Perpetual Help Credit Cooperative, Inc vs.

Faburada, et al
G.R. No. 121948 October 8, 2001

FACTS: Faburada et. al. filed a complaint against PHCCI for illegal dismissal and other
money claims. PHCCI asked to dismiss the complaint on the ground that no EM-ER
relationship exists since private respondents are all members and co-owners of the
cooperative. Private respondents have not exhausted the remedies provided in the
cooperative by-laws. Petitioner filed a supplemental motion to dismiss because Article
121 of R.A. No. 6939 requires conciliation or mediation within the cooperative before a
resort to judicial proceeding. The Labor Arbiter ruled that the case is impressed with
employer-employee relationship and that the laws on cooperatives is subservient to the
Labor Code. The NLRC ruled the same.

ISSUE: Whether or not respondent judge committed grave abuse of discretion in ruling
that there is an employer-employee relationship between the parties and that private
respondents were illegally dismissed.
RULING: No. SC stated that private respondents were rendering services necessary to
the day-to-day operations of petitioner PHCCI. This fact alone qualified them as regular
employees thus, their services may be terminated only for a valid cause, with observance
of due process. They were dismissed in an arbitrary way without just cause and authorized
cause.