitioner argues that if such increase were allowed, it would pass off such to the consumers.

Issue: W/N matters of salary are part of management prerogative

RULING: Yes. There is no need to consult the Secretary of Labor in cases involving contracting out for 6 months or more as it is part of management prerogative. However, a line must be drawn with respect to management prerogatives on business operationsper seand those which affect the rights of the workers. Employers must see to it that that employees are properly informed of its decisions to attain harmonious labor relations and enlighten the worker as to their rights.

The contracting out business or services is an exercise of business judgment if it is for the promotion of efficiency and attainment of economy. Management must be motivated by good faith and contracting out should not be done to circumvent the law. Provided there was no malice or that it was not done arbitrarily, the courts will not interfere with the exercise of this judgment.

Joeb M. Aliviado, et al. vs. Procter & Gamble Phils., Inc. and PROMM-GEM Inc.[GR No. 160506March 9, 2010]FACTS:Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with either Promm-Gem or SAPSfor periods of more or less five months at a time. They were assigned at different outlets, supermarkets and stores where they handled all theproducts of P&G. They received their wages from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on erringmerchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice. P&G is principally engaged in themanufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets anddistributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for thepromotion and merchandising of its products.Petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. Theassert that Promm-Gem and SAPS arelabor-only contractors providing services of manpower to their client.They claim that the contractors haveneither substantial capital nor tools and equipment to undertake independent labor contracting. Petitioners insist that since they had been engagedto perform activities which are necessary or desirable in the usual business or trade of P&G, then they are its regular employees. The LaborArbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee relationship between petitioners and P&G. Hefurther found that Promm-Gem and SAPS were legitimate independent job contractors. Petitioners filed an appeal to NLRC which affirmed thedecision of the labor Arbiter and also denied their motion for reconsideration.ISSUES:Whether or not P&G is the employer of petitionersSC RULING:In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-Gem andSAPS are labor-only contractors or legitimate job contractors. The pertinent Labor Code provision on the matter states:ART. 106. Contractor or subcontractor.XXX There is "labor-only" contracting where the person supplying workers toanemployer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises,among others, and the workers recruited and placed by such person are performing activities which are directly related tothe principal business of such employer. In such cases, the person or intermediary shall beconsidered merely as an agent ofthe employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employedby him.

In the case of Promm-Gem, its financial statements show that it has authorized capital stock of P1 million and a capital available foroperations. Promm-Gem supplied its complainant-workers with the relevant materials for them to perform their work and also issued uniforms tothem. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractualor project employees. The court finds that Promm-Gem has substantial investment which relates to the work to be performed. Under thecircumstances, it cannot besustained a labor-only contractor but a legitimate independent contractor.On the other hand, SAPS is considered merely an agent of the principal employer and the latter is responsible to the employees of thelabor-only contractor as if such employees had been directly employed by the principal employer. Consequently, the following petitioners, havingbeen recruited and supplied by SAPS -- which engaged in labor-only contracting -- are considered as the employees of P&G: Parenthetically,unlike Promm-Gem which dismissed its employees for grave misconduct and breach of trust due to disloyalty, SAPS dismissed its employeesupon the initiation of P&G. It is evident that SAPS does not carry on its own business because the termination of its contract with P&Gautomatically meant for it also the termination of its employees services. It is obvious from its act that SAPS had no other clients and had nointention of seeking other clients in order to further its merchandising business. From all indications SAPS, existed to cater solely to the need ofP&G for the supply of employees in the latters merchandising concerns only. Under the circumstances prevailing in the instant case, we cannotconsider SAPS as an independent contractor. WHEREFORE, thepetition is GRANTED.

GARDEN OF MEMORIES VS NLRCThe FactsPetitionerGardenof Memories is engaged in the business of operating a memorial park situated at Calsadang Bago, Pateros, Metro-Manila and selling memorial Plan and services.Respondent Cruz, on the other hand, worked at the Garden of Memories Memorial Park as a utility worker from August 1991 until her termination in February 1998.OnMarch 13, 1998, Cruz filed a complaint[4]for illegal dismissal, underpayment of wages, non-inclusion in the Social Security Services, and non-payment of legal/special holiday, premium pay for rest day, 13thmonth pay and service incentive leave pay againstGardenofMemoriesbefore the Department of Labor and Employment(DOLE).Upon motion ofGardenofMemories, Requio was impleaded as respondent on the alleged ground that she was its service contractor and the employer of Cruz.In her position paper,[5]Cruz averred that she worked as a utility worker ofGardenofMemorieswith a salary ofP115.00 per day. As a utility worker, she was in charge, among others, of the cleaning and maintenance of the ground facilities of the memorial park. Sometime in February 1998, she had a misunderstanding with a co-worker named Adoracion Requio regarding the use of a garden water hose. When the misunderstanding came to the knowledge of Requio, the latter instructed them to go home and not to return anymore. After three (3) days, Cruz reported for work but she was told that she had been replaced by another worker. She immediately reported the matter of her replacement to the personnel manager ofGardenofMemoriesand manifested her protest.Cruz argued that as a regular employee of theGardenofMemories, she could not be terminated without just or valid cause. Also, her dismissal was violative of due process as she was not afforded the opportunity to explain her side before her employment was terminated.Cruz further claimed that as a result of her illegal dismissal, she suffered sleepless nights, serious anxiety and mental anguish.In its Answer,[6]GardenofMemoriesdenied liability for the claims of Cruz and asserted that she was not its employee but that of Requio, its independent service contractor, who maintained the park for a contract price. It insisted that there was no employer-employee relationship between them because she was employed by its service contractor, Victoriana Requio(Victoriana), who was later succeeded by her daughter, Paulina, when she (Victoriana) got sick.GardenofMemoriesclaimed that Requio was a service contractor who carried an independent business and undertook the contract of work on her own account, under her own responsibility and according to her own manner and method, except as to the results thereof.In her defense, Requio prayed for the dismissal of the complaint stating that it was Victoriana, her mother, who hired Cruz, and she merely took over the supervision and management of the workers of the memorial park when her mother got ill. She claimed that the ownership of the business was never transferred to her.Requio further stated that Cruz was not dismissed from her employment but that she abandoned her work.[7]OnOctober 27, 1999, the LA ruled that Requio was not an independent contractor but a labor-only contractor and that her defense that Cruz abandoned her work was negated by the filing of the present case.[8]The LA declared bothGardenofMemoriesand Requio, jointly and severally, liable for the monetary claims of Cruz, the dispositive portion of the decision reads:WHEREFORE, premises considered, respondents Garden of Memories Memorial [P]ark and Life Plan, Inc. and/or Paulina Requio are hereby ordered to jointly and severally pay within ten (10) days from receipt hereof, the herein complainant Hilaria Cruz, the sums of72,072 (198 x 26 days x 14 months pay), representing her eight (8) months separation pay and six (6) months backwages;42,138.46, as salary differential;2,475.00, as service incentive leave pay; and12,870.00 as 13thmonth pay, for three (3) years, or a total sum of129,555.46, plus ten percent attorneys fee.Complainants other claims including her prayer for damages are hereby denied for lack of concrete evidence.SO ORDERED.[9]GardenofMemoriesand Requio appealed the decision to the NLRC. In its December 29, 2000 Decision, the NLRC affirmed the ruling of the LA, stating that Requio had no substantial capital or investments in the form of tools, equipment, machineries, and work premises, among others, for her to qualify as an independent contractor. It declared the dismissal of Cruz illegal reasoning out that there could be no abandonment of work on her part sinceGardenofMemoriesand Requio failed to prove that there was a deliberate and unjustified refusal on the part of the employee to go back to work and resume her employment.GardenofMemoriesmoved for a reconsideration of the NLRC decision but it was denied for lack of merit.[10]Consequently,GardenofMemoriesand Requio filed before the CA a petition for certiorari under Rule 65 of the Rules of Court. In itsJune 11, 2003Decision, the CA dismissed the petition and affirmed the NLRC decision. Hence, this petition, where they asserted that:The Public Respondents National Labor Relations Commission and Court of Appeals committed serious error, gravely abused their discretion and acted in excess of jurisdiction when they failed to consider the provisions of Section 6 (d) of Department Order No. 10, Series of 1997, by the Department of Labor and Employment, and then rendered their respective erroneous rulings that:IPETITIONER PAULINA REQUIO IS ENGAGED IN LABOR-ONLY CONTRACTING.IITHERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN RESPONDENT CRUZ ANDPETITIONERGARDENOF MEMORIES.IIIRESPONDENT HILARIA CRUZ DID NOT ABANDON HER WORK.IVTHERE IS [NO] BASIS IN GRANTING THE MONETARY AWARDS IN FAVOR OF THE RESPONDENT CRUZ DESPITE THE ABSENCE OF A CLEAR PRONOUNCEMENT REGARDING THE LEGALITY OR ILLEGALITY OF HER DISMISSAL.[11]The petitioners aver that Requio is the employer of Cruz as she(Requio)is a legitimate independent contractor providing maintenance work in the memorial park such as sweeping, weeding and watering of the lawns. They insist that there was no employer-employee relationship betweenGardenofMemoriesand Cruz. They claim that there was a service contract betweenGardenofMemoriesand Requio for the latter to provide maintenance work for the former and that the power of control, the most important element in determining the presence of such a relationship was missing. Furthermore,GardenofMemoriesalleges that it did not participate in the selection or dismissal of Requios employees.As to the issue of dismissal, the petitioners denied the same and insist that Cruz willfully and actually abandoned her work. They argue that Cruzs utterancesHINDI KO KAILANGAN ANG TRABAHOandHINDI KO KAILANGAN MAGTRABAHO AT HINDI KO KAILANGAN MAKI-USAP KAY PAULINA REQUIO,manifested her belligerence and disinterest in her work and that her unexplained absences later only showed that she had no intention of returning to work.The Court finds no merit in the petition.At the outset, it must be stressed that the jurisdiction of this Court in a petition for review oncertiorariunder Rule 45 of the Rules of Court is limited to reviewing errors of law, not of fact. This is in line with the well-entrenched doctrine that the Court is not a trier of facts, and this is strictly adhered to in labor cases.[12]Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence. Particularly when passed upon and upheld by the CA, they are binding and conclusive upon the Court and will not normally be disturbed.[13]This is because it is not the function of this Court to analyze or weigh all over again the evidence already considered in the proceedings below; or reevaluate the credibility of witnesses; or substitute the findings of fact of an administrative tribunal which has expertise in its special field.[14]In the present case, the LA, the NLRC, and the CA are one in declaring that petitioner Requio was not a legitimate contractor. Echoing the decision of the LA and the NLRC, the CA reasoned out that Requio was not a licensed contractor and had no substantial capital or investment in the form of tool, equipment and work premises, among others.Section 106 of the Labor Code on contracting and subcontracting provides:Article 106. Contractor or subcontractor.- Whenever, an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor shall be paid in accordance with the provisions of this Code.In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.[Underscoring provided]In the same vein, Sections 8 and 9, DOLE Department Order No. 10, Series of 1997, state that:Sec. 8.Job contracting. There is job contracting permissible under the Code if the following conditions are met:(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control anddirectionofhisemployerorprincipalinallmatters connected with the performance of the work except as to the results thereof; and(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.Sec. 9.Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:(1)Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and(2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.On the matter of labor-only contracting, Section 5 of Rule VIII-A of the Omnibus Rules Implementing the Labor Code, provides:Section 5. Prohibition against labor-only contracting.Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:i)Thecontractor 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 related to the main business of the principal, orii)The contractor does not exercise the right to control over the performance of the work of the contractual employee.X x x xThus, in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.[15]On the other hand, there is labor-only contracting where: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer.[16]The Court finds no compelling reason to deviate from the findings of the tribunals below.Both the capitalization requirement and the power of control on the part of Requio are wanting.Generally, the presumption is that the contractor is a labor-only contracting unless such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the like.[17]In the present case, thoughGardenofMemoriesis not the contractor, it has the burden of proving that Requio has sufficient capital or investment since it is claiming the supposed status of Requio as independent contractor.[18]GardenofMemories, however, failed to adduce evidence purporting to show that Requio had sufficient capitalization. Neither did it show that she invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the completion of the service contract.Furthermore, Requio was not a licensed contractor. Her explanation that her business was a mere livelihood programakinto a cottage industry provided by Garden of Memories as part of its contribution to the upliftment of the underprivileged residing near the memorial park proves that her capital investment was not substantial. Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries, and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.[19]Obviously, Requio is a labor-only contractor.Another determinant factor that classifies petitioner Requio as a labor-only contractor was her failure to exercise the right to control the performance of the work of Cruz. This can be gleaned from the Service Contract Agreement[20]betweenGardenofMemoriesand Requio, to wit:x x x xNOW THEREFORE, premises considered, the parties hereto have hereunto agreed on the following terms and conditions:1.That the Contractor shall undertake the maintenance of the above-mentioned works in strict compliance with and subject to all the requirements and standards of GMMPLPI.2.Likewise, the Contractor shall perform all other works that may from time to time be designated by GMMPLPI thru its authorized representatives, which work is similar in nature to the responsibilities of a regular employee with a similar function.3.The contract price for the labor to be furnished or the service to be rendered shall be THIRTY-FIVE THOUSAND (35,000.00) PESOS per calendar month, payable as follows:(a)Eight Thousand Seven Hundred Fifty Thousand(8,750.00) Pesos payable on every 7th, 15th, 23rdand 30thof the month.4.The period of this Contract shall be for Three (3) months from Feb 1, April 30, 1998and renewable at the option of the Management.5.It is expressly recognized that this contract was forged for the purpose of supplying the necessary maintenance work and in no way shall the same be interpreted to have created an employer-employee relationship.Xxxx [Underscoring supplied]The requirement of the law in determining the existence of independent contractorship is that the contractor should undertake the work on his own account, under his own responsibility, according to his own manner and method, free from the control and direction of the employer except as to the results thereof.[21]In this case, however, the Service Contract Agreement clearly indicates that Requio has no discretion to determine the means and manner by which the work is performed. Rather, the work should be in strict compliance with, and subject to, all requirements and standards ofGardenofMemories.Under these circumstances, there is no doubt that Requio is engaged in labor-only contracting, and is considered merely an agent ofGardenofMemories. As such, the workers she supplies should be considered as employees ofGardenofMemories. Consequently, the latter, as principal employer, is responsible to the employees of the labor-only contractor as if such employees have been directly employed by it.[22]Notably, Cruz was hired as a utility worker tasked to clean, sweep and water the lawn of the memorial park. She performed activities which were necessary or desirable to its principal trade or business.Thus, she was aregular employee ofGardenofMemoriesand cannot be dismissed except for just and authorized causes.[23]Moreover, the Court agrees with the findings of the tribunals below that respondent Cruz did not abandon her work but was illegally dismissed.As the employer,GardenofMemorieshas the burden of proof to show the employee's deliberate and unjustified refusal to resume his employment without any intention of returning.[24]For abandonment to exist, two factors must be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second element as the more determinative factor being manifested by some overt acts.[25]It has been said that abandonment of position cannot be lightly inferred, much less legally presumed from certain equivocal acts.[26]Mere absence is not sufficient.[27]In this case, no such intention to abandon her work can be discerned from the actuations of Cruz. Neither were there overt acts which could be considered manifestations of her desire to truly abandon her work. On the contrary, her reporting to the personnel manager that she had been replaced and the immediate filing of the complaint before the DOLE demonstrated a desire on her part to continue her employment withGardenofMemories. As correctly pointed out by the CA,the filing of the case for illegal dismissal negated the allegation of abandonment.WHEREFORE, the petition isDENIED. TheJune 11, 2003Decision of the Court of Appeals in CA-G.R. SP No. 64569 and itsOctober 16, 2003Resolution are herebyAFFIRMED.

GOYA, INC.,Petitioner,v.GOYA, INC. EMPLOYEES UNION-FFW,Respondent.D E C I S I O NPERALTA,J.:This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse and set aside the June 16, 2005 Decision1and October 12, 2005 Resolution2of the Court of Appeals in CA-G.R. SP No. 87335, which sustained the October 26, 2004 Decision3of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:cralawlibraryWHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair labor practice in engaging the services of PESO.The company is, however, directed to observe and comply with its commitment as it pertains to the hiring of casual employees when necessitated by business circumstances.4?r?l1The facts are simple and appear to be undisputed.Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged in the manufacture, importation, and wholesale of top quality food products, hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional services in its factory in Parang, Marikina City. This prompted respondent Goya, Inc. Employees UnionFFW (Union) to request for a grievance conference on the ground that the contractual workers do not belong to the categories of employees stipulated in the existing Collective Bargaining Agreement (CBA).5When the matter remained unresolved, the grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration.During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement was no longer possible; hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence."6Both parties thereafter filed their respective pleadings.The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged have been assigned to work in positions previously handled by regular workers and Union members, in effect violating Section 4, Article I of the CBA, which provides for three categories of employees in the Company, to wit:cralawlibrarySection 4. Categories of Employees. The parties agree on the following categories of employees:cralawlibrary(a) Probationary Employee. One hired to occupy a regular rank-and-file position in the Company and is serving a probationary period. If the probationary employee is hired or comes from outside the Company (non-Goya, Inc. employee), he shall be required to undergo a probationary period of six (6) months, which period, in the sole judgment of management, may be shortened if the employee has already acquired the knowledge or skills required of the job. If the employee is hired from the casual pool and has worked in the same position at any time during the past two (2) years, the probationary period shall be three (3) months.(b) Regular Employee. An employee who has satisfactorily completed his probationary period and automatically granted regular employment status in the Company.(c) Casual Employee, One hired by the Company to perform occasional or seasonal work directly connected with the regular operations of the Company, or one hired for specific projects of limited duration not connected directly with the regular operations of the Company.It was averred that the categories of employees had been a part of the CBA since the 1970s and that due to this provision, a pool of casual employees had been maintained by the Company from which it hired workers who then became regular workers when urgently necessary to employ them for more than a year. Likewise, the Company sometimes hired probationary employees who also later became regular workers after passing the probationary period. With the hiring of contractual employees, the Union contended that it would no longer have probationary and casual employees from which it could obtain additional Union members; thus, rendering inutile Section 1, Article III (Union Security) of the CBA, which states:cralawlibrarySection 1. Condition of Employment. As a condition of continued employment in the Company, all regular rank-and-file employees shall remain members of the Union in good standing and that new employees covered by the appropriate bargaining unit shall automatically become regular employees of the Company and shall remain members of the Union in good standing as a condition of continued employment.The Union moreover advanced that sustaining the Companys position would easily weaken and ultimately destroy the former with the latters resort to retrenchment and/or retirement of employees and not filling up the vacant regular positions through the hiring of contractual workers from PESO, and that a possible scenario could also be created by the Company wherein it could "import" workers from PESO during an actual strike.In countering the Unions allegations, the Company argued that: (a) the law expressly allows contracting and subcontracting arrangements through Department of Labor and Employment (DOLE) Order No. 18-02; (b) the engagement of contractual employees did not, in any way, prejudice the Union, since not a single employee was terminated and neither did it result in a reduction of working hours nor a reduction or splitting of the bargaining unit; and (c) Section 4, Article I of the CBA merely provides for the definition of the categories of employees and does not put a limitation on the Companys right to engage the services of job contractors or its management prerogative to address temporary/occasional needs in its operation.On October 26, 2004, VA Laguesma dismissed the Unions charge of ULP for being purely speculative and for lacking in factual basis, but the Company was directed to observe and comply with its commitment under the CBA. The VA opined:cralawlibraryWe examined the CBA provision Section 4, Article I of the CBAallegedly violated by the Company and indeed the agreement prescribes three (3) categories of employees in the Company and provides for the definition, functions and duties of each. Material to the case at hand is the definition as regards the functions of a casual employee described as follows:cralawlibraryCasual Employee One hired by the COMPANY to perform occasional or seasonal work directly connected with the regular operations of the COMPANY, or one hired for specific projects of limited duration not connected directly with the regular operations of the COMPANY.While the foregoing agreement between the parties did eliminate managements prerogative of outsourcing parts of its operations, it serves as a limitation on such prerogative particularly if it involves functions or duties specified under the aforequoted agreement. It is clear that the parties agreed that in the event that the Company needs to engage the services of additional workers who will perform "occasional or seasonal work directly connected with the regular operations of the COMPANY," or "specific projects of limited duration not connected directly with the regular operations of the COMPANY", the Company can hire casual employees which is akin to contractual employees. If we note the Companys own declaration that PESO was engaged to perform "temporary or occasional services" (See the Companys Position Paper, at p. 1), then it should have directly hired the services of casual employees rather than do it through PESO.It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the CBA provision in question. It must, however, be stressed that the right of management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA. Given the foregoing, the Companys engagement of PESO for the given purpose is indubitably a violation of the CBA.7?r?l1While the Union moved for partial reconsideration of the VA Decision,8the Company immediately filed a petition for review9before the Court of Appeals (CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees when necessitated by business circumstances. Professing that such order was not covered by the sole issue submitted for voluntary arbitration, the Company assigned the following errors:cralawlibraryTHE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS EXPRESSLY GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.10?r?l1THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.11?r?l1On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the controversy, it held:cralawlibraryThis Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that "the engagement of PESO is not in keeping with the intent and spirit of the CBA." The said ruling is interrelated and intertwined with the sole issue to be resolved that is, "Whether or not the Company is guilty of unfair labor practice in engaging the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence." Both issues concern the engagement of PESO by the Company which is perceived as a violation of the CBA and which constitutes as unfair labor practice on the part of the Company. This is easily discernible in the decision of the Hon. Voluntary Arbitrator when it held:cralawlibraryx x x x While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does not constitute unfair labor practice as it (sic) not characterized under the law as a gross violation of the CBA. Violations of a CBA, except those which are gross in character, shall no longer be treated as unfair labor practice. Gross violations of a CBA means flagrant and/or malicious refusal to comply with the economic provisions of such agreement. x x xAnent the second assigned error, the Company contends that the Hon. Voluntary Arbitrator erred in declaring that the engagement of PESO is not in keeping with the intent and spirit of the CBA. The Company justified its engagement of contractual employees through PESO as a management prerogative, which is not prohibited by law. Also, it further alleged that no provision under the CBA limits or prohibits its right to contract out certain services in the exercise of management prerogatives.Germane to the resolution of the above issue is the provision in their CBA with respect to the categories of the employees:cralawlibraryx x xA careful reading of the above-enumerated categories of employees reveals that the PESO contractual employees do not fall within the enumerated categories of employees stated in the CBA of the parties. Following the said categories, the Company should have observed and complied with the provision of their CBA. Since the Company had admitted that it engaged the services of PESO to perform temporary or occasional services which is akin to those performed by casual employees, the Company should have tapped the services of casual employees instead of engaging PESO.In justifying its act, the Company posits that its engagement of PESO was a management prerogative. It bears stressing that a management prerogative refers to the right of the employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work, presupposing the existence of employer-employee relationship. On the basis of the foregoing definition, the Companys engagement of PESO was indeed a management prerogative. This is in consonance with the pronouncement of the Supreme Court in the case of Manila Electric Company v. Quisumbing where it ruled that contracting out of services is an exercise of business judgment or management prerogative.This management prerogative of contracting out services, however, is not without limitation. In contracting out services, the management must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious arbitrary actions. In the case at bench, the CBA of the parties has already provided for the categories of the employees in the Companysestablishment. These categories of employees particularly with respect to casual employees serve as limitation to the Companys prerogative to outsource parts of its operations especially when hiring contractual employees. As stated earlier, the work to be performed by PESO was similar to that of the casual employees. With the provision on casual employees, the hiring of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA. (Citations omitted)12?r?l1The Company moved to reconsider the CA Decision,13but it was denied;14hence, this petition.Incidentally, on July 16, 2009, the Company filed a Manifestation15informing this Court that its stockholders and directors unanimously voted to shorten the Companys corporate existence only until June 30, 2006, and that the three-year period allowed by law for liquidation of the Companys affairs already expired on June 30, 2009. Referring to Gelano v. Court of Appeals,16Public Interest Center, Inc. v. Elma,17and Atienza v. Villarosa,18it urged Us, however, to still resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on a matter not covered by the issue submitted for arbitration.Even if this Court would brush aside technicality by ignoring the supervening event that renders this case moot and academic19due to the permanent cessation of the Companys business operation on June 30, 2009, the arguments raised in this petition still fail to convince Us.We confirm that the VA ruled on a matter that is covered by the sole issue submitted for voluntary arbitration. Resultantly, the CA did not commit serious error when it sustained the ruling that the hiring of contractual employees from PESO was not in keeping with the intent and spirit of the CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA, "interrelated and intertwined with," the sole issue submitted for resolution by the parties. This being said, the Companys invocation of Sections 4 and 5, Rule IV20and Section 5, Rule VI21of the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued by the NCMB is plainly out of order.Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v. Saornido.22In Ludo, the company was engaged in the manufacture of coconut oil, corn starch, glucose and related products. In the course of its business operations, it engaged the arrastre services of CLAS for the loading and unloading of its finished products at the wharf. The arrastre workers deployed by CLAS to perform the services needed were subsequently hired, on different dates, as Ludos regular rank-and-file employees. Thereafter, said employees joined LEU, which acted as the exclusive bargaining agent of the rank-and-file employees. When LEU entered into a CBA with Ludo, providing for certain benefits to the employees (the amount of which vary according to the length of service rendered), it requested to include in its members period of service the time during which they rendered arrastre services so that they could get higher benefits. The matter was submitted for voluntary arbitration when Ludo failed to act. Per submission agreement executed by both parties, the sole issue for resolution was the date of regularization of the workers. The VA Decision ruled that: (1) the subject employees were engaged in activities necessary and desirable to the business of Ludo, and (2) CLAS is a labor-only contractor of Ludo. It then disposed as follows: (a) the complainants were considered regular employees six months from the first day of service at CLAS; (b) the complainants, being entitled to the CBA benefits during the regular employment, were awarded sick leave, vacation leave, and annual wage and salary increases during such period; (c) respondents shall pay attorneys fees of 10% of the total award; and (d) an interest of 12% per annum or 1% per month shall be imposed on the award from the date of promulgation until fully paid. The VA added that all separation and/or retirement benefits shall be construed from the date of regularization subject only to the appropriate government laws and other social legislation. Ludo filed a motion for reconsideration, but the VA denied it. On appeal, the CA affirmed in toto the assailed decision; hence, a petition was brought before this Court raising the issue, among others, of whether a voluntary arbitrator can award benefits not claimed in the submission agreement. In denying the petition, We ruled:cralawlibraryGenerally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of disputes. The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus:cralawlibraryIn general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonably assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without back pay.In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his authority as embracing not merely the determination of the abstract question of whether or not a performance bonus was to be granted but also, in the affirmative case, the amount thereof.By the same token, the issue of regularization should be viewed as two-tiered issue. While the submission agreement mentioned only the determination of the date or regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was created speedy labor justice. It bears stressing that the underlying reason why this case arose is to settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To require them to file another action for payment of such benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor.23?r?l1Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said case reaffirms the plenary jurisdiction and authority of the voluntary arbitrator to interpret the CBA and to determine the scope of his/her own authority. Subject to judicial review, the leeway of authority as well as adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration speedy labor justice. In this case, a complete and final adjudication of the dispute between the parties necessarily called for the resolution of the related and incidental issue of whether the Company still violated the CBA but without being guilty of ULP as, needless to state, ULP is committed only if there is gross violation of the agreement.Lastly, the Company kept on harping that both the VA and the CA conceded that its engagement of contractual workers from PESO was a valid exercise of management prerogative. It is confused. To emphasize, declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Companys act of contracting out/outsourcing is within the purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and the Union delimit the free exercise of management prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the right of the management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA," while the CA held that "this management prerogative of contracting out services, however, is not without limitation. x x x These categories of employees particularly with respect to casual employees serve as limitation to the Companys prerogative to outsource parts of its operations especially when hiring contractual employees."???r?bl???r??ll??l?br?rA collective bargaining agreement is the law between the parties:cralawlibraryIt is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:cralawlibraryA collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control. x x x.24?r?l1In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the Union must be read in conjunction with its Section 1, Article III (on union security). Both are interconnected and must be given full force and effect. Also, these provisions are clear and unambiguous. The terms are explicit and the language of the CBA is not susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective bargaining agreement or the general principles of fair play and justice25Evidently, this case has one of the restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation Employees Union-PTGWO v. Bersamira,26De Ocampo v. NLRC,27Asian Alcohol Corporation v. NLRC,28and Serrano v. NLRC29cited by the Company. To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated by the express policy of the law.30?r?l1WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005 Resolution of the Court of Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are hereby AFFIRMED.JEROME D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRI-LAS MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITOGR No. 178827March 24, 2009FACTS:Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work of nurses under her.The Labor Arbiter (LA) declared petitioners to be regular employees of Shangri-la, noting that the petitioners usually perform work which is necessary and desirable to Shangri-las business, and thus ordered Shangri-la to grant them the wages and benefits due them as regular employees from the time their services were engaged.Upon appeal, the NLRC declared that no employer-employee relationship existed between Shangri-la and petitioners. It ruled that contrary to the finding of the LA, even if Art. 280 of the Labor Code states that if a worker performs work usually necessary or desirable in the business of an employer, he cannot be automatically deemed a regular employee, and that the Memorandum of Agreement between the respondent and the respondent doctor amply shows that respondent doctor was in fact engaged by Shangri-la on retainer basis, under which she could hire her own nurses and other clinic personnel.The Court of Appeals (CA) affirmed the NLRC decision, concluding that all aspects of employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la.ISSUES:1. Whether or not Article 157 of the Labor Code make it mandatory for covered establishment to employ health personnel; and2. Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.HELD:The Court holds that, contrary to petitioners postulation, Art. 157 does not require the engagement of full-time nurses as regular employees of a company employing not less than 50 workers. Thus, the Article provides:ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of:(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article;(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and(c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight (8) hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its employees, not necessarily to hire or employ a service provider. As held in Philippine Global Communications vs. De Vera:x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer to retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2)hours.Theterm full-time in Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read alongside Art. 280 in order to vest employer-employee relationship on the employer and the person so engaged. So De Vera teaches:x x For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. x x xThe phrase services of a full-time registered nurse should thus be taken to refer to the kind of services that the nurse will render in the companys premises and to its employees, not the manner of his engagement.The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing and payment of the contractors workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.On the other hand, existence of an employer- employee relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (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.Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-las principal business operation of hotels and restaurants.As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employees last drawn salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS premium as well as their wages if they were not indeed her employees.With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, Clinic Policies and Employee Manual claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-las regular workers, governs how they perform their respective tasks and responsibilities.In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners employer.San Miguel Corp. vs.Semillanoet al., [GR No. 164257, July 5, 2010]Facts:It appears that AMPCO hired the services of Vicente et al., [VicenteSemillano, Nelson Mondejar, Jovito Remada and Alex Hawod,respondents herein] on different dates in December [of 1991 and] 1994. All of them were assigned to work in SMC's Bottling Plant situated atBrgy. Granada Sta. Fe, Bacolod City, in order to perform the following tasks: segregating bottles, removing dirt therefrom, filing them indesignated places, loading and unloading the bottles to and from the delivery trucks, and performing other tasks as may be ordered by SMC'sofficers. [They] were required to work inside thepremises of SMC using [SMC's] equipment.[They] rendered service with SMC for more than6months.Subsequently, SMC entered into a Contract of Services with AMPCO designating the latter as the employer of Vicente, et al., As a result,Vicente et al., failed to claim the rights and benefits ordinarily accorded a regular employee of SMC. In fact, they were not paid their 13th monthpay. On June 6, 1995, they were not allowed toenter the premises of SMC. The projectmanager of AMPCO, Merlyn Polidario, told them to waitfor further instructions from the SMC's supervisor. Vicente et al., waited for one month, unfortunately, they never heard a word fromSMC.TCcIaAConsequently, Vicente et al., as complainants, filed on July 17, 1995 a COMPLAINT FOR ILLEGAL DISMISSAL with the Labor Arbiteragainst AMPCO, Merlyn V. Polidario, SMC and Rufino I. Yatar [SMC PlantManager].Issue:Whether or not AMPCO is a legitimate job contractor.Ruling:Section 5 of Department Order No. 18-02 (Series of 2002) of the Rules Implementing Articles 106 to 109 of the Labor Code further providesthat:"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations,tools, equipment, implements, machineries and work premises,actually and directly usedby the contractor orsubcontractor in the performance or completion of thejob work or service contracted out.(emphasis supplied)The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers areperformed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.The test to determine the existence of independent contractorship is whether or not the one claiming to be an independent contractor hascontracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results ofthe work.In the case at bench, petitioner faults the CA for holding that the respondents were under the control of petitioner whenever they performed thetask of loading in the delivery trucks and unloading from them. It, however, fails to show how AMPCO took "entire charge, control andsupervision of the work and service agreed upon." AMPCO's Comment on the Petition is likewise utterly silent on this point. Notably, bothpetitioner and AMPCO chose to ignore the uniform finding of the LA, NLRC (in its original decision) and the CA that one of the assigned jobs ofrespondents was to "perform other acts as may be ordered by SMC's officers." Significantly, AMPCO, opted not to challenge the originaldecision of the NLRC that found it a mere labor-only contractor.SCcHIEMoreover, the Court is not convinced that AMPCO wielded "exclusive discretion in the discharge" of respondents.Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so.The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannotdictate, by a declaration in a contract, the character of AMPCO's business, that is, whether as labor-only contractor, or job contractorEmmanuel Babas et. al. v Lorenzo Shipping Corporation (G.R. No. 186091)

FACTS:Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry. LSC entered into aGeneral Equipment Maintenance Repair and Management Services Agreement(Agreement) with Best Manpower Services, Inc. (BMSI).Under theAgreement, BMSI undertook to provide maintenance and repair services to LSCs container vans, heavy equipment, trailer chassis, and generator sets.BMSI further undertook to provide checkers to inspect all containers received for loading to and/or unloading from its vessels.

Simultaneous with the execution of theAgreement, LSC leased its equipment, tools, and tractors to BMSI.The period of lease was coterminous with theAgreement.

BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics.

In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI.On October 1, 2003, LSC terminated theAgreement, effective October 31, 2003.Consequently, petitioners lost their employment.

BMSI asserted that it is an independent contractor.It averred that it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job.LSC averred that petitioners were employees of BMSI and were assigned to LSC by virtue of theAgreement.BMSI is an independent job contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. TheAgreementbetween LSC and BMSI constituted legitimate job contracting.Thus, petitioners were employees of BMSI and not of LSC.

The Labor Arbiter dismissed petitioners complaint on the ground that petitioners were employees of BMSI.It was BMSI which hired petitioners, paid their wages, and exercised control over them.The NLRC reversed the Labor Arbiter

Issue: Whether or not respondent was engaged in labor-only contracting.

Held:Yes. InDe Los Santos v. NLRC, the character of the business,i.e., whether as labor-only contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business.

The Court has observed that:First, petitioners worked at LSCs premises, and nowhere else. Other than the provisions of theAgreement, there was no showing that it was BMSI which established petitioners working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work.

Second, LSC was unable to present proof that BMSI had substantial capital.There was no proof pertaining to the contractors capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render.What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC.

Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSCs business.

Lastly, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.

The CA erred in considering BMSIs Certificate of Registration as sufficient proof that it is an independent contractor.Jurisprudence states that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractorfrom arising.

*LSC is ordered to reinstate the petitioners to their former positions. Petitioners are declared as regular employees of LSC.

NOTES:Labor-only contracting -a prohibited act-is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal.-Elements:(a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility(b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.[20]

Permissible job contracting or subcontracting an arrangement whereby a principal agrees to put out or farm out with the contractoror subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal.

Conditions:(a) The contractorcarries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof;

(b) The contractorhas substantial capital or investment; and

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

NORKIS TRADING CORPORATION,Petitioner,vs.JOAQUIN BUENA VISTA, HENRY FABROA, RICARDO CAPE, BERTULDO TULOD, WILLYDONDOY ANO and GLEN VILLARASA,Respondents.G.R.No.182018October10,2012The respondents were hired and worked by/for Norkis Trading as skilled workers assigned inthe operation of industrial and welding machines owned and used by Norkis Trading for itsbusiness, they were not treated as regular employees by Norkis Trading. Instead, they wereregarded by Norkis Trading as members of PASAKA, a cooperative, and which was deemed anindependent contractor that merely deployed the respondents to render services for NorkisTrading.The respondents, believing that they were regular employees of Norkis Trading, filedon June 9, 1999 with the DOLE a complaint against Norkis Trading and PASAKA for labor-onlycontracting and non-payment of minimum wageand overtime pay.The filing of thecomplaintfor labor-only contracting allegedly led to the suspension of the respondentsmembership withPASAKA.On October 13,1999, the respondents wereto report back towork but theywereinformed by PASAKA that they would be transferred to Norkis Tradings sister company, PortaCoeli Industrial Corporation (Porta Coeli).The respondents opposed the transfer as it would allegedly result in a change of employers,from Norkis Trading to Porta Coeli. The respondents also believed that the transfer would resultin a demotion since from being skilled workers in Norkis Trading, they would be reduced tobeing utility workers.These circumstances made the respondents amend their complaint forillegal suspension, to include the charges of unfair labor practice, illegal dismissal, damages andattorneysfees.ISSUE: Whether the respondents were illegally dismissed by Norkis TradingHELD: YES.Where an entity is declared to be a labor-only contractor, the employees supplied by saidcontractor to the principal employer become regular employees of the latter. Having gainedregular status, the employees are entitled to security of tenure and can only be dismissed forjustorauthorizedcausesandaftertheyhadbeenaffordeddueprocess. Terminationofemployment without just or authorized cause and without observing procedural due process isillegal. Considering, that Porta Coeli is an entity separate and distinct from Norkis Trading, therespondents employment with Norkis Trading was necessarily severed by the change in workassignment.

THIRD DIVISION

[G.R. No. 196426 : August 15, 2011]

MARTICIO SEMBLANTE AND DUBRICK PILAR, PETITIONERS, VS. COURT OF APPEALS, 19THDIVISION, NOW SPECIAL FORMER 19THDIVISION, GALLERA DE MANDAUE / SPOUSES VICENTE AND MARIA LUISA LOOT, RESPONDENTS.

D E C I S I O N

VELASCO JR.,J.:

Before Us is a Petition for Review on Certiorari under Rule 45, assailing and seeking to set aside the Decision[1]and Resolution[2]dated May 29, 2009 and February 23, 2010, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 03328. The CA affirmed the October 18, 2006 Resolution[3]of the National Labor Relations Commission (NLRC), Fourth Division (now Seventh Division), in NLRC Case No. V-000673-2004.

Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by respondents-spouses Vicente and Maria Luisa Loot, the owners ofGallera de Mandaue(the cockpit), as the officialmasiadorandsentenciador, respectively, of the cockpit sometime in 1993.

As themasiador, Semblante calls and takes the bets from the gamecock owners and other bettors and orders the start of the cockfight. He also distributes the winnings after deducting thearriba, or the commission for the cockpit. Meanwhile, as thesentenciador, Pilar oversees the proper gaffing of fighting cocks, determines the fighting cocks physical condition and capabilities to continue the cockfight, and eventually declares the result of the cockfight.[4]

For their services asmasiadorandsentenciador, Semblante receives PhP 2,000 per week or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had both been issued employees identification cards[5]that they wear every time they report for duty. They alleged never having incurred any infraction and/or violation of the cockpit rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents.

In answer, respondents denied that petitioners were their employees and alleged that they were associates of respondents independent contractor, Tomas Vega. Respondents claimed that petitioners have no regular working time or day and they are free to decide for themselves whether to report for work or not on any cockfighting day. In times when there are few cockfights inGallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so respondents assert, were only issued identification cards to indicate that they were free from the normal entrance fee and to differentiate them from the general public.[6]

In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of respondents as they performed work that was necessary and indispensable to the usual trade or business of respondents for a number of years. The Labor Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay petitioners their backwages and separation pay.[7]

Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And within the 10-day appeal period, he filed the respondents appeal with the NLRC on September 24, 2004, but without posting a cash or surety bond equivalent to the monetary award granted by the Labor Arbiter.[8]

It was only on October 11, 2004 that respondents filed an appeal bond dated October 6, 2004. Hence, in a Resolution[9]dated August 25, 2005, the NLRC denied the appeal for its non-perfection.

Subsequently, however, the NLRC, acting on respondents Motion for Reconsideration, reversed its Resolution on the postulate that their appeal was meritorious and the filing of an appeal bond, albeit belated, is a substantial compliance with the rules. The NLRC held in its Resolution of October 18, 2006 that there was no employer-employee relationship between petitioners and respondents, respondents having no part in the selection and engagement of petitioners, and that no separate individual contract with respondents was ever executed by petitioners.[10]

Following the denial by the NLRC of their Motion for Reconsideration, per Resolution dated January 12, 2007, petitioners went to the CA on a petition for certiorari. In support of their petition, petitioners argued that the NLRC gravely abused its discretion in entertaining an appeal that was not perfected in the first place. On the other hand, respondents argued that the NLRC did not commit grave abuse of discretion, since they eventually posted their appeal bond and that their appeal was so meritorious warranting the relaxation of the rules in the interest of justice.[11]

In its Decision dated May 29, 2009, the appellate court found for respondents, noting that referees and bet-takers in a cockfight need to have the kind of expertise that is characteristic of the game to interpret messa