G.R. No.

87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET
AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL
CORPORATION, respondents.

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:

Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and
Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel
Corporation vs. SMCEU-PTGWO, et als."

Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor dispute being involved.
Private respondent San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the ground of absence of any employer-employee
relationship between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite Service Enterprises
(D'Rite), besides the fact that the Union is bereft of personality to represent said workers for purposes of collective bargaining. The Solicitor General
agrees with the position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and D'Rite (Annexes K and I, SanMig's
Comment, respectively). These companies are independent contractors duly licensed by the Department of Labor and Employment (DOLE). SanMig
entered into those contracts to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion and diversity of its
operation. In said contracts, it was expressly understood and agreed that the workers employed by the contractors were to be paid by the latter and
that none of them were to be deemed employees or agents of SanMig. There was to be no employer-employee relation between the contractors and/or
its workers, on the one hand, and SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized representative of the monthly paid rank-
and-file employees of SanMig with whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A,
SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract employees and workers are excluded from
the bargaining unit and, therefore, outside the scope of this Agreement."

In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and D'Rite workers had signed up for union
membership and sought the regularization of their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for SanMig for a period ranging from six (6) months to fifteen
(15) years and that their work is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or
trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then demanded that the employment status of
these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for unfair labor
practice, CBA violations, and union busting (Annex D, Petition).

On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F, Petition).

As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the two (2) notices of strike were consolidated and
several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).

Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and offices.

On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to enjoin the Union from:
 a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the purposes of collective
bargaining;

b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to demonstrate and/or picket at the
plants and offices of plaintiff within the bargaining unit referred to in the CBA,...;

d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines and/or barricades
which the defendants may set up at the plants and offices of plaintiff within the bargaining unit referred to in the CBA ...;

f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract workers of plaintiff, as well as
those persons lawfully transacting business with plaintiff at the work places within the bargaining unit referred to in the CBA, ...,
to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the work places within the
bargaining unit referred to in the CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within the bargaining unit
referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex
H, Petition)

Respondent Court found the Complaint sufficient in form and substance and issued a Temporary Restraining Order for the purpose of maintaining
the status quo, and set the application for Injunction for hearing.

In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the case/nature
of the action, which motion was opposed by SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.

After several hearings on SanMig's application for injunctive relief, where the parties presented both testimonial and documentary evidence on 25
March 1989, respondent Court issued the questioned Order (Annex A, Petition) granting the application and enjoining the Union from Committing the
acts complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary Injunction after SanMig had
posted the required bond of P100,000.00 to answer for whatever damages petitioners may sustain by reason thereof.

In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court has jurisdiction to take
cognizance of plaintiff's grievance.

The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite. The application and
contract for employment of the defendants' witnesses are either with Lipercon or D'Rite. What could be discerned is that there is
no employer-employee relationship between plaintiff and the contractual workers employed by Lipercon and D'Rite. This,
however, does not mean that a final determination regarding the question of the existence of employer-employee relationship
has already been made. To finally resolve this dispute, the court must extensively consider and delve into the manner of
selection and engagement of the putative employee; the mode of payment of wages; the presence or absence of a power of
dismissal; and the Presence or absence of a power to control the putative employee's conduct. This necessitates a full-blown
trial. If the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the other hand,
a writ of injunction does not necessarily expose defendants to irreparable damages.

Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the challenged Writ. On 24 April 1989, we issued a
Temporary Restraining Order enjoining the implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we
can now strike," which it superimposed on the Order and widely circulated to entice the Union membership to go on strike. Upon being apprised
thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).

In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the contractual workers of Lipercon and D'Rite had been
laid off. The strike adversely affected thirteen (13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation. The Union stated that it would lift the strike if
the thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their other demands, such as wage distortion and appointment of
coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that "without prejudice to the outcome
of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their
former jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would
immediately lift the pickets and return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and required the parties to submit their memoranda
simultaneously, the last of which was filed on 9 January 1990.

The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over the present controversy and properly issued
the Writ of Preliminary Injunction to the resolution of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of
the regular Courts.

Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a labor dispute and is directly
connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the
acts complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private respondent) are within the competence of labor
tribunals, is beyond question" (pp. 6-7, Petitioners' Memo).

On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor dispute between itself and the
Union. SanMig submits, in particular, that "respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of strike
staged by petitioner union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to hire and thereby create
an employment relationship with contractual workers, especially were the contractual workers were recognized by the union,
under the governing collective bargaining agreement, as excluded from, and therefore strangers to, the bargaining unit.

B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a deadlock in a labor
dispute over 'wages, hours of work and all other and of the employment' of the employees in the unit. The union leaders cannot
instigate a strike to compel the employer, especially on the eve of certification elections, to hire strangers or workers outside the
unit, in the hope the latter will help re-elect them.

C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of a labor dispute, is an
abuse of right, and violates the employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476,
Rollo).

We find the Petition of a meritorious character.

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "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 the disputants stand in the proximate relation of employer and employee."

While it is SanMig's submission that no employer-employee relationship exists between itself, on the one hand, and the contractual workers of Lipercon
and D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether the disputants stand in the proximate relationship of employer
and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the terms and conditions of employment or a
"change" or "arrangement" thereof (ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the fact that the
plaintiffs and defendants do not stand in the proximate relation of employer and employee.

That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to regularize the status of the employees
contracted by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms are thus
involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to represent those workers, who have signed up for
Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that there is no employer-
employee relationship between it and those workers and because the demand violates the terms of their CBA. Obvious then is that representation and
association, for the purpose of negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was precisely also
to prevent such representation. Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied that the
controversy below is directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB
NCR NS-01-093-83).

Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite constitute "labor-only" contracting and,
therefore, a regular employer-employee relationship may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of
Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid and the strike itself
legal when it was allegedly instigated to compel the employer to hire strangers outside the working unit; those are issues the resolution of which call
for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably linked with those issues.

The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is not controlling as in that case there
was no controversy over terms, tenure or conditions, of employment or the representation of employees that called for the application of labor laws. In
that case, what the petitioning union demanded was not a change in working terms and conditions, or the representation of the employees, but that its
members be hired as stevedores in the place of the members of a rival union, which petitioners wanted discharged notwithstanding the existing
contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts unique to that case, that such a demand
could hardly be considered a labor dispute.

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitly provided for in Article 217 of the Labor
Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original
and exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor practice cases; 2. those that workers
may file involving wages, hours of work and other terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this
Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of the law.

The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the case within the
jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those disputes. To allow the action filed below to prosper
would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice (Philippine Communications, Electronics and Electricity
Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).

We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its best business judgment to determine whether it
should contract out the performance of some of its work to independent contractors. However, the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law (Section 3, Article XIII, 1987
Constitution) equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium.

WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ
of Prohibition is GRANTED and respondent Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of
dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the proceedings in the National
Conciliation Mediation Board-Department of Labor and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No
costs.

SO ORDERED.

RAUL G. LOCSIN and G.R. No. 185251

EDDIE B. TOMAQUIN,
Petitioners,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
PHILIPPINE LONG DISTANCE Promulgated:
TELEPHONE COMPANY,
Respondent. October 2, 2009
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks the reversal of the May 6, 2008 Decision [1] and November 4, 2008

Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 97398, entitled Philippine Long Distance Telephone Company v. National Labor Relations

Commission, Raul G. Locsin and Eddie B. Tomaquin. The assailed decision set aside the Resolutions of the National Labor Relations Commission

(NLRC) dated October 28, 2005 and August 28, 2006 which in turn affirmed the Decision dated February 13, 2004 of the Labor Arbiter. The assailed

resolution, on the other hand, denied petitioners motion for reconsideration of the assailed decision.
 The Facts

On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the Security and Safety Corporation of the Philippines

(SSCP) entered into a Security Services Agreement [3](Agreement) whereby SSCP would provide armed security guards to PLDT to be assigned to its

various offices.

Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards, were posted at a PLDT office.

On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement effective October 1, 2001.[4]

Despite the termination of the Agreement, however, petitioners continued to secure the premises of their assigned office. They were allegedly directed

to remain at their post by representatives of respondent. In support of their contention, petitioners provided the Labor Arbiter with copies of petitioner

Locsins pay slips for the period of January to September 2002. [5]

Then, on September 30, 2002, petitioners services were terminated.

Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such as overtime pay, holiday pay,

premium pay for holiday and rest day, service incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary damages against

PLDT.

The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the Decision that petitioners were found to be

employees of PLDT and not of SSCP. Such conclusion was arrived at with the factual finding that petitioners continued to serve as guards of PLDTs

offices. As such employees, petitioners were entitled to substantive and procedural due process before termination of employment. The Labor Arbiter

held that respondent failed to observe such due process requirements. The dispositive portion of the Labor Arbiters Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Philippine Long Distance and
Telephone Company (PLDT) to pay complainants Raul E. Locsin and Eddie Tomaquin their separation pay and back wages
computed as follows:

NAME SEPARATION PAY BACKWAGES

1. Raul E. Locsin P127,500.00 P240,954.67
2. Eddie B. Tomaquin P127,500.00 P240,954.67
P736,909.34

All other claims are DISMISSED for want of factual basis.

Let the computation made by the Computation and Examination Unit form part of this decision.

SO ORDERED.

PLDT appealed the above Decision to the NLRC which rendered a Resolution affirming in toto the Arbiters Decision.

Thus, PDLT filed a Motion for Reconsideration of the NLRCs Resolution which was also denied.
Consequently, PLDT filed a Petition for Certiorari with the CA asking for the nullification of the Resolution issued by the NLRC as well as the Labor

Arbiters Decision. The CA rendered the assailed decision granting PLDTs petition and dismissing petitioners complaint. The dispositive portion of the

CA Decision provides:

WHEREFORE, the instant Petition for Certiorari is GRANTED. The Resolutions dated October 28, 2005 and August 28, 2006 of
the National Labor Relations Commission are ANNULLED and SET ASIDE. Private respondents complaint against Philippine
Long Distance Telephone Company is DISMISSED.

SO ORDERED.

The CA applied the four-fold test in order to determine the existence of an employer-employee relationship between the parties but did not

find such relationship. It determined that SSCP was not a labor-only contractor and was an independent contractor having substantial capital to operate

and conduct its own business. The CA further bolstered its decision by citing the Agreement whereby it was stipulated that there shall be no employer-

employee relationship between the security guards and PLDT.

Anent the pay slips that were presented by petitioners, the CA noted that those were issued by SSCP and not PLDT; hence, SSCP

continued to pay the salaries of petitioners after the Agreement. This fact allegedly proved that petitioners continued to be employees of

SSCP albeit performing their work at PLDTs premises.

From such assailed decision, petitioners filed a motion for reconsideration which was denied in the assailed resolution.

Hence, we have this petition.

The Issues

1. Whether or not; complainants extended services to the respondent for one (1) year from October 1, 2001, the effectivity of
the termination of the contract of complainants agency SSCP, up to September 30, 2002, without a renewed contract,
constitutes an employer-employee relationship between respondent and the complainants.

2. Whether or not; in accordance to the provision of the Article 280 of the Labor Code, complainants extended services to the
respondent for another one (1) year without a contract be considered as contractual employment.

3. Whether or not; in accordance to the provision of the Article 280 of the Labor Code, does complainants thirteen (13) years
of service to the respondent with manifestation to the respondent thirteen (13) years renewal of its security contract with
the complainant agency SSCP, can be considered only as seasonal in nature or fixed as [specific projects] or
undertakings and its completion or termination can be dictated as [controlled] by the respondent anytime they wanted to.

4. Whether or not; complainants from being an alleged contractual employees of the respondent for thirteen (13) years as
they were then covered by a contract, becomes regular employees of the respondent as the one (1) year extended
services of the complainants were not covered by a contract, and can be considered as direct employment pursuant to the
provision of the Article 280 of the Labor Code.

5. Whether or not; the Court of Appeals committed grave abuse of discretion when it set aside and [annulled] the labor
[arbiters] decision and of the NLRCs resolution declaring the dismissal of the complainant as illegal. [6]

The Courts Ruling

This petition is hereby granted.

 An Employer-Employee
Relationship Existed Between the Parties

It is beyond cavil that there was no employer-employee relationship between the parties from the time of petitioners first assignment to

respondent by SSCP in 1988 until the alleged termination of the Agreement between respondent and SSCP. In fact, this was the conclusion that was

reached by this Court in Abella v. Philippine Long Distance Telephone Company,[7] where we ruled that petitioners therein, including herein petitioners,

cannot be considered as employees of PLDT. It bears pointing out that petitioners were among those declared to be employees of their respective

security agencies and not of PLDT.

The only issue in this case is whether petitioners became employees of respondent after the Agreement between SSCP and respondent

was terminated.

This must be answered in the affirmative.

Notably, respondent does not deny the fact that petitioners remained in the premises of their offices even after the Agreement was

terminated. And it is this fact that must be explained.

To recapitulate, the CA, in rendering a decision in favor of respondent, found that: (1) petitioners failed to prove that SSCP was a labor-only

contractor; and (2) petitioners are employees of SSCP and not of PLDT.

In arriving at such conclusions, the CA relied on the provisions of the Agreement, wherein SSCP undertook to supply PLDT with the

required security guards, while furnishing PLDT with a performance bond in the amount of PhP 707,000. Moreover, the CA gave weight to the provision

in the Agreement that SSCP warranted that it carry on an independent business and has substantial capital or investment in the form of equipment,

work premises, and other materials which are necessary in the conduct of its business.

Further, in determining that no employer-employee relationship existed between the parties, the CA quoted the express provision of the

Agreement, stating that no employer-employee relationship existed between the parties herein. The CA disregarded the pay slips of Locsin considering

that they were in fact issued by SSCP and not by PLDT.

From the foregoing explanation of the CA, the fact remains that petitioners remained at their post after the termination of the Agreement.

Notably, in its Comment dated March 10, 2009,[8] respondent never denied that petitioners remained at their post until September 30, 2002. While

respondent denies the alleged circumstances stated by petitioners, that they were told to remain at their post by respondents Security Department and

that they were informed by SSCP Operations Officer Eduardo Juliano that their salaries would be coursed through SSCP as per arrangement with

PLDT, it does not state why they were not made to vacate their posts. Respondent said that it did not know why petitioners remained at their posts.

Rule 131, Section 3(y) of the Rules of Court provides:

 SEC. 3. Disputable presumptions.The following presumptions are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence:

xxxx

(y) That things have happened according to the ordinary course of nature and the ordinary habits of life.

In the ordinary course of things, responsible business owners or managers would not allow security guards of an agency with whom the

owners or managers have severed ties with to continue to stay within the business premises. This is because upon the termination of the owners or

managers agreement with the security agency, the agencys undertaking of liability for any damage that the security guard would cause has already

been terminated. Thus, in the event of an accident or otherwise damage caused by such security guards, it would be the business owners and/or

managers who would be liable and not the agency. The business owners or managers would, therefore, be opening themselves up to liability for acts of

security guards over whom the owners or managers allegedly have no control.

At the very least, responsible business owners or managers would inquire or learn why such security guards were remaining at their posts,

and would have a clear understanding of the circumstances of the guards stay. It is but logical that responsible business owners or managers would be

aware of the situation in their premises.

We point out that with respondents hypothesis, it would seem that SSCP was paying petitioners salaries while securing respondents

premises despite the termination of their Agreement. Obviously, it would only be respondent that would benefit from such a situation. And it is seriously

doubtful that a security agency that was established for profit would allow its security guards to secure respondents premises when the Agreement was

already terminated.

From the foregoing circumstances, reason dictates that we conclude that petitioners remained at their post under the instructions of

respondent. We can further conclude that respondent dictated upon petitioners that the latter perform their regular duties to secure the premises during

operating hours. This, to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee relationship. Certainly,

the facts as narrated by petitioners are more believable than the irrational denials made by respondent. Thus, we ruled in Lee Eng Hong v. Court of

Appeals:[9]

Evidence, to be believed, must not only proceed from the mouth of a credible witness, but it must be credible in itself such as
the common experience and observation of mankind can approve as probable under the circumstances. We have no test of the
truth of human testimony, except its conformity to our knowledge, observation and experience. Whatever is repugnant to these
belongs to the miraculous and is outside judicial cognizance (Castaares v. Court of Appeals, 92 SCRA 568 [1979]).

To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the Agreement, petitioners remained at

their post securing the premises of respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the

denials proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest and, presumably, directive

of respondent, petitioners continued with their services. Evidently, such are indicia of control that respondent exercised over petitioners.

Such power of control has been explained as the right to control not only the end to be achieved but also the means to be used in reaching

such end.[10] With the conclusion that respondent directed petitioners to remain at their posts and continue with their duties, it is clear that respondent

exercised the power of control over them; thus, the existence of an employer-employee relationship.
 In Tongko v. The Manufacturers Life Insurance Co. (Phils.) Inc.,[11] we reiterated the oft repeated rule that control is the most important

element in the determination of the existence of an employer-employee relationship:

In the determination of whether an employer-employee relationship exists between two parties, this Court applies
the four-fold test to determine the existence of the elements of such relationship. In Pacific Consultants International Asia, Inc.
v. Schonfeld, the Court set out the elements of an employer-employee relationship, thus:

Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute,
four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. It is the so-
called control test which constitutes the most important index of the existence of the employer-employee relationship
that is, whether the employer controls or has reserved the right to control the employee not only as to the result of
the work to be done but also as to the means and methods by which the same is to be accomplished. Stated
otherwise, an employer-employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end to be achieved but also the means to be used in reaching such end.

Furthermore, Article 106 of the Labor Code contains a provision on contractors, to wit:

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the latters 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.

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

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. (Emphasis supplied.)

Thus, the Secretary of Labor issued Department Order No. 18-2002, Series of 2002, implementing Art. 106 as follows:

Section 5. Prohibition against labor-only contracting.Labor-only contracting is hereby declared prohibited. For this
purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor 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.

The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code, as
amended.

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.

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.

On the other hand, Sec. 7 of the department order contains the consequence of such labor-only contracting:

Section 7. Existence of an employer-employee relationship.The contractor or subcontractor shall be considered the

employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation.
The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor
Code, including the failure to pay wages.
 The principal shall be deemed the employer of the contractual employee in any of the following cases as declared
by a competent authority:

(a) where there is labor-only contracting; or

(b) where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.
(Emphasis supplied.)

Evidently, respondent having the power of control over petitioners must be considered as petitioners employerfrom the termination of the

Agreement onwardsas this was the only time that any evidence of control was exhibited by respondent over petitioners and in light of our ruling

in Abella.[12] Thus, as aptly declared by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent, including due

process requirements in the termination of their services.

Both the Labor Arbiter and NLRC found that respondent did not observe such due process requirements. Having failed to do so,

respondent is guilty of illegal dismissal.

WHEREFORE, we SET ASIDE the CAs May 6, 2008 Decision and November 4, 2008 Resolution in CA-G.R. SP No. 97398. We

hereby REINSTATE the Labor Arbiters Decision dated February 13, 2004 and the NLRCs Resolutions dated October 28, 2005 and August 28, 2006.

No costs.

SO ORDERED.

PEOPLES BROADCASTING SERVICE (BOMBO RADYO G.R. No. 179652

PHILS., INC.),
Petitioner, Present:

CORONA, C.J.,
CARPIO,
- versus - VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
THE SECRETARY OF THE DEPARTMENT OF LABOR AND BERSAMIN,
EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION DEL CASTILLO,*
VII, and JANDELEON JUEZAN, ABAD,
Respondents. VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.

Promulgated:
March 6, 2012
x-----------------------------------------------------------------------------------------x

RESOLUTION

VELASCO, JR., J.:

In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and

Resolution of the Court of Appeals (CA) dated October 26, 2006 and June 26, 2007, respectively, in C.A. G.R. CEB-SP No. 00855.
 Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor and Employment (DOLE) Regional

Office No. VII, Cebu City, 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. [1] After the conduct of summary investigations,

and after the parties submitted their position papers, the DOLE Regional Director found that private respondent was an employee of petitioner, and was

entitled to his money claims. [2] Petitioner sought reconsideration of the Directors Order, but failed. The Acting DOLE Secretary dismissed petitioners

appeal on the ground that petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety bond. When the matter was

brought before the CA, where petitioner 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, as the jurisdictional limitation imposed by Article

129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730. [3]

In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against petitioner was dismissed. The dispositive portion

of the Decision reads as follows:

WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26 June
2007 of the Court of Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order of the then Acting
Secretary of the Department of Labor and Employment dated 27 January 2005 denying petitioners appeal, and the Orders of
the Director, DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively, are ANNULLED. The
complaint against petitioner is DISMISSED.[4]

The Court found that there was no employer-employee relationship between petitioner and private respondent. It was held that while the

DOLE may make a determination of the existence of an employer-employee relationship, this function could not be co-extensive with the visitorial and

enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. 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). [5]

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.[6] In its Comment,[7] the DOLE sought clarification as well, as to the extent of its visitorial and enforcement power

under the Labor Code, as amended.

The Court treated the Motion for Clarification as a second motion for reconsideration, granting said motion and reinstating the petition. [8] It is

apparent that there is a need to delineate the jurisdiction of the DOLE Secretary vis--vis that of the NLRC.

Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing officers to hear and decide any matter involving

the recovery of wages and other monetary claims and benefits was qualified by the proviso that the complaint not include a claim for reinstatement, or

that the aggregate money claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening the Visitorial and Enforcement Powers of the

Secretary of Labor, did away with the PhP 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims

beyond PhP 5,000. The only qualification to this expanded power of the DOLE was only that there still be an existing employer-employee relationship.
 It is conceded that if there is no employer-employee relationship, whether it has been terminated or it has not existed from the start, the

DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the first sentence 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. 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?

The first portion of the question must be answered in the affirmative.

The prior decision of this Court in the present case accepts such answer, but places a limitation upon the power of the DOLE, that is, the

determination of the existence of an employer-employee relationship cannot be co-extensive with the visitorial and enforcement power of the

DOLE. But even in conceding the power of the DOLE to determine the existence of an employer-employee relationship, the Court held that the

determination of the existence of an employer-employee relationship is still primarily within the power of the NLRC, that any finding by the DOLE is

merely preliminary.

This 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 must have the power to determine whether or

not an employer-employee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the

Labor Code, as amended by RA 7730.

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. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use

of the same evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and

enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing

the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing

of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that

evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship.
 If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of

the NLRC. The DOLE would have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review,

that no employer-employee relationship existed in the first place.

The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate the prospect of competing conclusions

between the DOLE and the NLRC. The prospect of competing conclusions could just as well have been eliminated by according respect to the DOLE

findings, to the exclusion of the NLRC, and this We believe is the more prudent course of action to take.

This is not to say that the determination by the DOLE is beyond question or review. Suffice it to say, there are judicial remedies such as a

petition for certiorari under Rule 65 that may be availed of, should a party wish to dispute the findings of the DOLE.

It must also be remembered that the power of the DOLE to determine the existence of an employer-employee relationship need not

necessarily result in an affirmative finding. The DOLE may well make the determination that no employer-employee relationship exists, thus divesting

itself of jurisdiction over the case. It must not be precluded from being able to reach its own conclusions, not by the parties, and certainly not by this

Court.

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.

There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a threshold amount set by Arts. 129 and

217 of the Labor Code when money claims are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is with the regional director of the

DOLE, under Art. 129, and if the amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217.The view states that

despite the wording of Art. 128(b), this would only apply in the course of regular inspections undertaken by the DOLE, as differentiated from cases

under Arts. 129 and 217, which originate from complaints. There are several cases, however, where the Court has ruled that Art. 128(b) has been

amended to expand the powers of the DOLE Secretary and his duly authorized representatives by RA 7730. In these cases, the Court resolved that the

DOLE had the jurisdiction, despite the amount of the money claims involved. Furthermore, in these cases, the inspection held by the DOLE regional

director was prompted specifically by a complaint. Therefore, the initiation of a case through a complaint does not divest the DOLE Secretary or his

duly authorized representative of jurisdiction under Art. 128(b).

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor

legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the

exclusion of the NLRC.If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is

filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor

Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and

other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an
existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned

through a petition for certiorari under Rule 65 of the Rules of Court.

In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship has been subjected to

review by this Court, with the finding being that there was no employer-employee relationship between petitioner and private respondent, based on the

evidence presented. Private respondent presented self-serving allegations as well as self-defeating evidence. [10]The findings of the Regional Director

were not based on substantial evidence, and private respondent failed to prove the existence of an employer-employee relationship. The DOLE had no

jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is proper.

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.

SO ORDERED.