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CASE 2013-0021: FIRST PHILIPPINE INDUSTRIAL ORPORATION, PETITIONER, -VERSUS- RAQUEL M. CALIMBAS AND LUISA P. MAHILOM, RESPONDENTS (G.R. NO. 179256, 10 JULY 2013, PERALTA J.) SUBJECT/S: LABOR ONLY CONTRACTING; PERMISSIBLE JOB CONTRACTING; ILLEGAL DISMISSAL. (BRIEF TITLE: FIRST PHIL INDUSTRIAL VS. CALIMBAS ET AL.)

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August 10, 2013

CASE 2013-0021: FIRST PHILIPPINE INDUSTRIAL ORPORATION, PETITIONER, -VERSUS- RAQUEL M. CALIMBAS AND LUISA P. MAHILOM, RESPONDENTS (G.R. NO. 179256, 10 JULY 2013, PERALTA J.) SUBJECT/S: LABOR ONLY CONTRACTING; PERMISSIBLE JOB CONTRACTING; ILLEGAL DISMISSAL. (BRIEF TITLE: FIRST PHIL INDUSTRIAL VS. CALIMBAS ET AL.)

 

DISPOSITIVE:

 

“WHEREFORE, premises considered, the Petition for Review on Certiorari is DENIED. The Decision dated March 6, 2007 and Resolution dated August 16, 2007 of the Court of Appeals in CA-G.R. SP No. 90527 are hereby AFFIRMED with MODIFICATION that respondents shall be entitled to separation pay equivalent to one month salary for every year of service.

 

SO ORDERED.”

 

SUBJECTS/DOCTRINES/DIGEST:

 

FIRST PHIL INDUSTRIAL ARGUES THAT RESPONDENTS WERE THE EMPLOYEES OF DGMS WHO ACTED AS INDEPENDENT CONTRACTOR. IS THEIR CONTENTION CORRECT?

 

NO. DGMS IS NOT AN INDEPENDENT JOB CONTRACTOR BUT WAS ENGAGED IN LABOR ONLY CONTRACTING.

 

PROOFS: THEY HAVE NO SUBSTANTIAL CAPITAL AND HAS NO SUBSTANTIAL EQUIPMENT IN THE FORM OF TOOLS, EQUIPMENT AND MACHINERY.

 

Given the foregoing standards, we sustain the findings of the CA that respondents are petitioner’s employees and that DGMS is engaged in labor only contracting.

 

First, in Vinoya v. National Labor Relations Commission,12 this Court categorically stated that the actual paid-in capital of P75,000.00 could not be considered as substantial capital. Thus, DGMS’s actual paid-in capital in the amount of P75,000.00 does not constitute substantial capital essential to carry out its business as an independent job contractor. In spite of its bare assertion that the Vinoya case does not apply in the present case, DGMS has not shown any serious and cogent reason to disregard the ruling in the aforementioned case. Records likewise reveal that DGMS has no substantial equipment in the form of tools, equipment and machinery. As a matter of fact, respondents were using office equipment and materials owned by petitioner while they were rendering their services at its offices.

 

Second, petitioner exercised the power of control and supervision over The respondents. As aptly observed by the CA, “the daily time records of respondents even had to be countersigned by the officials of petitioner to check whether they had worked during the hours declared therein.

 

Furthermore, the fact that DGMS did not assign representatives to supervise over respondents’ work in petitioner’s company tends to disprove the independence of DGMS. It is axiomatic that the test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subjected to the control of the employer, except only to the results of the work. Obviously, on this score alone, petitioner cannot rightly claim that DGMS was an independent job contractor inasmuch as respondents were subjected to the control and supervision of petitioner while they were performing their jobs.”13

 

Third, also worth stressing are the points highlighted by respondents: (1) Respondents worked only at petitioner’s offices for an uninterrupted period of five years, occupying the same position at the same department under the supervision of company officials; (2) Three weeks ahead of the termination letters issued by DGMS, petitioner’s HR Manager Lorna Young notified respondents, in a closed-door meeting, that their services to the company would be terminated by July 31, 2001; (3) In the termination letters prepared by DGMS, it was even stressed that the said termination letters will formalize the verbal notice given by petitioner’s HR Administration personnel; (4) The direct superiors of respondents were managerial employees of petitioner, and had direct control over all the work-related activities of the latter. This control included the supervision of respondents’ performance of their work and their compliance with petitioner’s company policies and procedures. DGMS, on the other hand, never maintained any representative at the petitioner’s office to oversee the work of respondents.

 

All told, an employer-employee relationship exists between petitioner and respondents. And having served for almost five years at petitioner’s company, respondents had already attained the status of regular employees.

 

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WERE RESPONDENTS ILLEGALLY DISMISSED?

 

YES. PETITIONER FAILED TO FOLLOW BOTH SUBSTANTIVE AND PROCEDURAL DUE PROCESS. PETITIONER FAILED TO SHOW ANY VALID OR JUST CAUSE UNDER THE LABOR CODE TO JUSTIFY TERMINATION OF SERVICES. THEY ALSO FAILED TO NOTIFY RESPONDENTS REGARDING THE ACTS OR OMISSIONS WHICH LED TO THEIR TERMINATION.

 

In the present case, petitioners failed to show any valid or just cause under the Labor Code on which it may justify the termination of services of respondents. Also, apart from notifying that their services had already been terminated, petitioner failed to comply with the rudimentary requirement of notifying respondents regarding the acts or omissions which led to the termination of their services as well as giving them an ample opportunity to contest the legality of their dismissal. Having failed to establish compliance with the requirements of termination of employment under the Labor Code, respondents’ dismissal is tainted with illegality.

 

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SUPPOSE AN EMPLOYER ENGAGES A CONTRACTOR AND THE CONTRACTOR FAILS TO PAY THE WAGES OF HIS EMPLOYEES WHAT IF ANY IS THE LIABILITY OF THE EMPLOYER?

 

THE EMPLOYER SHALL BE JOINTLY AND SEVERALLY LIABLE WITH HIS CONTRACTOR 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.

 

Article 106. Contractor or subcontractor. – Whenever an

employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, 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.

 

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IS CONTRACTING-OUT OF LABOR ILLEGAL?

 

PER SE IT IS NOT ILLEGAL. ONLY REGULATED TO PROTECT THE RIGHTS OF WORKERS.  IT CAN BE LABOR-ONLY CONTRACTING OR JOB CONTRACTING. LABOR-ONLY CONTRACTING IS PROHIBITED. JOB CONTRACTING IS REGULATED.

 

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under the Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and jobcontracting 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.

 

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WHEN IS THERE LABOR-ONLY CONTRACTING?

 

WHEN THE  PERSON SUPPLYING WORKERS TO AN EMPLOYER:

 

A)  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 SUCH EMPLOYER.

 

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 person 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.

 

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WHEN IS JOB CONTRACTING PERMISSIBLE?

 

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 AND DIRECTION OF HIS EMPLOYER OR PRINCIPAL IN ALL MATTERS 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. 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 and direction of his employer or principal in all matters 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. (RULES)

 

TO READ THE DECISION, JUST DOWNLOAD THE FILE BELOW.

SC-2013-0021-JULY 2013 – FIRST PHIL INDUSTRIAL – B

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LEGAL NOTE 0138: JUDICIAL COURTESY

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August 7, 2013

LEGAL NOTE 0138:  JUDICIAL COURTESY

 

WHAT IS MEANT BY THE PRECEPT OF JUDICIAL COURTESY?

 

IT MEANS THAT EVEN IF THERE IS NO WRIT OF PRELIMINARY INJUNCTION OR TEMPORARY RESTRAINING ORDER ISSUED BY A HIGHER COURT, IT WOULD BE PROPER FOR A LOWER COURT OR COURT OF ORIGIN TO SUSPEND ITS PROCEEDINGS IN VIEW OF A PENDING APPEAL OR PETITION FOR REVIEW  IN A HIGHER COURT.

 

CITE AN EARLIER CASE WHEN THE PRECEPT OF JUDICIAL COURTESY WAS APPLIED?

 

AS EARLY AS 1988 IN THE CASE OF ETERNAL GARDENS MEMORIAL PARK VS. COURT OF APPEALS ET AL (G.R. NO. L-50054, 17 AUGUST 1988) THE SUPREME COURT HAS APPLIED SUCH DOCTRINE.  IN THAT CASE THE COURT OF APPEALS PROCEEDED TO ACT ON CERTAIN INCIDENCES DESPITE THE  PENDENCY OF A PETITION FOR CERTIORARI PENDING BEFORE THE SUPREME COURT. THE SUPREME COURT RULED THAT WHILE SC HAS NOT ISSUED A RESTRAINING ORDER AGAINST CA TO PREVENT IT FROM TAKING ANY ACTION WITH REGARDS TO ITS RESOLUTIONS IT SHOULD HAVE REFRAINED FROM RULING THEREON BECAUSE BY DOING SO IT RENDERS MOOT WHAT WAS BEFORE THE SC. SAID THE COURT:

 

“Although this Court did not issue any restraining order against the Intermediate Appellate Court to prevent it from taking any action with regard to its resolutions respectively granting respondents’ motion to expunge from the records the petitioner’s motion to dismiss and denying the latter’s motion to reconsider such order, upon learning of the petition, the appellate court should have refrained from ruling thereon because its jurisdiction was necessarily limited upon the filing of a petition for certiorari with this Court questioning the propriety of the issuance of the above-mentioned resolutions. Due respect for the Supreme Court and practical and ethical considerations should have prompted the appellate court to wait for the final determination of the petition before taking cognizance of the case and trying to render moot exactly what was before this court.. . . (UNDERSCORING SUPPLIED.)


WHAT IS THE GENERAL RULE ON STAYING PROCEEDINGS IN THE LOWER COURTS?

 

SECTION 7 OF RULE 65 OF THE RULES OF COURT PROVIDES THE GENERAL RULE THAT THE MERE PENDENCY OF A SPECIAL CIVIL ACTION FOR CERTIORARI COMMENCED IN RELATION TO A CASE PENDING BEFORE A LOWER COURT OR COURT OF ORIGIN DOES NOT STAY THE PROCEEDINGS THEREIN IN THE ABSENCE OF A WRIT OF PRELIMINARY INJUNCTION OR TEMPORARY RESTRAINING ORDER.

 

IS THERE AN EXCEPTION TO THIS RULE?

 

YES,  IN CASE THE PRECEPT OF JUDICIAL COURTESY APPLIES.  IN THE CASE OF REPUBLIC VS. SANDIGANBAYAN ET AL. (G.R. NO. 166859, 26 JUNE 2006) THE SUPREME COURT RULED THAT EVEN IF THERE IS NO WRIT OF PRELIMINARY INJUNCTION OR TEMPORARY RESTRAINING ORDER ISSUED BY A HIGHER COURT IT IS PROPER FOR THE LOWER COURT TO SUSPEND PROCEEDINGS ON THE PRECEPT OF JUDICIAL COURTESY DESPITE THE PROVISION OF SECTION 7 OF RULE 65. SAID THE COURT:

 

The earlier quoted Section 7 of Rule 65 provides the general rule that the mere pendency of a special civil action for Certiorari commenced in relation to a case pending before a lower court or court of origin does not stay the proceedings therein in the absence of a writ of preliminary injunction or temporary restraining order.[4] 

 

There are of course instances where even if there is no writ of preliminary injunction or temporary restraining order issued by a higher court, it would be proper for a lower court or court of origin to suspend its proceedings on the precept of judicial courtesy.    As this Court explained in Eternal Gardens Memorial Park v. Court of Appeals:[5]

 

………………………..

 

This Court explained, however, that the rule on “judicial courtesy” applies where “there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court [or court of origin]”.[6]  (UNDERSCORING SUPPLIED.)

 

WHEN DOES THE RULE ON JUDICIAL COURTESY APPLIES?

 

WHERE “THERE IS A STRONG PROBABILITY THAT THE ISSUES BEFORE THE HIGHER COURT WOULD BE RENDERED MOOT AND MORIBUND AS A RESULT OF THE CONTINUATION OF THE PROCEEDINGS IN THE LOWER COURT [OR COURT OF ORIGIN]”.  (UNDERSCORING SUPPLIED.)

 

DOES IT APPLY ALSO TO LABOR  CASES?

 

YES. EVEN IN LABOR CASES WHERE DECISIONS ARE IMMEDIATELY FINAL AND EXECUTORY,  JUDICIAL COURTESY WAS CONSIDERED   APPLICABLE. IN  MILAGROS PANUNCILLO, PETITIONER, VERSUS CAP PHILIPPINES, INC., RESPONDENT (G.R. NO. 161305, 09 FEBRUARY 2007) A  PETITION FOR REVIEW WAS FILED AT THE CA QUESTIONING THE NLRC DECISION WHICH UPHELD THE DISMISSAL OF AN EMPLOYER. THE LABOR ARBITER DID NOT ISSUE A WRIT OF EXECUTION BECAUSE OF THE PENDING PETITION FOR REVIEW. THE SUPREME COURT APPROVED THE ACTION OF THE LABOR ARBITER AND RULED THAT IT IS AS IF A TEMPORARY RESTRAINING ORDER WAS ISSUED. SAID THE COURT:

 

“If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of an employee even if there is no restraining order, he could probably be merely observing judicial courtesy, which is advisable “if there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court.”[34]  In such a case, it is as if a temporary restraining order was issued . . .” (UNDERSCORING SUPPLIED.)

 

TO WHAT CATEGORY OF COURT DOES THE RULE ON JUDICIAL COURTESY  APPLIES?

 

IT IS BASED ON THE HIERARCHY OF COURTS AND APPLIES ONLY TO LOWER COURTS IN INSTANCES WHERE, EVEN IF THERE IS NO WRIT OF PRELIMINARY INJUNCTION OR TRO ISSUED BY A HIGHER COURT, IT WOULD BE PROPER FOR A LOWER COURT TO SUSPEND ITS PROCEEDINGS FOR PRACTICAL AND ETHICAL CONSIDERATIONS.[35] IN OTHER WORDS, THE PRINCIPLE OF “JUDICIAL COURTESY” APPLIES WHERE THERE IS A STRONG PROBABILITY THAT THE ISSUES BEFORE THE HIGHER COURT WOULD BE RENDERED MOOT AND MORIBUND AS A RESULT OF THE CONTINUATION OF THE PROCEEDINGS IN THE LOWER COURT OR COURT OF ORIGIN.[36]” (UNDERSCORING SUPPLIED).

 

AS RULED IN DATU MICHAEL ABAS KIDA ET AL. VS. SENATE OF THE PHILIPPINES, ET AL. (G.R. NO. 196271, 28 FEBRUARY 2012:

 

“Firstly, the principle of judicial courtesy is based on the hierarchy of courts and applies only to lower courts in instances where, even if there is no writ of preliminary injunction or TRO issued by a higher court, it would be proper for a lower court to suspend its proceedings for practical and ethical considerations.[35] In other words, the principle of “judicial courtesy” applies where there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court or court of origin.[36]” (UNDERSCORING SUPPLIED).

 

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LEGAL NOTE 0137: WHAT IS PROCURING CAUSE?

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July 29, 2013

LEGAL NOTE 0137: WHAT IS PROCURING CAUSE?

 

SOURCE: ORIENTAL PETROLEUM AND MINERALS CORPORATION, PETITIONER, -VERSUS- TUSCAN REAL TV, INC., RESPONDENT. (G.R. NO. 195481, 10 JULY 2013, ABAD J.) SUBJECT/S: BROKER’S COMMISSION; PRINCIPLE OF PROCURING CAUSE. (BRIEF TITLE: ORIENTAL PETROLIUM VS. TUSCAN REALTY)

 

WHAT IS MEANT BY “PROCURING CAUSE”?

 

THE TERM “PROCURING CAUSE” REFERS TO A CAUSE WHICH STARTS A SERIES OF EVENTS AND RESULTS, WITHOUT BREAK IN THEIR CONTINUITY, IN THE ACCOMPLISHMENT OF A BROKER’S PRIME OBJECTIVE OF PRODUCING A PURCHASER WHO IS READY, WILLING, AND ABLE TO BUY ON THE OWNER’S TERMS.

 

THIS IS SIMILAR TO THE CONCEPT OF PROXIMATE CAUSE IN TORTS, WITHOUT WHICH THE INJURY WOULD NOT HAVE OCCURRED.

 

TO BE REGARDED AS THE PROCURING CAUSE OF A SALE, A BROKER’S EFFORTS MUST HAVE BEEN THE FOUNDATION OF THE NEGOTIATIONS WHICH SUBSEQUENTLY RESULTED IN A SALE.

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TUSCAN REALTY WAS ENGAGED BY ORIENTAL PETROLEUM TO LOOK FOR BUYERS FOR ITS CONDOMINIUM UNITS IN CORINTHIAN PLAZA. TUSCAN INTRODUCED GATEWAY TO ORIENTAL PETROLEUM AND A CONTRACT TO SELL WAS EXECUTED. HOWEVER GATEWAY ASSIGNED ITS RIGHT UNDER THE CONTRACT TO SELL IN FAVOR OF ANCHETA WHO ULTIMATELY BOUGHT THE PROPERTY. IS TUSCAN ENTITLED TO BROKER’S COMMISSION?

 

YES.

 

BECAUSE OF THE PRINCIPLE OF “PROCURING CAUSE”.

 

IT WAS ON ACCOUNT OF TUSCAN REALTY’S EFFORT THAT ORIENTAL PETROLEUM GOT CONNECTED TO GATEWAY, THE PROSPECTIVE BUYER, RESULTING IN THE LATTER TWO ENTERING INTO A CONTRACT TO SELL INVOLVING THE TWO CONDOMINIUM UNITS. ALTHOUGH GATEWAY TURNED AROUND AND SOLD THE CONDOMINIUM UNITS TO ANCHETA, THE FACT IS THAT SUCH ULTIMATE SALE COULD NOT HAVE HAPPENED WITHOUT GATEWAY’S INDISPENSABLE INTERVENTION AS INTERMEDIATE BUYER.

 

TO READ THE DECISION, JUST DOWNLOAD THE FILE BELOW.

SCD-2013-0020 -JULY 2013 – 0RIENTAL PETROLEUM

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