Slimmers FACTS: Leslie Okol, a Vice President of Slimmers World, was terminated from employment after an incident with the Bureau of Customs regarding equipment belonging to/consigned to Slimmers World. As such, Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World for illegal suspension, illegal dismissal, unpaid commissions, damages, and attorney s fees, with prayer for reinstatement and payment of backwages. Slimmers World filed a Motion to Dismiss the case, asserting that the NLRC had no jurisdiction over the subject matter of the complaint. Slimmers World s motion was sustained, with the labor arbiter ruling that since Okol was the vice president at the time of her dismissal, being a corporate officer, the dispute was an intra-corporate controversy falling outside the jurisdiction of the arbitration branch. On appeal, the NLRC reversed the LA decision and ordered Slimmers World to reinstate Okol. The CA subsequently set aside the NLRC decision and ruled that the case was an intra-corporate controversy, and falls within the jurisdiction of the regular courts pursuant to RA 8799. ISSUE 1:Whether Okol was an employee or corporate officer of Slimmers World. Okol was a CORPORATE OFFICER at the time of her dismissal. According to the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as well as the officers of the corporation, The general management of the corporation shall be vested in a board of five directors who shall be stockholders and who shall be elected annually by the stockholders and who shall serve until the election and qualification of their successors and Like the Chairman of the Board and the President, the Vice President shall be elected by the Board of Directors from [its] own members. The Vice President shall be vested with all the powers and authority and is required to perform all the duties of the President during the absence of the latter for any cause. The Vice President will perform such duties as the Board of Directors may impose upon him from time to time. This clearly shows that Okol was a director and officer of Slimmers World. y An office is created by the charter of the corporation and the officer is elected by the directors and stockholders. On the other hand, an employee usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.

ISSUE 2:W/N the NLRC has jurisdiction over the illegal dismissal case filed by Okol. NO. Since it has been shown that Okol was a corporate officer, her charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and backwages against Slimmers World fall squarely within the ambit of intra-corporate disputes. A corporate officer s dismissal is always a corporate act, or an intracorporate controversy which arises between a stockholder and a corporation. The question of remuneration involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporate Code. The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. y Prior to its amendment, Section 5 of PD 902-A provided that intra-corporate disputes fall within the jurisdiction of the SEC. Subsection 5.2, Section 5 of RA 8799, transferred to RTCs the SEC s jurisdiction over all cases listed in Section 5 of PD 902-A.

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CA affirmed. Petition denied, without prejudice to Okol s taking recourse to and seeking relief through the appropriate remedy in the proper forum. y Jurisdiction over the subject matter is conferred by law.

Tiangco v. Uniwide FACTS: Gina Tiangco and Salvacion Manego were employees of Uniwide Sales Warehouse Club. In 2001, they both filed separate complaints for illegal dismissal, payment of separation pay, as well as award for moral and exemplary damages in the NLRC. Uniwide prayed that the proceedings on both cases be suspended on the ground that Uniwide had been placed in a state of suspension of payments by the SEC as early as April 2000 and a receivership committee had in fact been appointed. The LA suspended the proceedings until further orders from the SEC. In 2004, Tiangco and Manego filed a motion to reopen the case on the ground that the SEC, in its order in 2002, had already approved the second amendment to the rehabilitation plan of Uniwide. Uniwide opposed the motion. The LA ordered both parties to file their memoranda, stating that even without the said memoranda, the cases would be ordered submitted for decision after the lapse of the period for filing. This prompted Uniwide to file a petition for certiorari with the CA with a prayer for a TRO, imputing a grave abuse of discretion on the part of the LA. The CA granted the TRO and subsequently ruled that proceedings on the cases should remain suspended until further orders from the SEC. ISSUE 1:W/N the consolidated illegal dismissal cases can be reopened at this point of the SEC proceedings. NO. In previous cases, it had been held that a labor claim is a claim within the contemplation of PD 902-A, as amended. Thus, they are included among the actions suspended upon the placing under rehabilitation of employer-corporations. No exception in favor of a labor claim is mentioned in the law. Allowing labor cases to proceed clearly defeats the purpose of the automatic stay and severely encumbers the management committee s time and resources. To rule otherwise would open the floodgates to other similarly situated claimants and forestall if not defeat the rescue efforts. y PD 902-A: Upon appointment of a management committee, rehabilitation receiver, board, or body, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. o CLAIM refers to debts or demands of a pecuniary nature; assertion of rights for the payment of money o Purpose of Automatic Stay: To enable the management committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might duly hinder or prevent the rescue of the debtor company. To allow such other actions to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed towards its restructuring and rehabilitation.

CA affirmed. Petition denied. y Article 217 of the Labor Code should be construed not in isolation but in harmony with PD 902-A. True, the NLRC has the power to hear and decide labor disputes, but such authority is deemed suspended when PD 902-A is put into effect by the SEC.

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Bombo Radyo v. Secretary of Labor FACTS: Jandeleon Juezan filed a complaint against Bombo Radyo Philippines 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 non-coverage of SSS, PAG-IBIG, and PhilHealth before the DOLE Regional Office in Cebu City. Based on the complaint, the DOLE conducted a plant level inspection and noted that Bombo Radyo denied having an employer-employee relationship with Juezan, claiming that he was only a drama talent hired on a per drama participation basis. The DOLE Regional Director ruled that Juezan was an employee of Bombo Radyo, and that he was entitled to his money claims. On appeal to the DOLE Secretary, Bombo Radyo denied once more the existence of employer-employee relationship. 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 appealed again to the CA, maintaining that there was no employer-employee relationship because it was the drama directors and producers who paid, supervised, and disciplined Juezan. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the Labor Arbiter because Juezan s claim exceeded P5,000.00. As his appeal was denied, Juezan elevated the case to the Supreme Court, stating that the NLRC, not the DOLE Secretary, has jurisdiction over its claim, in view of Articles 217 and 128 of the Labor Code. ISSUE 1:W/N the Secretary of Labor has the power to determine the existence of an employer-employee relationship. NO. Article 128 is quite explicit that the visitorial and enforcement power of the DOLE comes into play only in cases when the relationship of employer-employee still exists. The clause in cases where the relationship of employer-employee still exists signifies that the employer-employee relationship must have existed even before the emergence of the controversy. Necessarily, the DOLE s power does not apply in two circumstances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such relationship has ever existed. Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (a) does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (b) are there violations of the Labor Code or of any labor law? A mere assertion of absence of employer-employee relationship does not deprive the DOLE jurisdiction over the claim under Article 128 of the Labor Code. 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. The Secretary of Labor would not have been precluded from exercising the powers under Article 128(b) over Bombo Radyo if another person with better-grounded claim of employment than that which Juezan had. Without a doubt, Bombo Radyo, since the inception of the case had been consistent in maintaining that Juezan is not its employee. Certainly, 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. 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, necessarily so, 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 cursory and the mechanical. More often than not, the question of employer-employee relationship becomes a battle of

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evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. y Section 3, Rule 11 of the Rules on Disposition of Labor Standards Cases: Where employer-employee relationship no longer exists by reason of the fact that it had 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 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. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLE s primary function of enforcing labor standards provisions. The determination of the existence of employeremployee relationship is still primarily lodged with the NLRC. 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, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NLRC, rather than an administrative official of the executive branch of the government. 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. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence. In some cases, the bond requirement on appeals involving monetary awards had been relaxed, as when (i) there was substantial compliance with the Rules; (ii) the surrounding facts and circumstances constitute meritorious ground to reduce the bond; (iii) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or (iv) the appellants, at the very least exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. o The purpose of an appeal bond is to ensure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment if subsequently affirmed.





CA decision set aside. Petition granted. y It is a general rule, that no court of limited jurisdiction can give itself jurisdiction by a wrong decision on a point collateral to the merits of the case upon which the limit to its jurisdiction depends; and however its decision may be final on all particulars, making up together that subject matter which, if true, is within its jurisdiction, and however necessary in many cases it may be for it to make a preliminary inquiry, whether some collateral matter be or be not within the limits, yet, upon this preliminary question, its decision must always be open to inquiry in the superior court. Standard of evidence/quantum of proof required in labor cases: substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion


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While the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business, the law does admit exceptions when warranted by the circumstances. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.

Dissent, Brion: y The nature of the proceedings, level of evidence required, and level of expertise between Labor Arbiters and the Regional Director are not different and one tribunal holds no primacy over the other in the determination of the employment relationship issue. The present law gives the Secretary of Labor or his representative the authority to fully determine whether employer-employee relationship exists; only upon a showing that it does not, is the DOLE divested of jurisdiction over the case. The new and amended Article 128(b) did not retain the formulation of the original as it broke up the original version into two sentences. In the first sentence, it recognized the primacy of the visitorial and enforcement powers of the Secretary of Labor over the terms of Articles 129 and 217. In other words, the Secretary or his delegate can inspect without being fettered by the limitations under these provisions. The second sentence is devoted wholly to the issuance of writs of execution to enforce the issued orders. It exists as an independent statement from what the first sentence states and is limited only by the exception when the employer cites a documentary proof that was not considered during the inspection. The existence of the relationship, however, is still a matter for the Secretary or the appropriate regional office to determine, unfettered by Articles 129 and 217 of the Labor Code. The mere allegation whether prima facie or not that employer-employee relationship exists, does not, by itself, divest the Regional Director of jurisdiction to rule on the case; the Director can at least fully determine whether or not employer-employee relationship exists.



Meteoro v. Creative Creatures FACTS: Creative Creatures hired Victor Meteoro and the rest of the petitioners on various dates as artists, carpenters, and welders, tasked to design, create, assemble, set-up, and dismantle props, and provide sound effects to Creative s various TV programs and movies. In 1999, Meteoro and the others filed a complaint against Creative for non-payment of labor standards incentives with the DOLE-NCR. An inspection was conducted. Creative claimed that the petitioners were only contractual workers, and as such, no employeremployee relationship existed. Thus, the DOLE could not have exercised jurisdiction over the case, for it had none. It added that the petitioners were free-lance individuals, performing special services with skills and expertise inherently exclusive to them like actors, actresses, directors, producers, and script writers, such that they were treated as special types of workers. Petitioners, on the other hand, aver that they were employees because the elements of an employer-employee relationship existed. Subsequently, petitioners filed a complaint for illegal dismissal against Creative, with prayer for payment of overtime pay, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, and attorney s fees before the NLRC. A few months after, DOLE Regional Director Maximo Baluyot Lim issued an order directing Creative to pay petitioners. On appeal, DOLE Secretary Patricia Sto. Tomas upheld the DOLE Regional Director s findings. She stated that the Secretary of Labor or his duly authorized representative is allowed to use his visitorial and enforcement powers to give effect to labor legislation,

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regardless of the amount involved. On appeal, the CA dismissed the case against Creative for lack of jurisdiction. Petition for review on certiorari. ISSUE: W/N the DOLE-NCR properly exercised its jurisdiction over the case. NO. The DOLE Secretary and her authorized representatives, such as the DOLE-NCR Director, have jurisdiction to enforce compliance with labor standards laws under the broad visitorial and enforcement powers conferred by Article 128 of the Labor Code, and expanded by RA No. 7730. But this notwithstanding, the power of the Regional Director to hear and decide money claims is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the exception clause, provides an instance when the Regional Director or his representatives may be divested of jurisdiction over a labor standards case. Under prevailing jurisprudence, the so-called exception clause has the following elements, all of which must concur: (a) That the employer contests the findings of the labor regulations officer and raises issues thereon; (b) That in order to resolve such issues, there is a need to examine evidentiary matters; and (c) That such matters are not verifiable in the normal course of inspection. In the instant case, Creative registered its objection to the findings of the labor inspector at the earliest opportunity. It is clear that Creative contested and continues to contest the findings and conclusions of the labor inspector. Also, the question of whether or not petitioners were independent contractors/project employees/free-lance workers is a question of fact that necessitates the examination of evidentiary matters not verifiable in the course of inspection. Verily, the Regional Director and the Secretary of Labor are divested of jurisdiction to decide the case, and the NLRC is the agency clothed with authority to do so. Petition denied for lack of merit. CA decision affirmed. y To contest means to raise questions as to the amounts complained of or the absence of violation of labor standards laws; or, issues as to the complainants right to labor standards benefits. Raising lack of jurisdiction alone is not the contest contemplated by the exception clause. It is necessary that the employer contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. More importantly, the key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters be not verifiable in the course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the employer, the Regional Director, and later the DOLE Secretary, may still examine it; and these officers are not divested of jurisdiction to decide the case.

Negros Metal Corporation v. Lamayo FACTS: Armelo Lamayo worked for Negros Metal Corporation as a machinist, In 2002, while Lamayo was working at the company s foundry grinding some tools, the company manager called his attention to the fact that he was using the grinder. Lamayo replied that since the machine was bigger, he would finish the work faster. Since Lamayo s explanation was found unsatisfactory, he was charged of loitering and warned via memorandum. Taking the warning as a three-day suspension under the company rules, Lamayo reported for work after three days, only to be meted with another ten-day suspension, for allegedly failing to sign the memorandum suspending him earlier. After serving the second suspension, he was informed by the company that his services had been terminated and that he should draft his resignation letter. Lamayo filed a complaint for illegal dismissal with the Labor Arbiter. Negros Metal Corporation averred that the complaint should be dismissed because the Labor Arbiter had no jurisdiction over the same since under the Collective Bargaining Agreement, such matters must first be brought before the company s grievance machinery. The LA brushed

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aside such opposition, held that Lamayo was indeed illegally dismissed, and ordered Negros Metal to pay Lamayo separation pay, backwages, and 13th month pay. Upon appeal, the NLRC set aside the ruling of the LA and remanded the case to the LA for disposition based on the company s grievance procedure. Lamayo appealed to the CA, which set aside the NLRC s decision and reinstated the LA s decision. Petition for review on certiorari, maintaining that the grievance machinery procedure should have been followed first before Lamayo s complaint for illegal dismissal could be given due course. ISSUE: W/N Lamayo should have gone through the company s grievance machinery first before filing a complaint for illegal dismissal with the Labor Arbiter. NO. Under Article 217, it is clear that a Labor Arbiter has original and exclusive jurisdiction over termination disputes. On the other hand, under Article 261, a voluntary arbitrator has original and exclusive jurisdiction over grievances arising from the interpretation or enforcement of company policies. As a general rule then, termination disputes should be brought before a Labor Arbiter, except when the parties, under Article 262, unmistakably express that they agree to submit the same to voluntary arbitration. In the present case, the CBA provision on grievance machinery being invoked by Negros Metal does not expressly state that termination disputes are included in the ambit of what may be brought before the company s grievance machinery. In fine, the LA had original and exclusive jurisdiction over Lamayo s complaint for illegal dismissal. Petition denied. LA decision reinstated. y The SC is not a trier of facts. It is not tasked to review the evidence on record, documentary and testimonial, and reassess the probative weight thereof, especially in view of the well-entrenched rule that findings of fact of administrative officials, such as labor arbiters, who have acquired expertise on account of their specialized jurisdiction are accorded by the courts not only respect but, most often, with finality, particularly when affirmed on appeal.

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