Aliviado v. Procter & Gamble Philippines, Inc., GR No.

160506,9 March 2010 (Del Castillo)

Facts: P&G is principally engaged in the manufacture and production of different consumer and
health products, which it sells on a wholesale basis to various supermarkets and distributors. 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.
Aliviado and other petitioners worked as P&Gs merchandisers, and individually signed
employment contracts with either Promm-Gem or SAPS for periods of more or less five months
at a time. They were assigned at different outlets, supermarkets, and stores where they handled
all the products of P&G, and received their wages from Promm-Gem or SAPS. Promm-Gem and
SAPS imposed disciplinary measures on erring merchandisers.
In December 1991, petitioners filed a complaint against P&G for regularization, service incentive
leave pay, and other benefits, with damages. The LA dismissed the case for lack of merit and
ruled that there was no employer-employee relationship between the petitioners and P&G. He
found that the selection and engagement of the petitioners, the payment of their wages, the power
of dismissal and control with respect to the means and methods by which their work was
accomplished, were all done by Promm-Gem/SAPS. He further found that Promm-Gem and
SAPS were legitimate independent job contractors. The NLRC and the CA subsequently affirmed
the LAs findings.

Issue: W/N Promm-Gem and SAPS are legitimate job contractors.

Ruling: Promm-Gem is a legitimate job contractor, while SAPS is a labor-only contractor.
Therefore, the employees of SAPS are the employees of P&G, SAPS being merely the agent of
P&G.
Promm-Gem has shown evidence that it has substantial investment which relates to the work to
be performed, such as authorized stock of P1M and a paid-in capital, or capital available for
operations, of P500k; it has long-term assets worth over P400k and current assets worth over
P700k; it maintained its own warehouse and office space with a floor area of 870 square meters;
it had under its name three registered vehicles which were used for its promotional/merchandising
business; and it has clients aside from P&G. Promm-Gem also supplied its complainant-workers
with the relevant materials, such as markers, tapes, liners, and cutters, necessary for them to
perform their work. Promm-Gem also issued them uniforms. Also, Promm-Gem already
considered the complainants working under it as its regular, not merely contractual or project,
employees. This negates, on the part of Promm-Gem, bad faith and intent to circumvent labor
laws which factors have often been tipping points that lead the Court to strike down the
employment practice or agreement concerned as contrary to public policy, morals, good customs,
or public order.
On the other hand, SAPS Articles of Incorporation shows that it has a paid-in capital of only little
over P31k. There is no other evidence presented to show how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment, or other
assets. It failed to show that its paid-in capital is sufficient for its 6-month contract period with P&G
to generate its needed revenue to sustain its operations independently. Instead, it could be readily
seen that its capital is not even sufficient for one months payroll, which is pegged at little over
P44k. Furthermore, petitioners have been charged with themerchandising and promotion of the
products of P&G, an activity that has already been considered by the Court as doubtlessly directly
related to the manufacturing business, which is the principal business of P&G. Considering that
SAPS has no substantial capital or investment and the workers it recruited are performing
activities which are directly related to the principal business of P&G, SAPS is engaged in labor-
only contracting.
Petition granted. Labor laws expressly prohibit labor-only contracting. To prevent its
circumvention, the Labor Code establishes an employer-employee relationship between the
employer and the employees of the labor-only contractor. There is labor-only contracting when
the contractor or sub-contractor 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)The contractor or
subcontractor does not have substantial capital or investment which relates to the job, work, or
service to be performed and the employees recruited, supplied, or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the
principal; or(ii)The contractor does not exercise the right to control over the performance of the
work of the contractual employee. Where labor-only contracting exists, the Labor Code itself
establishes an employer-employee relationship between the employer and the employees of the
labor-only contractor. The statute establishes this relationship for a comprehensive purpose: to
prevent a circumvention of labor laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only contractor as if
such employees had been directly employed by the principal employer. In termination cases,
the burden of proof rests upon the employer to show that the dismissal is for just and valid cause.

San Miguel Corp. vs. Semillano et al., [GR No. 164257, July 5, 2010]

Facts:
It appears that AMPCO hired the services of Vicente et al., [Vicente Semillano, 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 at Brgy. Granada
Sta. Fe, Bacolod City, in order to perform the following tasks: segregating bottles, removing dirt
therefrom, filing them in designated places, loading and unloading the bottles to and from the
delivery trucks, and performing other tasks as may be ordered by SMC's officers. [They] were
required to work inside the premises of SMC using [SMC's] equipment. [They] rendered service
with SMC for more than 6months.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 month pay. On June 6, 1995, they were not allowed to enter the premises of
SMC. The project manager 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 from SMC.
Consequently, Vicente et al., as complainants, filed on July 17, 1995 a COMPLAINT FOR
ILLEGAL DISMISSAL with the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and
Rufino I. Yatar [SMC Plant Manager].

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 provides that: "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.
(emphasis supplied) The "right to control" shall refer to the right reserved to the person for whom
the services of the contractual workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in reaching that end. The test to determine
the existence of independent contractorship is whether or not the one claiming to be an
independent contractor has contracted to do the work according to his own methods and without
being subject to the control of the employer, except only as to the results of the work. In the case
at bench, petitioner faults the CA for holding that the respondents were under the control of
petitioner whenever they performed the task of loading in the delivery trucks and unloading from
them. It, however, fails to show how AMPCO took "entire charge, control and supervision of the
work and service agreed upon." AMPCO's Comment on the Petition is likewise utterly silent on
this point. Notably, both petitioner 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 of respondents was to
"perform other acts as may be ordered by SMC's officers." Significantly, AMPCO, opted not to
challenge the original decision of the NLRC that found it a mere labor-only contractor. Moreover,
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
cannot dictate, by a declaration in a contract, the character of AMPCO's business, that is, whether
as labor-only contractor, or job contractor.

PAL vs NLRC 1998

Facts:
Private respondents (Ferdinand Pineda and Godofredo Cabling) are flight stewards of
the petitioner. Both were dismissed from the service for their alleged involvement in the April 3,
1993 currency smuggling in Hong Kong. One person in the name of Joseph Abaca was
intercepted at the airport carrying a bag containing 2.5 million pesos who allegedly found said
plastic bag at the Skybed section of arrival flight PR300/03 where private respondents served as
flight attendants. After having been implicated by Abaca in the incident before the respondents
disciplinary board, it is was Abaca himself who gave exculpating statements to the same board
and declared that the private respondents were not the owners of the said currencies. that just
as petitioners thought that they were already fully cleared of the charges, as they no longer
received any summons/notices on the intended additional hearings mandated by the
Disciplinary Board, that they were already fully cleared of the charges, as they no longer
received any summons/notices on the intended additional hearings mandated by the
Disciplinary Board, they were surprised to find out that they were terminated by PAL.
Aggrieved by said dismissal, private respondents filed with the NLRC a petition for
injunction praying that:
"I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting respondents
(petitioner herein) from effecting or enforcing the Decision dated Feb. 22, 1995, or to reinstate
petitioners temporarily while a hearing on the propriety of the issuance of a writ of preliminary
injunction is being undertaken;
"II. After hearing, a writ of preliminary mandatory injunction be issued ordering respondent to
reinstate petitioners to their former positions pending the hearing of this case, or, prohibiting
respondent from enforcing its Decision dated February 22,1995 while this case is pending
adjudication;
"III. After hearing, that the writ of preliminary injunction as to the reliefs sought for be made
permanent, that petitioners be awarded full backwages, moral damages of PHP 500,000.00
each and exemplary damages of PHP 500,000.00 each, attorneys fees equivalent to ten
percent of whatever amount is awarded, and the costs of suit."
The NLRC issued the writ of injunction. PAL moved for reconsideration on the ground
that has no jurisdiction to issue an injunction or restraining order since this may be issued only
under Article 218 of the Labor Code if the case involves or arises from labor disputes and
thereby divesting the labor arbiter of its original and exclusive jurisdiction over illegal dismissal
cases .

Issue: W/N the NLRC acted with grave abuse of discretion on issuing the writ of injunction
Held:
Yes.
In labor cases, Article 218 of the Labor Code empowers the NLRC- "(e) To enjoin or
restrain any actual or threatened commission of any or all prohibited or unlawful acts or to
require the performance of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or render ineffectual
any decision in favor of such party.
Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of
Procedure of the NLRC, pertinently provides as follows:
"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction or a restraining order
may be granted by the Commission through its divisions pursuant to the provisions of paragraph
(e) of Article 218 of the Labor Code, as amended, when it is established on the bases of the
sworn allegations in the petition that the acts complained of, involving or arising from any labor
dispute before the Commission, which, if not restrained or performed forthwith, may cause
grave or irreparable damage to any party or render ineffectual any decision in favor of such
party.
From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ
originates from "any labor dispute" upon application by a party thereof, which application if not
granted "may cause grave or irreparable damage to any party or render ineffectual any decision
in favor of such party."
 The term "labor dispute" is defined as "any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of employment regardless of
whether or not the disputants stand in the proximate relation of employers and employees."
The petition for injunction directly filed before the NLRC is in reality an action for
illegal dismissal.
This is clear from the allegations in the petition which prays for: reinstatement of private
respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As
such, the petition should have been filed with the labor arbiter who has the original and
exclusive jurisdiction to hear and decide the following cases involving all workers, whether
agricultural or non-agricultural:
(1) Unfair labor practice;
(2) Termination disputes;
(3) If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
(5) Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
(6) Except claims for employees compensation, social security, medicare and maternity
benefits, all other claims arising from employer-employee relations, including those of persons
in domestic or household service, involving an amount exceeding five thousand pesos (P
5,000.00), whether or not accompanied with a claim for reinstatement.
The jurisdiction conferred by the foregoing legal provision to the labor arbiter is both original
and exclusive, meaning, no other officer or tribunal can take cognizance of, hear and decide any
of the cases therein enumerated. The only exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to
submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code.
On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided
by labor arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of
the NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the
private respondents' petition for injunction which challenges the dismissal orders of petitioner.
Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its
divisions to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of
Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes.
SM: Quasi delicts; liability of Employer under A.2180, NCC
NAPOCOR vs. CA
GR# 119121, August 14, 1998

FACTS: NPCs 4 dump trucks left Marawi City for Iligan City when one of its trucks, RFT-9-6-
673, DRIVEN BY Ilumba figured in a head- on- collision with a Toyota Tamaraw. The incident
resulted in the death of 3 persons riding in the Toyota, as well as physical injuries to 17 other
passengers. PHESCO claimed that it was not the dump trucks owner and that they were owned
by NPC. IT further said that it was merely NPCs contractor with the main duty of supplying
workers and technicians for the latters projects. NPC, meantime, denied such liability and
countered that the driver of the dump truck was PHESCOs employee.
HELD: PHESCO was engaged in labor only contracting vis--vis NPC and as such, it is
considered merely as NPCs agent. In such cases, an ER-EE relationship between the
principal employer and the employees of the labor-only contractor is created.
Accordingly, the principal employer is responsible to the employees of the labor only
contractor as if such employees have been directly employed by the principal
employer. Since PHESCO is only a labor only contractor, the workers it supplied to NPC,
including the truck driver, should be considered as NPCs employees.

PAL vs NLRC 1998

Facts:
Private respondents (Ferdinand Pineda and Godofredo Cabling) are flight stewards of
the petitioner. Both were dismissed from the service for their alleged involvement in the April 3,
1993 currency smuggling in Hong Kong. One person in the name of Joseph Abaca was
intercepted at the airport carrying a bag containing 2.5 million pesos who allegedly found said
plastic bag at the Skybed section of arrival flight PR300/03 where private respondents served as
flight attendants. After having been implicated by Abaca in the incident before the respondents
disciplinary board, it is was Abaca himself who gave exculpating statements to the same board
and declared that the private respondents were not the owners of the said currencies. that just
as petitioners thought that they were already fully cleared of the charges, as they no longer
received any summons/notices on the intended additional hearings mandated by the
Disciplinary Board, that they were already fully cleared of the charges, as they no longer
received any summons/notices on the intended additional hearings mandated by the
Disciplinary Board, they were surprised to find out that they were terminated by PAL.
Aggrieved by said dismissal, private respondents filed with the NLRC a petition for
injunction praying that:
"I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting respondents
(petitioner herein) from effecting or enforcing the Decision dated Feb. 22, 1995, or to reinstate
petitioners temporarily while a hearing on the propriety of the issuance of a writ of preliminary
injunction is being undertaken;
"II. After hearing, a writ of preliminary mandatory injunction be issued ordering respondent to
reinstate petitioners to their former positions pending the hearing of this case, or, prohibiting
respondent from enforcing its Decision dated February 22,1995 while this case is pending
adjudication;
"III. After hearing, that the writ of preliminary injunction as to the reliefs sought for be made
permanent, that petitioners be awarded full backwages, moral damages of PHP 500,000.00
each and exemplary damages of PHP 500,000.00 each, attorneys fees equivalent to ten
percent of whatever amount is awarded, and the costs of suit."
The NLRC issued the writ of injunction. PAL moved for reconsideration on the ground
that has no jurisdiction to issue an injunction or restraining order since this may be issued only
under Article 218 of the Labor Code if the case involves or arises from labor disputes and
thereby divesting the labor arbiter of its original and exclusive jurisdiction over illegal dismissal
cases.

Issue: W/N the NLRC acted with grave abuse of discretion on issuing the writ of injunction

Held:
Yes.
In labor cases, Article 218 of the Labor Code empowers the NLRC- "(e) To enjoin or
restrain any actual or threatened commission of any or all prohibited or unlawful acts or to
require the performance of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or render ineffectual
any decision in favor of such party.
Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of
Procedure of the NLRC, pertinently provides as follows:
"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction or a restraining order
may be granted by the Commission through its divisions pursuant to the provisions of paragraph
(e) of Article 218 of the Labor Code, as amended, when it is established on the bases of the
sworn allegations in the petition that the acts complained of, involving or arising from any labor
dispute before the Commission, which, if not restrained or performed forthwith, may cause
grave or irreparable damage to any party or render ineffectual any decision in favor of such
party.
From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ
originates from "any labor dispute" upon application by a party thereof, which application if not
granted "may cause grave or irreparable damage to any party or render ineffectual any decision
in favor of such party."
The term "labor dispute" is defined as "any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of employment regardless of
whether or not the disputants stand in the proximate relation of employers and employees."
 The petition for injunction directly filed before the NLRC is in reality an action for
illegal dismissal.
This is clear from the allegations in the petition which prays for: reinstatement of private
respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As
such, the petition should have been filed with the labor arbiter who has the original and
exclusive jurisdiction to hear and decide the following cases involving all workers, whether
agricultural or non-agricultural:
(1) Unfair labor practice;
(2) Termination disputes;
(3) If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
(5) Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
(6) Except claims for employees compensation, social security, medicare and maternity
benefits, all other claims arising from employer-employee relations, including those of persons
in domestic or household service, involving an amount exceeding five thousand pesos (P
5,000.00), whether or not accompanied with a claim for reinstatement.
The jurisdiction conferred by the foregoing legal provision to the labor arbiter is both original
and exclusive, meaning, no other officer or tribunal can take cognizance of, hear and decide any
of the cases therein enumerated. The only exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to
submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code.
On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided
by labor arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of
the NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the
private respondents' petition for injunction which challenges the dismissal orders of petitioner.
Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its
divisions to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of
Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes.

Coca-cola Bottlers Philippines vs. Ricky Dela Cruz, et. al.

G.R. No. 184977, December 7, 2009

Facts:

Respondents filed two separate complaints for regularization with money claims against Coca-
Cola Bottlers Philippines, Inc. Before the Labor Arbiter, the respondents alleged that they are
route helpers assigned to work in the petitioners trucks. They go from the Coca-Cola sales
offices or plants to customer outlets; they were hired either directly by the petitioner or by its
contractors, but they do not enjoy the full remuneration, benefits and privileges granted to the
petitioners regular sales force. They argued that the services they render are necessary and
desirable in the regular business of the petitioner. In defense, the petitioner contended that it
entered into contracts of services with Peerless and Excellent Partners Cooperative, Inc.
(Excellent) to provide allied services; under these contracts, Peerless and Excellent retained the
right to select, hire, dismiss, supervise, control and discipline and pay the salaries of all
personnel they assign to the petitioner; in return for these services, Peerless and Excellent were
paid a stipulated fee. The petitioner posited that there is no employer-employee relationship
between the company and the respondents and the complaints should be dismissed for lack of
jurisdiction on the part of the NLRC. In reply, the respondents countered that they worked under
the control and supervision of the companys supervisors who prepared their work schedules
and assignments. Peerless and Excellent, too, did not have sufficient capital or investment to
provide services to the petitioner. The respondents thus argued that the petitioners contracts of
services with Peerless and Excellent are in the nature of "labor-only" contracts prohibited by
law.

Issue:

Was there labor-only contracting?

Ruling:

Yes. The contract between the principal and the contractor is not the final word on how the
contracted workers relate to the principal and the purported contractor; the relationships must
be tested on the basis of how they actually operate. The legitimate job contractor must have the
capitalization and equipment to undertake the sale and distribution of the manufacturers
products, and must do it on its own using its own means and selling methods.

Even before going into the realities of workplace operations, the Court of Appeals found that the
service contracts themselves provide ample leads into the relationship between the company,
on the one hand, and Peerless and Excellent, on the other. The Court of Appeals noted that
both the Peerless and the Excellent contracts show that their obligation was solely to provide
the company with the services of contractual employees, and nothing more. These contracted
services were for the handling and delivery of the companys products and allied services.
Following D.O. 18-02 and the contracts that spoke purely of the supply of labor, the Court of
Appeals concluded that Peerless and Excellent were labor-only contractors unless they could
prove that they had the required capitalization and the right of control over their contracted
workers.

The contractors were not independently selling and distributing company products, using their
own equipment, means and methods of selling and distribution; they only supplied the
manpower that helped the company in the handing of products for sale and distribution. In the
context of D.O. 18-02, the contracting for sale and distribution as an independent and self-
contained operation is a legitimate contract, but the pure supply of manpower with the task of
assisting in sales and distribution controlled by a principal falls within prohibited labor-only
contracting. Consequently, the contracted personnel, engaged in component functions in the
main business of the company under the latters supervision and control, cannot but be regular
company employees.
PEOPLES BROADCASTING (BOMBO RADYO PHILS.)
VS. SECRETARY OF LABOR
G.R. No. 179652, May 8, 2009

FACTS:
Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo Radyo Phils.
(Bombo Radyo) for illegal deduction, non-payment of service incentive leave, 13th month pay,
premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages
and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE
conducted a plant level inspection. The Labor Inspector in his report wrote,

Management representative informed that (Juezan) complainant is a drama talent hired

on a per drama participation basis hence no employer-employer relationship existed
between them. As proof of this, management presented photocopies of cash vouchers,
billing statement, employments of specific undertaking, etc. The management has no
control of the talent if he ventures into another contract with other broadcasting
industries.

The DOLE Regional Director issued an order ruling that Juezan is an employee of Bombo Radyo,
and that Juezan is entitled to his money claims. Bombo Radyo sought reconsideration claiming
that the Regional Director gave credence to the documents offered by Juezan without examining
the originals, but at the same time the Regional Director missed or failed to consider Bombo
Radyos evidence. The motion for reconsideration was denied. On appeal, the Acting DOLE
Secretary dismissed the appeal on the ground that Bombo Radyo did not post a cash or surety
bond and instead submitted a Deed of Assignment of Bank Deposit.

Bombo Radyo elevated the case to the Court of Appeals, claiming that it was denied due process
when the DOLE Secretary disregarded the evidence it presented and failed to give it the
opportunity to refute the claims of Juezan. It maintained that no employer-employee relationship
had ever existed between it and Juezan because it was the drama directors and producers who
paid, supervised and disciplined him. It also added that the case was beyond the DOLEs
jurisdiction because Juezans claim exceeded P5,000.
The Court of Appeals held that the DOLE Secretary had the power to order and enforce
compliance with labor standard laws irrespective of the amount of individual claims because the
limitation imposed by Art. 29 of the Labor Code had been repealed by R.A. 7730.

Bombo Radyo argues that the NLRC (not the DOLE Secretary) has jurisdiction over Juezans
claim, in view of Arts. 217 and 128 of the Labor Code. It adds that the Court of Appeals committed
grave abuse of discretion when it dismissed their appeal without delving on the issue of employer-
employee relationship.

ISSUE: Whether or not the Secretary of Labor has the power to determine the existence of an
employer-employee relationship.

HELD: NO. Art. 128 (b) of the Labor Code, as amended by R.A. 7730 reads:
 Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and
in cases where the relationship of employer-employee still exists, the Secretary of Labor
and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of this Code and other
labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection.

The provision is explicit that the visitorial and enforcement power of the DOLE comes into play
only in cases when the relationship of employer-employee still exists. This clause signifies that
the employer-employee relationship must have existed even before the emergence of the
controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (i) where
the employer-employee relationship has ceased; and (ii) where no such relationship has ever
existed.

The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of
Labor Standards Cases issued by the DOLE Secretary. It reads:

Where employer-employee relationship no longer exists by reason of the fact that it has
already been severed, claims for payment of monetary benefits fall within the exclusive
and original jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint,
it can be ascertained that employer-employee relationship no longer exists, the case,
whether accompanied by an allegation of illegal dismissal, shall immediately be
endorsed by the Regional Director to the appropriate branch of the National Labor
Relations Commission (NLRC).

The law accords a prerogative to the NLRC over the claim when the employer-employee
relationship has terminated or such relationship has not arisen at all. The existence of an
employer-employee relationship is a matter which is not easily determinable from an ordinary
inspection because the elements of such a relationship are not verifiable from a mere ocular
examination. The intricacies and implications of an employer-employee relationship demand that
the level of scrutiny should be far above the superficial. While documents, particularly documents
found in the employers office are the primary source materials, what may prove decisive are
factors related to the history of the employers business operations, its current state as well as
accepted contemporary practices in the industry. More often than not, the question of employer-
employee relationship becomes a battle of evidence, the determination of which should be
comprehensive and intensive and therefore best left to the specialized quasi-judicial body of the
NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow
has to make a determination of the existence of an employer-employee relationship. However,
such determination cannot be coextensive with the visitorial and enforcement power itself. Such
is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor
standards provisions. The determination of the existence of employer-employee relationship is
still primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Art. 128, two important questions must be
resolved: (i) Does the employer-employee relationship still exist, or alternatively, was there ever
an employer-employee relationship to speak of; and (ii) Are there violations of the Labor Code or
of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation
on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The
rationale underlying this limitation is to eliminate the prospect of competing conclusions of the
Secretary of Labor and the NLRC. If the Secretary of Labor proceeds to exercise his visitorial and
enforcement powers absent the first requisite, his office confers jurisdiction on itself which it
cannot otherwise acquire.

Nevertheless, a mere assertion of absence of employer-employee relationship does not deprive

the DOLE of jurisdiction over the claim. At least a prima facie showing of such absence of
relationship, as in this case, is needed to preclude the DOLE from the exercise of its power.
Without a doubt, Bombo Radyo, since the inception of this case had been consistent in
maintaining that Juezan is not its employee. A preliminary determination, based on the evidence
offered and noted by the Labor Inspector during the inspection as well as submitted during the
proceedings before the Regional Director puts in genuine doubt the existence of employer-
employee relationship. From that point on, the prudent recourse on the part of the DOLE should
have been to refer Juezan to the NLRC for the proper dispensation of his claims. Furthermore,
even the evidence relied on by the Regional Director in his order are mere self-serving
declarations of Juezan, and hence cannot be relied upon as proof of employer-employee
relationship.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 179652 March 6, 2012

PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), Petitioner,

vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE
REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents.

RESOLUTION

VELASCO, JR., J.:

FACTS : Private respondent Jandeleon Juezan filed a complaint against petitioner with the
Department of Labor and Employment (DOLE). for illegal deduction, nonpayment of service
incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of
benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth. The
DOLE Regional Director found that private respondent was an employee of petitioner,
and was entitled to his money claims.
When the matter was brought before the CA, where petitioner (Bombo Radyo) claimed
that it had been denied due process, it was held that petitioner was accorded due
process as it had been given the opportunity to be heard, and that the DOLE Secretary
had jurisdiction over the matter.
In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint
against petitioner was dismissed. The National Labor Relations Commission (NLRC) was
held to be the primary agency in determining the existence of an employer-employee
relationship. This was the interpretation of the Court of the clause "in cases where the
relationship of employer-employee still exists" in Art. 128(b).
From this Decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of
Decision (with Leave of Court). The PAO sought to clarify as to when the visitorial and
enforcement power of the DOLE be not considered as co-extensive with the power to
determine the existence of an employer-employee relationship
ISSUE: Under Art. 128(b) of the Labor Code, as amended by RA 7730, it is clear and beyond
debate that an employer-employee relationship must exist for the exercise of the visitorial and
enforcement power of the DOLE. The question now arises, may the DOLE make a
determination of whether or not an employer-employee relationship exists, and if so, to what
extent?

HELD: The previous conclusion must be revisited. No limitation in the law was placed upon
the power of the DOLE to determine the existence of an employer-employee relationship.
No procedure was laid down where the DOLE would only make a preliminary finding, that
the power was primarily held by the NLRC. The law did not say that the DOLE would first
seek the NLRCs determination of the existence of an employer-employee relationship, or
that should the existence of the employer-employee relationship be disputed, the DOLE
would refer the matter to the NLRC.

The DOLE, in determining the existence of an employer-employee relationship, has a

ready set of guidelines to follow, the same guide the courts themselves use. 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;
(4) the employers power to control the employees conduct.9 The use of this test is not
solely limited to the NLRC

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to
make a determination as to the existence of an employer-employee relationship in the exercise
of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.

WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the
MODIFICATION that in the exercise of the DOLEs visitorial and enforcement power, the Labor
Secretary or the latters authorized representative shall have the power to determine the
existence of an employer-employee relationship, to the exclusion of the NLRC.