HERMINIGILDO INGUILLO v. FIRST PHILIPPINE SCALES, Inc.

[G.R. NO. 165407 June 5, 2009]

THIRD DIVISION PERALTA, J.

FACTS:

First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the manufacturing of
weighing scales, employed Bergante and Inguillo as assemblers.

FPSI and FPSI Labor Union (FPSILU) entered into a CBA for a period of 5 years. Bergante &
Inguillo , who were members signed the CBA. The provision of CBA requires that all members
to maintain their membership with FPSILU during the lifetime of CBA. Failing to do so, and
for any causes enumerated therein, the Union Directorate and/or FPSILU Executive Council
may recommend to FPSI and employee/union members suspension or dismissal.

During the lifetime of CBA, petitioner and several FPSI employees joined another union
Nagkakaisang Lakas ng Manggagawa (NLM). Respondents terminated the services of
employees upon a “Petisyon” submitted by FPSILU.

The Labor Arbiter held that Bergante & Inguillo were not illegally dismissed. The two clearly
violated the Union Security Clause of the CBA when the joined another union and committed
acts detrimental to the interest of FPSILU and respondents.

The NLRC reversed the decision stating that respondents failed to present evidence to show
that petitioners committed acts inimical to FPSILU’s interest.

Respondents filed Motion for Reconsideration. The NLRC referred the case to Executive Labor Arbiter
and set aside the previous resolution. This time, NLRC held that petitioners were illegally dismissed as
respondents merely put in force the CBA provision on the termination of services of disaffiliating union
members upon the recommendation of the union.

The Court of Appeals dismissed the appeal and the subsequent Motion for Reconsideration.

ISSUE:

Whether the enforcement of the aforesaid Union Security Clause justified herein petitioner’s dismissal
from service.

HELD:

The Supreme Court ruled that the dismissals of petitioners were valid pursuant to the enforcement of
Union Security Clause, however did not comply with requisite procedural due process.

In enforcing the Union Security Clause in the CBA, the Court was upholding the sanctity and
inviolability of contract. But in doing, they cannot override an employee’s right to due process.

The Supreme Court provides the requisites in terminating the employment of an employee by enforcing
the Union Security Clause:
1. The Union Security Clause is applicable;
2. The Union is requesting for the enforcement of the Union Security provision in CBA;
3. There is sufficient evidence to support the union’s decision to expel the employee from the union
or company;

All the requisites have been sufficiently met, but the twin notice rule requirement was not followed. The
petitioners were dismissed by “petisyon” only. Thus, the petitioners were validly dismissed by
enforcement of Union Security Clause, were declared illegally dismissed due to absence of procedural
due process.
GREGORIO V. TONGKO vs. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.),
INC.
G.R. No. 167622               June 29, 2010
EN BANC BRION, J.:

FACTS:

Tongko and Manulife had two basic phases The contractual relationship between. The first or
initial phase began on July 1, 1977, under a Career Agent’s Agreement (Agreement) that
provided that he is an Agent, considered independent contractor and that there was no
employer-employee relationship between them. It also stated that the company or the agent
may terminate for any breach or violations of provisions by giving fifteen (15) days’ notice in
writing. Tongko additionally agreed (1) to comply with all regulations and requirements of
Manulife, and (2) to maintain a standard of knowledge and competency in the sale of
Manulife’s products, satisfactory to Manulife and sufficient to meet the volume of the new
business, required by his Production Club membership

The second phase started in 1983 when Tongko was named Unit Manager in Manulife’s Sales
Agency Organization. In 1990, he became a Branch Manager. Six years later (or in 1996),
Tongko became a Regional Sales Manager. Tongko’s gross earnings consisted of commissions,
persistency income, and management overrides.

In 2001, Manulife instituted manpower development programs at the regional sales

management level. Respondent Renato Vergel de Dios wrote Tongko a letter dated November
6, 2001 on concerns that were brought up during the October 18, 2001 Metro North Sales
Managers Meeting. Subsequently, de Dios wrote Tongko another letter, dated December 18,
2001, terminating Tongko’s services. Stating that all these efforts have failed in helping him
align your directions with Management’s avowed agency growth policy. It stated also that the
Management is exercising its prerogative under Section 14 of your Agents Contract as we are
now issuing this notice of termination of your Agency Agreement with us effective fifteen
days from the date of this letter.

Tongko responded by filing an illegal dismissal complaint with the National Labor Relations
Commission (NLRC) Arbitration Branch. He essentially alleged – despite the clear terms of the
letter terminating his Agency Agreement – that he was Manulife’s employee before he was
illegally dismissed.

The labor arbiter decreed that no employer-employee relationship existed between the parties.
However, the NLRC reversed the labor arbiter’s decision on appeal; it found the existence of
an employer-employee relationship and concluded that Tongko had been illegally dismissed.
In the petition for certiorari with the Court of Appeals (CA), the appellate court found that the
NLRC gravely abused its discretion in its ruling and reverted to the labor arbiter’s decision
that no employer-employee relationship existed between Tongko and Manulife.

ISSUE:

Whether there exist and employer-employee relationship between Tongko and Manulife.

HELD:

The Supreme Court ruled that there was no employer-employee relationship.

The primary evidence in the present case is the July 1, 1977 Agreement that governed and
defined the parties’ relations until the Agreement’s termination in 2001. This Agreement stood
for more than two decades and, based on the records of the case, was never modified or
novated. It assumes primacy because it directly dealt with the nature of the parties’
relationship up to the very end; moreover, both parties never disputed its authenticity or the
accuracy of its terms.
By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not as
an employee. To be sure, the Agreement’s legal characterization of the nature of the
relationship cannot be conclusive and binding on the courts; the characterization of the
juridical relationship the Agreement embodied is a matter of law that is for the courts to
determine. At the same time, though, the characterization the parties gave to their relationship
in the Agreement cannot simply be brushed aside because it embodies their intent at the time
they entered the Agreement, and they were governed by this understanding throughout their
relationship. At the very least, the provision on the absence of employer-employee relationship
between the parties can be an aid in considering the Agreement and its implementation, and in
appreciating the other evidence on record.

Tongko’s was the granted of an expanded sales agency role that recognized him as leader
amongst agents in an area that Manulife defined. 

The absence of evidence showing Manulife’s control over Tongko’s contractual duties points
to the absence of any employer-employee relationship between Tongko and Manulife. In the
context of the established evidence, Tongko remained an agent all along; although his
subsequent duties made him a lead agent with leadership role, he was nevertheless only an
agent whose basic contract yields no evidence of means-and-manner control.

The sufficiency of Tongko’s failure to comply with the guidelines of de Dios’ letter, as a
ground for termination of Tongko’s agency, is a matter that the labor tribunals cannot rule
upon in the absence of an employer-employee relationship. Jurisdiction over the matter
belongs to the courts applying the laws of insurance, agency and contracts.
 ALLIED BANKING CORPORATION vs. REYNOLD CALUMPANG
G.R. No. 219435 January 17, 2018
THIRD DIVISION VELASCO, J.:

FACTS:

Petitioner Allied Banking Corporation and Race Cleaners, Inc., a corporation engaged in the
business of janitorial and manpower services, had entered into a Service Agreement whereby
the latter provided the former with messengerial, janitorial, communication, and maintenance
services and the personnel therefor.

Respondent Reynold Calumpang was hired as a janitor by RCI and was assigned at the Bank's
Tanjay City Branch. He was tasked to perform janitorial work and messengerial/errand
services. His job required him to be out of the Branch at times to nm errands such as delivering
statements and checks for clearing, mailing letters, among others.

Petitioner observed that whenever respondent went out on errands, it takes a long time for
him to return to the Branch. It was eventually discovered that during these times, respondent
was also plying his pedicab and ferrying passengers. Petitioner also found out through several
clients of the Branch who informed the Bank Manager, Mr. Oscar Infante, that respondent had
been borrowing money from them. Because of these acts, Mr. Infante informed respondent
that his services would no longer be required at the Branch.Disgruntled, respondent thereafter
filed a complaint for illegal dismissal and underpayment of wages against petitioner before the
NLRC.

The Labor Arbiter ruled in favor of respondent, held that there was an employer-employee
relationship between petitioner and respondent, based on the following findings: (a)
Respondent rendered services to petitioner for eleven (11) unbroken years; (b) There was no
evidence of a Service Agreement between petitioner and RCI; (c) There was no evidence of a
request for replacement of respondent made by petitioner with RCI; (d) Respondent was
directly paid by petitioner and not through RCI; (e) Respondent's work was directly controlled
and supervised by petitioner; (f) It was petitioner who terminated the services of respondent
with no participation of RCI whatsoever; and (g) RCI disowned any employment relationship
with respondent. NLRC affirmed the decision of the Labor Arbiter. The CA upheld the rulings
of the Labor Arbiter and the NLRC.

ISSUE: Whether the RCI is a labor-only contractor.

HELD: The Supreme Court ruled that RCI is a labor-only contractor. As a general rule, a
contractor is presumed to be a labor-only contractor, unless such contractor overcomes the
burden of proving that it has the substantial capital, investment, tools and the like.

In the present case, petitioner failed to establish that RCI is a legitimate labor contractor as
contemplated under the Labor Code. Except for the bare allegation of petitioner that RCI had
substantial capitalization, it presented no supporting evidence to show the same. Petitioner
never submitted financial statements from RCI. Even the Service Agreement allegedly entered
into between petitioner and RCI, upon which petitioner relied to show that RCI was an
independent contractor, had lapsed in August 2005, as admitted by petitioner in its Position
Paper. Notably, petitioner failed to allege when the Service Agreement was executed, thus,
making its claim that respondent was hired by RCI and assigned to petitioner in 2003 even
more ambiguous.

A finding that a contractor is a labor-only contractor, as opposed to permissible job

contracting, is equivalent to declaring that there is an employer-employee relationship
between the principal and the employees of the supposed contractor, and the labor-only
contractor is considered as a mere agent of the principal, the real employer. In this case,
petitioner bank is the principal employer and RCI is the labor-only contractor.

PHILIPPINE AIRLINES, INC. vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 115785             August 4, 2000
 FIRST DIVISION PARDO, J.:

FACTS:

Philippine Airlines hired respondent Raul Diamante as Integrated Ticket Representative for
Bacolod City station.

On April 8, 1988, Edgardo Pineda, Rizalino Cabarloc, Ernesto Subia and Rolando Velasco went
to Bacolod Airport to have their tickets booked for their flight to Manila on April 9 and 10,
1988. Romeo Vista, a former officemate of Edgardo Pineda, was their contact person. At the
airport, Leticia Vista, wife of Romeo Vista, introduced Raul Diamante to Edgardo Pineda as
the person who could help in the booking of his ticket. Pineda requested Diamante if he could
book their tickets for the April 8, 1988 flight, particularly Subia, who had to attend an
important meeting in Manila. Diamante answered that all flights for the week were fully
booked. He suggested that he leave with him their tickets. Pineda gave four (4) tickets to
Diamante together with the amount of One Thousand Pesos (P1,000.00) then Diamante
assured them that they will be accommodated. Subia was booked for the April 8, 1988 flight to
Manila while Pineda, Velasco and Cabarloc were booked for the April 10, 1988 flight. When
Subia failed to take the flight due to illness, Diamante returned Subia's ticket to Vista the
following day since it was Diamante's day off. In order to facilitate Subia's re-booking, Vista
asked for the help of her friend Nelia Cawaling, a neighbor of PAL Station Agent Rodolfo
Puentebella. With the help of Cawaling and Puentebella, Subia was able to take the April 9,
1988 flight to Manila.

Upon their arrival in Manila, on June 20, 1988, Pineda executed an affidavit charging Diamante
with bribery/corruption which Diamante denied the allegations against him. After evaluation
of the complaint and finding the explanation of Diamante insufficient, petitioner's manager
charged Diamante administratively with bribery/extortion and violation of PAL's Code of
Discipline, particularly Article VIII, Section 1, paragraph 2. Petitioner convened an ad-
hoc Committee on Administrative Investigation and conducted an investigation.The
Committee, after deliberation, resolved the case on the basis of the evidence on record. On
December 14, 1988, Diamante received a notice of his dismissal from the service by an office
memorandum, dated November 29, 1988.

On January 17, 1989, Diamante filed with the National Labor Relations Commission, Regional
Arbitration Branch No. VI, Bacolod City, a complaint 4 against Philippine Airlines, Inc. for
illegal dismissal, reinstatement with backwages and damages.

Labor Arbiter Merlin Deloria rendered a decision declaring the dismissal legal and valid.The
NLRC rendered a decision granting Diamante's appeal and setting aside the Labor Arbiter's
decision and ordering the reinstatement of Diamante with three years backwages. Petitioner
filed a motion for reconsideration which the NLRC denied, hence this petition.

ISSUE:

Whether the dismissal of Diamante was a valid management prerogative.

HELD:

The Supreme Court ruled that Diamante was found to have violated the Company Code of
Discipline. We recognize the right of an employer to regulate all aspects of employment. This
right, aptly called management prerogative, gives employers the freedom to regulate,
according to their discretion and best judgment, all aspects of employment, including work
assignment, working methods, processes to be followed, working regulations transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers. In general, management has the prerogative to discipline its employees and to
impose appropriate penalties on erring workers pursuant to company rules and regulations.

VIRGILIO CALLANTA vs. CARNATION PHILIPPINES, INC.,

G.R. No. 70615 October 28, 1986
 SECOND DIVISION FERNAN, J.:

FACTS:

Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. as
a salesman in the Agusan del Sur area. Five (5) years later or on June 1, 1979, respondent
Carnation filed with the Regional Office No. X of the Ministry of Labor and Employment
[MOLE], an application for clearance to terminate the employment of Virgilio Callanta on the
alleged grounds of serious misconduct and misappropriation of company funds amounting to
P12,000.00, more or less.

Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said
clearance application, petitioner Virgilio Callanta's employment with Carnation was
terminated effective June 1, 1979. On July 5, 1982, Virgilio Callanta filed with the MOLE,
Regional Office No. X, a complaint for illegal dismissal with claims for reinstatement,
backwages, and damages against respondent Carnation.

Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of Callanta's
employment to be without valid cause. Respondent Carnation was therefore ordered to
reinstate Virgilio Callanta to his former position with backwages of one [1] year without
qualification including all fringe benefits provided for by law and company policy. The NLRC
set aside the decision of the Labor Arbiter. It declared the complaint for illegal dismissal filed
by Virgilio Callanta to have already prescribed. 

In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of
petitioner's complaint alleging that the same is barred by prescription for having been filed
more than three [3] years after the date of Callanta's dismissal.

ISSUE:

Whether Callanta’s case of illegal dismissal prescribes in 3 years, pursuant to Art. 291 and Art.
292 of the Labor Code

HELD:

The Supreme Court ruled that the said action prescribe in four (4) years based on Article 46 of
the Civil Code

Article 1146. The following actions must be instituted within four years.

(1) Upon an injury to the rights of the plaintiff.

In dismissal without just cause of an employee from his employment constitutes a violation of
the Labor Code and its implementing rules and regulations. Such violation, however, does not
amount to an "offense" as understood under Article 291 of the Labor Code. In its broad sense,
an offense is an illegal act which does not amount to a crime as defined in the penal law, but
which by statute carries with it a penalty similar to those imposed by law for the punishment
of a crime.  It is in this sense that a general penalty clause is provided under Article 289 of the
Labor Code which provides that "... any violation of the provisions of this code declared to be
unlawful or penal in nature  shall be punished with a fine  of not less than One Thousand Pesos
[P1,000.00] nor more than Ten Thousand Pesos [10,000.00], or imprisonment of not less than
three [3] months nor more than three [3] years, or both such fine and imprisonment at the
discretion of the court."

Clearly then, when one is arbitrarily and unjustly deprived of his job or means of livelihood,
the action instituted to contest the legality of one’s dismissal from employment constitutes, in
essence, an action predicated “upon an injury to the rights of the plaintiff”, as contemplated
under Article 1146 of the NCC, which must be brought within four (4) years.