Perpetual Help Credit Cooperative, Inc. v. Faburada
REITERATIONFacts
The Antecedents: Private respondents Benedicto Faburada, Sisinita Vilar, Imelda Tamayo, and Harold Catipay filed a complaint against petitioner Perpetual Help Credit Cooperative, Inc. (PHCCI) for illegal dismissal, premium pay on holidays and rest days, separation pay, wage differential, moral damages, and attorney's fees. PHCCI moved to dismiss, arguing no employer-employee relationship existed as private respondents were members and co-owners, and that internal cooperative remedies were not exhausted. PHCCI later filed a supplemental motion to dismiss, citing Article 121 of R.A. No. 6939 requiring conciliation or mediation within the cooperative before resorting to judicial proceedings. Procedural History: The Labor Arbiter denied the motion to dismiss, finding an employer-employee relationship and stating that cooperative law is subservient to the Labor Code. The Labor Arbiter rendered a decision finding the complainants illegally dismissed and ordering PHCCI to pay backwages, separation pay, 13th month pay, wage differentials, and attorney's fees. The National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's decision on appeal. The Petition: PHCCI filed a petition for certiorari, questioning the NLRC's ruling that an employer-employee relationship existed and that private respondents were illegally dismissed.
Issue(s)
Whether respondent NLRC committed grave abuse of discretion in ruling that there is an employer-employee relationship between the parties. Whether private respondents were illegally dismissed. Whether the Labor Arbiter has jurisdiction over the complaint despite the alleged failure to exhaust internal cooperative remedies.
Ruling
The petition is denied. The decision of respondent NLRC is affirmed, with modification that the backwages due private respondents shall be paid in full, computed from the time they were illegally dismissed up to the time of the finality of the Decision.
Ratio Decidendi
On the existence of an employer-employee relationship: The Court reiterated the four elements to determine an employer-employee relationship: (1) the selection and engagement of the worker; (2) the power to dismiss; (3) the payment of wages; and (4) the power to control the worker's conduct, with the latter being the most important. The Court found these elements present, noting that private respondents were hired, worked regular hours, had specific duties, were paid regular wages, accomplished daily time records, and worked under the supervision of the cooperative manager. The Court emphasized that the nature of the work and the length of service, not just the number of hours worked, determine regularity of employment. The contention that private respondents were mere volunteer workers was rejected. On illegal dismissal: The Court affirmed the findings of the Labor Arbiter and NLRC that private respondents were illegally dismissed. As regular employees, they are entitled to security of tenure and can only be terminated for just or authorized causes, with observance of due process. The private respondents were dismissed because PHCCI considered them voluntary workers, not for any valid cause. Furthermore, PHCCI failed to comply with procedural due process, which requires two written notices before termination. Only one memorandum terminating their services was issued. On the jurisdiction of the Labor Arbiter: The Court clarified that Presidential Decree No. 175 and its implementing rules do not provide for a grievance machinery applicable to the dispute. Letter of Instruction No. 23 was deemed irrelevant. While Article 121 of R.A. No. 6938 and Section 8 of R.A. No. 6939 provide for conciliation or mediation mechanisms within cooperatives, these provisions apply to disputes among members, officers, directors, and intra-cooperative disputes. The Court held that the dispute in this case, concerning payment of wages, overtime pay, rest day, and termination of employment, falls under the original and exclusive jurisdiction of the Labor Arbiter as provided by Article 217 of the Labor Code, regardless of whether the private respondents were members of the cooperative.
Main Doctrine
Members of a cooperative who render services necessary to the day-to-day operations of the cooperative, are paid regular wages, work under the supervision of the cooperative manager, and are dismissed without just or authorized cause and without observance of procedural due process, are considered regular employees entitled to reinstatement and full backwages, notwithstanding their status as members of the cooperative. Disputes concerning wages, overtime pay, rest day, and termination of employment fall within the exclusive jurisdiction of the Labor Arbiter.