Labor Standards Case Digests

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ASSIGNMENT #2 CASE DIGESTS EMPLOYER-EMPLOYEE RELATIONSHIP
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents. FACTS: Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification election on behalf of the route managers at PepsiCola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides: Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order dated September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third Division for lack of showing that respondent committed grave abuse of discretion. But petitioner filed a motion for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. ISSUES: (1) whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees and (2) whether Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, 8 of the Constitution. HELD:1. Yes, route managers are considered managerial employees. We have in this case an expert's view that the employees concerned are managerial employees within the purview of Art. 212 which provides: (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. Examples of first-line managers are the "foreman" or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large office. First-level managers are often called supervisors. MIDDLE MANAGERS The term middle management can refer to more than one level in an organization. Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers' principal responsibilities are to direct the activities that implement their organizations' policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle manager. TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organization's interactions with its environment. Typical titles of top managers are "chief executive officer," "president," and "senior vicepresident." Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management 2 classification. As can be seen from this description, a distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-and-file employees. "Managerial employees" may therefore be said to fall into two distinct categories: the "managers" per se, who compose the former group described above, and the "supervisors" who form the latter group. Whether they belong to the first or the second

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category, managers, vis-a-vis employers, employees.
are,
likewise,
Unlike supervisors who basically merely direct operating employees in line with set tasks assigned to them, route managers are responsible for the success of the company's main line of business through management of their respective sales teams. Such management necessarily involves the planning, direction, operation and evaluation of their individual teams and areas which the work of supervisors does not entail. The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them. They are not mere functionaries with simple oversight functions but business administrators in their own right. 2. No, Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, does not violate Art. III, 8 of the Constitution Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-andfile employees but may join, assist or form separate labor organizations of their own. This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides separate definitions of the terms "managerial" and "supervisory employees," as follows: Art. 212. Definitions. . . . (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Although the definition of "supervisory employees" seems to have been unduly restricted to the last phrase of the definition in the Industrial Peace Act, the legal significance given to the phrase "effectively recommends" remains the same. In fact, the distinction between top and middle managers, who set management policy, and front-line supervisors, who are merely responsible for ensuring that such policies are carried out by
the rank and file, is articulated in the present definition. When read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of the Constitutional Commission in framing Art. III, 8 of the fundamental law. Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in his ponencia inPhilips Industrial 31 Development, Inc. v. NLRC: In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or joint a labor union equally applies to them. In Bulletin Co., Inc. v. Hon. Augusto Sanchez, elaborated on this rationale, thus: Publishing Court
this
. . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial 32 employees in Union membership. To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to organize. But the same reason for denying them the right to organize justifies even more the ban on managerial employees from forming unions. After all, those who qualify as top or middle managers are executives who receive from their employers information that not only is confidential but also is not generally available to the public, or to their competitors, or to other employees. It is hardly necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the decision in that case. WHEREFORE, the petition is DISMISSED.

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Separate Opinions DAVIDE, JR., J., concurring and dissenting; I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III of the Constitution. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional Commission, that all employees meaning rankand-file, supervisory and managerial whether from the public or the private sectors, have the right to form unions for purposes not contrary to law. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional Commission, that all employees meaning rankand-file, supervisory and managerial whether from the public or the private sectors, have the right to form unions for purposes not contrary to law. PUNO, J., separate concurring; To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between management and labor. If all managerial employees will be allowed to unionize, then all who are in the payroll of the company, starting from the president, vice-president, general managers and everyone, with the exception of the directors, may go on strike or picket the
employer. Company officers will join forces with the supervisors and rank-and-file. Management and labor will become a solid phalanx with bargaining rights that could be 41 enforced against the owner of the company. The basic opposing forces in the industry will not be management and labor but the operating group on the one hand and the stockholder and bondholder group on the other. The industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross receipts of industry between 42 these two groups. And this will certainly bring ill-effects on our economy. VITUG, J., separate concurring and dissenting; I submit, with due respect, that the members of petitioning union, not really being "managerial employees" in the true sense of the term, are not disqualified from forming or joining labor organizations under Article 245 of the Labor Code. I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers, being no more than supervisory employees, can lawfully organize themselves into a labor union within the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the Labor Code has not been revoked by the 1987 Constitution. (CLAU)
SONZA vs. ABS-CBN Facts: ABS-CBN signed an Agreement with Mel and Jay Management and Development Corporation (MJMDC). Referred to in the Agreement as AGENT, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. Sonza wrote a letter to ABS-CBN, informing them that he irrevocably resigns in view of recent events concerning his programs and career. The acts of the station are violative of the Agreement and such letter will serve as a notice rescission of said Agreement. It also stated that he is waiving and renouncing recovery of the remaining amount stipulated but reserves the right to seek recovery of the other benefits under said Agreement. Sonza filed a complaint against ABS-CBN before the DOLE. He complained for non-payment of his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties but the Labor Arbiter denied the motion to dismiss. The Labor Arbiter then considered the case submitted for resolution and rendered his Decision dismissing the complaint for lack of jurisdiction. Sonza appealed to the NLRC which rendered its Decision affirming the Labor Arbiters decision. Sonza filed a motion for reconsideration, which the NLRC denied as well. Hence this present petition. Issue: WON there is an employer-employee relationship between Sonza and ABS-CBN. Ruling: There is no employer-employee relationship between Sonza and ABS-CBN. Case law has consistently held that the elements of an employer-employee relationship are: (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 employee on the means and methods by which the work is accomplished. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of Sonza, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If Sonza did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with Sonza but would have hired him through its personnel department just like any other employee. All the talent fees and benefits paid to Sonza were the result of negotiations that led to the Agreement. If Sonza were ABSCBNs employee, there would be no need for the parties to stipulate on benefits which the law automatically incorporates into every employer-employee contract. Whatever benefits he enjoyed arose from contract and not because of an employeremployee relationship.
Sonza failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under labor laws. Even if it suffered severe business losses, ABS-CBN could not retrench Sonza because ABS-CBN remained obligated to pay his talent fees during the life of the Agreement. This circumstance indicates an independent contractual relationship between Sonza and ABS-CBN. ABS-CBN engaged Sonzas services specifically to co-host the Mel & Jay programs. ABS-CBN did not assign any other work to Sonza. To perform his work, SONZA only needed his skills and talent. Sonza had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. ABS-CBN did not instruct Sonza how to perform his job. Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. ABS-CBNs control was limited only to the result of Sonzas work, whether to broadcast the final product or not. Sonza further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABSCBN supplied the equipment, crew and airtime needed to broadcast the Mel & Jay programs. However, the equipment, crew and airtime are not the tools and instrumentalities Sonza needed to perform his job. What Sonza principally needed were his talent or skills and the costumes necessary for his appearance. A radio broadcast specialist who works under minimal supervision is an independent contractor. The records do not show that ABS-CBN exercised any supervision and control over how Sonza utilized his skills and talent in his shows. Sonza urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and standards of performance. The Agreement stipulates that Sonza shall abide with the rules and standards of performance covering talents of ABS-CBN. The Agreement does not require Sonza to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code imposed on Sonza refers to KBP code. The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Lastly, Sonza insists that the exclusivity clause in the Agreement is the most extreme form of control which ABSCBN exercised over him. Being an exclusive talent does not by itself mean that Sonza is an employee of ABS-CBN. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. Sonzas claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In effect, Sonzas cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts. (DEUS)
G.R. No. 169136
July 14, 2006
ASIATIC DEVELOPMENT CORPORATION, petitioner, vs. SPOUSES WELLINGTON and FLORDELIZA BROGADA, respondents. FACTS: Respondents Wellington and Flordeliza Brogada are the parents of Fermin B. Brogada who was allegedly employed 4 by petitioner Asiatic Development Corporation from July 1994 up to his death in November 14, 1996. Respondents filed with the SSC a petition for social security coverage and payment of contributions in order to avail of the benefits accruing from the death of Fermin. They alleged that Fermin worked as survey aide under Engr. Bienvenido Orense, petitioners geodetic engineer. Fermin was working on a project with Engr. Orense for one of petitioners clients when he was shot and killed. Petitioner denied its liability. It argued that there was no employer-employee relationship between it and Fermin. It claimed that Fermin was the employee of Engr. Orense. ISSUE: WON ee-er relationship exists. HELD: The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of 6 fact. In petitions for review on certiorari under Rule 45, only questions of law may be raised by the parties and passed upon 7 by this Court. Factual findings of quasi-judicial bodies like the SSC, when adopted and confirmed by the CA and if supported by substantial evidence, are accorded respect and even finality 8 by this Court. While this Court has recognized several 9 exceptions to this rule, none of these exceptions finds application here. Both the SSC and CA found that Fermin was petitioners employee. Thus, petitioner is liable for unpaid social security contributions. Petitioners claims are a mere reiteration of arguments unsuccessfully raised before the SSC and the CA. No compelling reason whatsoever is shown by petitioner for this Court to reverse the SSCs findings and conclusions, as affirmed by the CA. (FAITH)
ANDRES VILLAVILLA and ESTER GADIENTE VILLAVILLA vs. CA TOPIC: employer-employee relationship FACTS: Arturo Villavilla, son of petitioners, was employed as "tripulante" (crew member) of the fishing boat "F/B Saint Theresa". When the boat sank off in Palawan, he was not among the known survivors of that sinking and had been missing since then. The his parents, herein petitioners, filed a petition with the Social Security Commission against Reynaldo Mercado and Marcelino Cosuco, owners of the ill-fated fishing boat, for death compensation benefits of Arturo whom respondents failed to register as their employee. Social Security System (SSS) filed a petition in intervention showed that "F/B Saint Theresa", owned by Marcelino Cosuco and operated by Reynaldo Mercado, was a registered member-employer, and that in the event petitioners succeeded in proving the employment of Arturo with private respondents, the latter should be held liable in damages equivalent to the benefits due the petitioners for failure to report Arturo for coverage pursuant to Social Security Act. Respondent Cosuco denied all and that he already sold the fishing boat to respondent Mercado. Social Security Commission issued an Order dismissing the petition for lack of cause of action. The same was affirmed by CA. ISSUE: 1. Whether there was an employer-employee relationship between petitioners' deceased son, Arturo Villavilla 2.whether there was a violation of the Social Security Act, as amended, by private respondents for not registering Arturo Villavilla with the System as their employee as mandated by law. HELD: 1. An employee is defined as a "person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer-employee relationship" (Sec. 8[d], Rep. Act 1161, as amended by Rep. Act 2658). In the present case, neither the pilots nor the crew-members receive compensation from boat-owners. They only share in their own catch produced by their own efforts. There is no showing that outside of their one third share, the boat-owners have anything to do with the distribution of the rest of the catch among the pilots and the crew members. The latter perform no service for the boat-owners, but mainly for their own benefit. In the undertaking in question, the boat-owners obviously are not responsible for the wage, salary, or fee of the pilot and crew-members. Their sole participation in the venture is the furnishing or delivery of the equipment used for fishing, after which, they merely wait for the boat's return and receive their share in the catch, if there is any. For his part, a person who joins the outfit is entitled to a share or participation in the fruit of the fishing trip. If it gives no return, the men get nothing. It appears to us therefore that the undertaking is in the nature of a joint venture, with the boat-owner supplying the boat and its equipment (sic), and the pilot and crew-members contributing the necessary labor, and the parties getting specific shares for their respective contributions.
The existence of employer-employee relationship are not present in the case at bar. As mentioned earlier, private respondent Reynaldo Mercado had no connection with the selection and engagement of Arturo Villavilla; exercised no power of dismissal over Arturo Villavilla; neither had he any power of control or had reserved the right to control Arturo Villavilla as to the result of the work to be done as well as the means and methods by which the same is to be accomplished, and there was no such uniform salary involved. 2. In the case before Us, it is clear that there was no employeremployee relationship between petitioner's son Arturo and private respondent Mercado, much less private respondent Cosuco. As such, Arturo could not be made subject of compulsory coverage under the Social Security Act; hence, private respondents cannot be said to have violated said law when they did not register him with the Social Security System. A fortiori, respondent as well as intervenor are not answerable to petitioners for any death benefits under the law.. (KICIANG)
Miguel v. JCT Group, Inc. Facts: Glorious Sun was a garment exporter until it folded up. Thereafter, De Soleil & American Inter-Fashion Corp. (AIFC) took over Glorious Suns manufacturing plant, facilities & equipment & absorbed its employees, including the petitioners. Following the EDSA Revolution, the PCGG sequestered De Soleil & AIFC & took over their assets & operations. JCT Group, Inc. (JCT) & De Soleil executed a Management & Operating Agreement (MOA) for the purpose of servicing De Soleils export quota & preserve its profitability. When the MOA expired, De Soleil ceased business operations, effectively terminating petitioners employment. Petitioners filed complaints for illegal dismissal & payment of backwages & other monetary claims before the NLRC against De Soleil, AIFC, PCGG, Glorious Sun, JCT, & Cuevas. The Labor Arbiter decided in favor of petitioners. The NLRC modified the labor arbiters decision by absolving Glorious Sun from liability & dismissing respondents appeal. The CA reversed the decision & remanded the case to the Labor Arbiter for further proceedings. It found no factual basis for the ruling that JCT had become the employer of petitioners after the cessation of operations of Glorious Sun. Issue: Whether the labor arbiter & the NLRC gravely abused their discretion when they ruled in favor of petitioners without determining the existence of an Er-Ee relationship between them & respondents Held: Yes. In finding for petitioners, the labor arbiter considered them regular employees for the reason that they performed duties, responsibilities & functions necessary & desirable to the business of garments manufacturing & exportation & had been also working for more than a year at the time of the cessation of business operation. Save for this conclusion, the labor arbiter made no determination whether there was Er-Ee relationship between respondents & petitioners &, if so, whether the former assumed the obligations of the latters previous employers. The NLRC decision is also silent on the basis for its ruling that JCT became the employer of petitioners after Glorious Sun ceased operations, save for its conclusion that petitioners were absorbed by, or their work continued under JCT. The defense of respondents is anchored on an alleged lack of ErEe relationship w/ petitioners as stipulated in the formers MOA w/ De Soleil. JCT further claims that any relationship w/ De Soleil & the latters employees was severed upon the termination of the MOA. It is therefore imperative to determine the nature of the MOA --- whether or not it partook only of a consultancy agreement, in which no ErEe relationship existed between respondents & petitioners. The test for determining an ErEe relationship hinges on resolving who has the power to select employees, who pays their wages, who has the power to dismiss them, & who exercises control in the methods & the results by w/c the work is accomplished. The last factor, the control test, is the most important. In resolving the status of a MOA, the test for determining an ErEe relationship has to be applied. Indeed, the only way to find out whether Respondents JCT & Cuevas are liable to petitioners is by remanding the case to the lower court. Petition denied, assailed decision affirmed. (LORI)
WACK WACK GOLF & COUNTRY CLUB, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, MARTINA G. CAGASAN, CARMENCITA F. DOMINGUEZ, and BUSINESS STAFFING AND MANAGEMENT, INC., Respondent FACTS: A fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Country Club (Wack Wack), including its kitchen. In view of the reconstruction of the whole clubhouse complex, Wack Wack filed a notice with the DOLE on April 14, 1997 that it was going to suspend the operations of the Food and Beverage (F & B) Department one (1) month thereafter. Notices to 54 employees were also sent out, informing them that they need not report for work anymore after April 14, 1997 but that they would still be paid their salaries up to May 14, 1997. They were further told that they would be informed once full operations in Wack Wack resume. Wack Wack Golf Employees Union and Wack wack officers made an agreement that: The affected employees of F & B who are members of the UNION hereby agree to accept the special separation benefit package agreed upon between the CLUB management on the one hand, and the UNION officers and the UNION lawyer on the other, in the amount equivalent to one-and-one-half months salary for every year of service, regardless of the number of years of service rendered. That, in addition, said employees shall also receive the other benefits due them, namely, the cash equivalent of unused vacation and sick leave credits, proportionate 13th month pay; and other benefits, if any, computed without premium; All qualified employees who may have been separated from the service under the above package shall be considered under a priority basis for employment by concessionaires and/or contractors, and even by the Club upon full resumption of operations, upon the recommendation of the UNION. The Club may even persuade an employee-applicant for availment under the package to remain on his/her job, or be assigned to another position.
that the said respondents were no longer employees of Wack Wack when they filed their complaints with the Labor Arbiter? HELD: YES. It must be recalled that said respondents availed of the special separation package offered by the petitioner. This special separation package was thought of and agreed by the two parties (Wack Wack and the Union) after a series of discussions and negotiations to avert any labor unrest due to the closure of Wack Wack. Priority was given to the employees of the F & B Department, but was, likewise, offered to the other employees who may wish to avail of the separation package due to the reconstruction of Wack Wack. The respondents signed their respective release and quitclaims after receiving their money benefits. When the respondents voluntarily signed their quitclaims and accepted the separation package offered by the petitioner, they, thenceforth, already ceased to be employees of the petitioner. Nowhere does it appear in the Agreement that the petitioner assured the respondents of continuous employment in Wack Wack. Qualified employees were given priority in being hired by its concessionaires and/or contractors such as BSMI when it entered into a management contract with the petitioner. The right to hire and fire is another element of the employeremployee relationship which actually existed between the respondents and BSMI, and not with Wack Wack. There being no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez, the latter have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be validly ordered to reinstate the respondents and pay them their claims for backwages. NLRCs ruling that BSMI is a labor-only contractor hence, the petitioner is principally liable is not correct. BSMI is an independent contractor. It had provided management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its sufficient capitalization. (NICOLE)
Respondents Dominguez and Cagasan availed of the benefits. Wack Wack entered into a Management Contract with Business Staffing and Management, Inc. (BSMI), a corporation engaged in the business as Management Service Consultant undertaking and managing for a fee projects. Pursuant to the agreement, BSMI hired the respondents. However, BSMI saw that the positions of Cagasan and Dominguez were redundant as this was being handled by another department. The two were terminated. Respondents file an illegal dismissal case before the Labor Arbiter but dismissed it. When appealed to NLRC, it reversed the decision of the Arbiter and said that the respondents be reinstated. Hence, appeal. ISSUE: Does NLRC committed grave abuse of discretion in ordering Wack Wack to reinstate the respondents Cagasan and Dominguez with backwages when indubitable evidence shows
PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE VERA, respondent. GARCIA, J.: Facts: Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. At the crux of the controversy is Dr. De Veras status vis a vis petitioner when the latter terminated his engagement. It appears that on 15 May 1981, De Vera, via a letter, offered his services to the petitioner, therein proposing his plan of works required of a practitioner in industrial medicine. The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP CONTRACT[4] which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover the retainership the Company previously had with Dr. K. Eulau and that respondents retainer fee will be at P4,000.00 a month. Said contract was renewed yearly.[5] The retainership arrangement went on from 1981 to 1994 with changes in the retainers fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a letter[6] bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the latters retainers contract with the Company effective at the close of business hours of December 31, 1996 because management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises. PETITIONER's claim On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process. He averred that he was designated as a company physician on retainer basis for reasons allegedly known only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom. Labor arbiter On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision[7] dismissing De Veras complaint for lack of merit, on the rationale that as a retained physician under a valid contract mutually agreed upon by the parties, De Vera was an independent contractor and that he was not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December 31, 1996. NLRC On De Veras appeal to the NLRC, the latter, in a decision[8] dated 23 October 2000, reversed (the word used is modified)
that of the Labor Arbiter, on a finding that De Vera is Philcoms regular employee and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. CA Philcom then went to the Court of Appeals on a petition for certiorari. On 12 September 2002, the Court of Appeals rendered a decision,[10] modifying that of the NLRC by deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu of reinstatement. Hence, Philcoms present recourse on its main submission that Issue Whether an employer-employee relationship exists between petitioner and respondent. Held In a long line of decisions,[15] the Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test, to wit: [1] the selection and engagement of the employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the employees conduct, or the so-called control test, considered to be the most important element. 1) The tenor of his letter indicates that the complainant was proposing to extend his time with the respondent and seeking additional compensation for said extension. This shows that the respondent PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is proposing his own schedule and asking to be paid for the same. This is proof that the complainant understood that his relationship with the respondent PHILCOM was a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work. After more than ten years of services to PHILCOM, the complainant never bothered to ask the respondent to remit his SSS contributions. This clearly shows that the complainant never considered himself an employee of PHILCOM and thus, respondent need not remit anything to the SSS in favor of the complainant.[18] Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees.[19] It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary. Remarkably absent from the parties arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished.[21] Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the private practice of his profession, not to mention the fact that respondents work hours and the additional compensation therefor were negotiated upon by the parties.[22] In fine, the
parties themselves practically agreed on every terms and conditions of respondents engagement, which thereby negates the element of control in their relationship. 2) The appellate courts premise that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. 3) Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157 of the Labor Code, and argues that he satisfies all the requirements thereunder. The provision relied upon reads: ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of: (a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article; The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).
Respondent takes no issue on the fact that petitioners business of telecommunications is not hazardous in nature. As such, what applies here is the last paragraph of Article 157 which, to stress, provides that the employer may engage the services of a physician and dentist on retained basis, subject to such regulations as the Secretary of Labor may prescribe. The successive retainership agreements of the parties definitely hue to the very statutory provision relied upon by respondent. With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer basis, as shown by their various retainership contracts, so can petitioner put an end, with or without cause, to their retainership agreement as therein provided.[27] WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is REINSTATED. (ROBERT)
(b)
(c)
Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in non-hazardous workplaces, the employer may engage the services of a physician on retained basis. As correctly observed by the petitioner, while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees,[24] adding that the law, as written, only requires the employer to retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.[25]
JARDIN VS. NLRC G.R. No. 119268. February 23, 2000 FACTS: Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondents taxicabs every other day on a 24-hour work schedule under the boundary system. Private respondent admittedly regularly deducts from petitioners daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests. Private respondent, upon learning about the plan of petitioners, refused to let petitioners drive their taxicabs. Petitioner filed with the Labor Arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. The Labor Arbiter dismissed said complaint for lack of merit. On appeal to the NLRC, set aside the judgment of the Labor Arbiter. A first motion for reconsideration was filed by the private respondent but was dismissed. Another motion for reconsideration was filed but this time, NLRC granted aforesaid second motion for reconsideration ruling that it lacks jurisdiction over the case as petitioners and private respondent have no employeremployee relationship. Expectedly, petitioners sought reconsideration of the labor tribunals decision which was denied. Hence, the instant petition. ISSUE: Whether or not there is an existence of an employer-employee relationship. RULING: YES. There is an existence of an employer-employee relationship. In the determination the existence of employer-employee relationship, the following are the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct. In a number of cases decided by this Court, we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter.
The management of the business is in the owners hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer. As consistently held by this Court, termination of employment must be effected in accordance with law. The just and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. These lack of valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners dismissal. Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (SYLVESTER)
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MANILA GOLF & COUNTRY CLUB, INC., petitioner, vs. INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR, respondents. FACTS: This case originally involved three separate proceedings, all initiated by or on behalf of herein private respondent and his fellow caddies. That which gave rise to the present petition for review was originally filed with the Social Security Commission (SSC) via petition of seventeen (17) persons who styled themselves "Caddies of Manila Golf and Country Club-PTCCEA" for coverage and availment of benefits under the Social Security Act as amended, "PTCCEA" being the acronym of a labor organization, the "Philippine Technical, Clerical, Commercial Employees Association," with which the petitioners claimed to be affiliated. The petition, docketed as SSC Case No. 5443, alleged in essence that although the petitioners were employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as such with the SSS. In the case before the SSC, the respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees. Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for social security coverage, avowedly coming to realize that indeed there was no employment relationship between them and the Club. The case continued, and was eventually adjudicated by the SSC after protracted proceedings only as regards the two holdouts, Fermin Llamar and Raymundo Jomok. The Commission dismissed the petition for lack of merit. From this Resolution appeal was taken to the Intermediate appellate Court which declared Fermin Llamar an employee of the Manila Gold and Country Club, ordering that he be reported as such for social security coverage and paid any corresponding benefits, ISSUE: Whether or not persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS). HELD:No, persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are not employees of such clubs and therefore not within the compulsory coverage of the Social Security System (SSS). The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure of control
over the incidents of the caddies' work and compensation that an employer would possess. The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last number for the 17 day. By and large, there appears nothing in the record to refute the petitioner's claim that: (Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or otherwise with any entity or individual without restriction by petitioner. . . . . . . In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not required to render a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute because a player is at liberty to choose a caddy of his preference regardless of the caddy's order in the rotation. It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work elsewhere. Under such circumstances, he may then leave the premises of petitioner and go to such other place of work that he wishes (sic). Or a caddy who is on call for a particular day may deliberately absent himself if he has more profitable caddying, or another, engagement in some other place. These are things beyond petitioner's control and for which it imposes no direct sanctions 18 on the caddies. . . . WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is sought, is reversed and set aside, it being hereby declared that the private respondent, Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that petitioner is under no obligation to report him for compulsory coverage to the Social Security System. No pronouncement as to costs. (CLAU)
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FELIX VS. BUENASEDA G.R. No. 109704 January 17, 1995 FACTS: This is a petition assailing the petitioners dismissal as Medical Specialist I of the National Center for Mental Health as illegal and violative of the constitutional provision on security of tenure. Petitioner joined the NCMH as a Resident Physician in June 1979. Shortly, he was promoted as Senior Resident Physician until the Ministry of Health reorganized the NCMH pursuant to E.O. 119. Under the reorganization, he was appointed to the position of Senior Resident Physician in a temporary capacity. On August 1988, he was elevated to the position of Medical Specialist I (Temporary Status) which was renewed the following year. The Dept. of Health issued Department Order No. 347 which required board certification as prerequisite for renewal of specialist positions in various medical centers and it also extend appointments of Medical Specialist positions in cases where the termination of medical specialist who failed to meet the requirements for board certification. On August 20, 1991, after reviewing petitioner's service record, non-renewal of petitioners appointment as Medical Specialist I was recommended. He was, however, allowed to continue in the service, and receive his salary, allowances and other benefits even after being informed of the termination of his appointment. Soon, he was advised by the hospital authorities to vacate his cottage. The petitioner filed a petition with the Merit System Protection Board alleging harassment by respondents; however, it was later dismissed for lack of merit. Said decision was appealed to the Civil Service Commission which dismissed the same including the Motion for Reconsideration the petitioner has filed after which brought this appeal. ISSUE: Whether or not the petitioner was illegally dismissed from his position and that it is not a violative of his constitutional right of security of tenure. RULING: NO. The petitioner was not illegally dismissed. The Solicitor General is correct in contending that the petitioners temporary appointment after the reorganization were valid and did not violate his constitutional right of security of tenure. Petitioner is guilty of estoppels or laches. Stringent standards and requirements for renewal of specialistrank positions or for promotion to the next post-graduate residency year are necessary because lives are ultimately at stake. Petitioners insistence on being reverted back to the status quo prior to the reorganizations would therefore be akin to a college student asking to be sent to high school and staying there. He is estopped from insisting upon a right or claim which he had plainly abandoned when he, from all indications, enthusiastically accepted the promotion. It bears emphasis that
at the time of petitioner's promotion to the position of Medical Specialist I (temporary) in August of 1988, no objection was raised by him about the change of position or the temporary nature of designation. The failure to assert a claim or the voluntary acceptance of another position in government, obviously without reservation, leads to a presumption that the civil servant has either given up his claim of has already settled into the new position. Finally, it is crystal clear, from the facts of the case at bench, that the petitioner accepted a temporary appointment (Medical Specialist I). As respondent Civil Service Commission has correctly pointed out, the appointment was for a definite and renewable period which, when it was not renewed, did not involve a dismissal but an expiration of the petitioner's term. (SYLVESTER)
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G.R. No. 148508 : May 20, 2004 R TRANSPORT CORPORATION,, Petitioner, v. ROGELIO EJANDRA, Respondent. FACTS: Private respondent Rogelio Ejandra worked as a bus driver of petitioner bus corporation got almost six years. One day, he was apprehended by an LTO officer for obstruction of traffic for which his license was confiscated. Ejendra immediately reported the incident to his manager, Mr. Oscar Pasquin, who gave him P500 to redeem his license but was able to retrieve his license only after a week. Later on, when Ejandra informed his manager that he was ready to report for work, he was told that the company was still studying whether to allow him to drive again. Private respondent was likewise accused of causing damage to the bus he used to drive. Petitioner claimed that private respondent, a habitual absentee, abandoned his job. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis. ISSUES: 1.) WON respondent abandoned his work; WON petitioner was the lessor of private respondent; that, as such, the termination of the contract of lease of services did not require petitioner to respect private respondents rights to notice and hearing. HELD: Under Section 1, Rule 45 of the 1997 Rules of Civil Procedure, a petition for review shall only raise questions of law considering that the findings of fact of the Court of Appeals are, as a general rule, conclusive upon and binding on this Court. This doctrine applies with greater force in labor cases where the factual findings of the labor tribunals are affirmed by the Court of Appeals. The reason is because labor officials are deemed to have acquired expertise in matters within their jurisdiction and therefore, their factual findings are generally accorded not only respect but also finality, and are binding on this Court. In the case at bar, the labor arbiter,the NLRC and the Court of Appeals were unanimous in finding that private respondent worked as a driver of one of the buses of petitioner and was paid on a 10% commission basis. After he was apprehended for a traffic violation, his license was confiscated. When he informed petitioners general manager of such fact, the latter gave him money to redeem his license. He went to the LTO office everyday but it was only after a week that he was able to get back his license. When he reported back to work, petitioners manager told him to wait until his services were needed again. Considering himself dismissed, private respondent filed a complaint for illegal dismissal against petitioner. We have no reason to disturb all these factual findings because they are amply supported by substantial evidence. Denying the existence of an employer-employee relationship, petitioner insists that the parties agreement was for a contract of lease of services. We disagree. Petitioner is barred to
negate the existence of an employer-employee relationship. In its petition filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. Petitioner maintained that private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioners claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly provides that an employees wages can be in the form of commissions. 2.) WON respondent was dismissed with just cause. HELD: NO. According to petitioner, private respondent abandoned his job and lied about the confiscation of his license. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Of the two, the second element is the more determinative factor and should be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.[15 In the instant case, petitioner fell short of proving the requisites. To begin with, petitioners absence was justified because the LTO, Guadalupe Branch, did not release his license until after a week. This was the unanimous factual finding of the labor tribunals and the Court of Appeals. In addition to the fact that petitioner had no valid cause to terminate private respondent from work, it violated the latters right to procedural due process by not giving him the required notice and hearing. Section 2, Rule XXIII, Book V of Department Order No. 9 provides for the procedure for dismissal for just or authorized cause: SEC. 2. Standards of due process; requirement of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and
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(c ) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employees last known address. II. For termination of employment as based on authorized causes defined in Article 283 of the Code, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department at least thirty days before the effectivity of the termination, specifying the ground or grounds for termination. III. If termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of an employee to meet the standards of the employer in case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination. (FAITH)
INSULAR LIFE ASSURANCE CO., LTD., Petitioner, vs. NLRC FACTS: Petitioner entered into an agency contract with respondent Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commissions. The contract was prepared by petitioner in its entirety and De los Reyes merely signed his conformity thereto. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. De los Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for termination of the contract. Aside from soliciting insurance for the petitioner, private respondent was required to submit to the former all completed applications for insurance within ninety (90) consecutive days, deliver policies, receive and collect initial premiums and balances of first year premiums, renewal premiums, deposits on applications and payments on policy loans. Private respondent was also bound to turn over to the company immediately any and all sums of money collected by him. In a written communication by petitioner to respondent De los Reyes, the latter was urged to register with the Social Security System as a self-employed individual as provided under PD No. 1636. Then petitioner and private respondent entered into another contract where the latter was appointed as Acting Unit Manager under its office the Cebu DSO V (157). As such, the duties and responsibilities of De los Reyes included the recruitment, training, organization and development within his designated territory of a sufficient number of qualified, competent and trustworthy underwriters, and to supervise and coordinate the sales efforts of the underwriters in the active solicitation of new business and in the furtherance of the agencys assigned goals. It was similarly provided in the management contract that the relation of the acting unit manager and/or the agents of his unit to the company shall be that of independent contractor. If the appointment was terminated for any reason other than for cause, the acting unit manager would be reverted to agent status and assigned to any unit. As in the previous agency contract, De los Reyes together with his unit force was granted freedom to exercise judgment as to time, place and means of soliciting insurance. Aside from soliciting insurance, De los Reyes was also expressly obliged to participate in the companys conservation program.. As long as he was unit manager in an acting capacity, De los Reyes was prohibited from working for other life insurance companies or with the government. He could not also accept a managerial or supervisory position in any firm doing business in the Philippines without the written consent of petitioner. Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner on 18 November 1993 that his services were terminated effective 18 December 1993. On 7 March 1994 he filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not paid his salaries and separation pay. Respondent NLRC decided that respondent De los Reyes was under the effective control of petitioner in the critical and most important aspects of his work as Unit Manager. Both petitioner and respondent NLRC treated the agency contract and the management contract entered into between petitioner and De los Reyes as contracts of agency.
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ISSUE: Whether or not there is an existing employer-employee relationship between the two parties despite written contractual disavowals. HELD: It is axiomatic that the existence of an employeremployee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the employee is an independent contractor when the terms of agreement clearly show otherwise. In determining the status of the management contract, the fourfold test on employment earlier mentioned has to be applied. so-called four-fold test, i.e., (a) selection and engagement of employee, (b) payment of wages, (c) power of dismissal, and, (d) power of control, De los Reyes was not an employee but an independent contractor. First test, a look at the provisions of the contract shows that private respondent was appointed as Acting Unit Manager only upon recommendation of the District Manager. This indicates that private respondent was hired by petitioner because of the favorable endorsement of its duly authorized officer. The very designation of the appointment of private respondent as acting unit manager obviously implies a temporary employment status which may be made permanent only upon compliance with company standards such as those enumerated under Sec. 6 of the management contract.[9] On the second test, The managers contract unquestionably demonstrate that the performance requirement imposed on De los Reyes was applicable quarterly while his entitlement to the free portion (P300) and the validated portion (P1,200) was monthlystarting on the first month of the twelve (12) months of the appointment.It is worth considering that the payment of compensation by way of commission does not militate against the conclusion that private respondent was an employee of petitioner. Under Art. 97 of the Labor Code, wage shall mean however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, price or commission basis. On the third and fourth test, as to the matter involving the power of dismissal and control by the employer, the latter of which is the most important of the test, petitioner asserts that its termination of De los Reyes was but an exercise of its inherent right as principal under the contracts and that the rules and guIdelines it set forth in the contract cannot, by any stretch of imagination, be deemed as an exercise of control over the private respondent as these were merely directives that fixed the desired result without dictating the means or method to be employed in attaining it. The following factual findings of the NLRC however contradict such claims. A perusal of the appointment of complainant as Acting Unit Manager reveals that: 1. Complainant was to exclusively serve respondent company.; 2. Complainant was required to meet certain manpower and production quotas.; 3. Respondent (herein petitioner) controlled the assignment and removal of soliciting agents to and from complainants unit. Exclusivity of service, control of assignments and removal of agents under private respondents unit, collection of premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund are but hallmarks of the management system in which herein private respondent worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon de los Reyes was an employee of herein petitioner. (KICIANG)
Almirez v. Infinite Loop Technology Corp. GR No. 162401, 31 Jan 2006 Carpio-Morales, J. Facts: Petitioner Almirez was hired as a Refinery Senior Process Design Engineer for a specific project by respondent Infinite Loop through its General Manager Rabino who, by letter to petitioner, furnished the details of her employment which included the Scope of Professional Services. Subsequently, petitioner, through counsel, wrote Rabino demanding that respondent compensate her the total amount of her contract. Rabino wrote petitioner that the project proponent, Arrox Resources Corp., have encountered re-organization & have not yet paid Infinite Loop for the project. Petitioner filed a complaint against Infinite Loop & Rabino before the NLRC for breach of contract of employment. Infinite Loop moved to dismiss the complaint on the ground that the NLRC has no jurisdiction over the parties & the subject matter as there was no ErEe relationship between them since the contract they entered into was one of services & not of employment. The Labor Arbiter held that there was an ErEe relationship between the parties based on paragraph 6 of the Scope of Professional Services which showed that the companys management team exercises control over the means & methods in the performance of petitioners duties. The NLRC, finding that an ErEe relation between the parties existed, dismissed respondents appeal. The CA finding that petitioner was hired to render professional services for a specific project & her cause of action is for a sum of money on account of Infinite Loops alleged breach of contractual obligation to pay her agreed professional fee, held that no ErEr relationship existed between the parties, hence, the NLRC & the Labor Arbiter have no jurisdiction over the complaint. Issue: Whether an ErEe relation existed between the parties Held: No. To ascertain the existence of an ErEe relationship, jurisprudence has invariably applied the 4-fold test, to wit: (1) the manner of selection & engagement; (2) the payment of wages; (3) the presence of absence of the power of dismissal; & (4) the presence of absence of the power of control. Of these 4, the last one, the so called control test is commonly regarded as the most crucial & determinative indicator of the presence of absence of an ErEe relationship. Under the control test, an ErEe relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner & means to be used in reaching that end. From the scope of petitioners professional services, there is no showing of a power of control over petitioner. The services to be performed by her specified what she needed to achieve but not on how she was to go about it. Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC, above-quoted paragraph No. 6 of the "Scope of [petitioners] Professional Services" requiring her to "[m]ake reports and recommendations to the company management team regarding work progress, revisions and improvement of process design on a regular basis as required by company
15
management team" does not "show that the companys management team exercises control over the means and methods in the performance of her duties as Refinery Process Design Engineer." Having hired petitioners professional services on account of her "expertise and qualifications" as petitioner herself proffers in her Position Paper, the company naturally expected to be updated regularly of her "work progress," if any, on the project for which she was specifically hired. A payslip cannot prove the existence of an ErEe relationship between the parties. The designation of the payments to petitioner as salaries is not determinative of the existence of an ErEe relationship. Salary is a general term defined as a remuneration for services given. It is the contract of engagement of services which is the law between the parties. Even petitioner concedes rendering service "based on the contract," which, as reflected earlier, is bereft of a showing of power of control, the most crucial and determinative indicator of the presence of an employer-employee relationship. (LORI)
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitionersappellants, vs. THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA NOGUERA, respondents-appellees.
FACTS: Lessor Noguera enter into a contract of lease with Tourist World Services (TWS) for the establishment of a main branch. Sevilla was made solidarily liable for the prompt payment of monthly rents. However,Sevilla was found connected with the firms rival company and since the branch office was anyhow losing, the Tourist World Service considered closing down its office. TWS terminated the lease contract with Noguera. The corporate secretary, went over to the branch office finding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the premises on June 4, 1962 to protect the interests of the Tourist World Service. When neither the appellant Lina Sevilla nor any of her employees could enter the locked premises, a complaint wall filed by the herein appellants against the appellees with a prayer for the issuance of mandatory preliminary injunction. Lina Sevilla claims that a joint bussiness venture was entered into by and between her and appellee TWS with offices at the Ermita branch office and that she was not an employee of the TWS to the end that her relationship with TWS was one of a joint business venture. On one hand, TWS contend that the appellant was an employee of the appellee Tourist World Service, Inc. and as such was designated manager. The trial court held that TWS is the true lessee and that SEvilla is only its employee. Hence, appeal. ISSUE: Whether or not there is an employer-employee relationship between TWS and Sevilla? HELD: YES. There has been no uniform test to determine the evidence of an employer-employee relation. In general, we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end." However, we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employer-employee relationship. The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means used. She even made herself solidarily liable in paying rentals that an ordinary employee will not do. The relationship here was a principal-agent but this does not mean that TWS may revoke this anytime. it is one coupled with an interest, the agency having been created for mutual interest, of the agent and the principal. We rule therefore, that for its unwarranted revocation of the contract of agency, the private respondent, Tourist World Service, Inc., should be sentenced to pay moral damages for breach of contract under Articles 21 & 2219 of the Civil Code. (NICOLE)
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INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents. NARVASA, J.: FACTS On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered 1 into a contract by which: Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations" of the Company; The contract also contained, among others, provisions governing the relations of the parties, i.e. the Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein contained shall therefore be construed to create the relationship of employee and employer between the Agent and the Company. However, the Agent shall observe and conform to all rules and regulations which the Company may from time to time prescribe. Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract 2 with the Company. In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting 3 April 1, 1980. Basiao thereafter filed with the then Ministry of Labor a 4 complaint against the Company and its president. Without contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. ISSUE Whether Basiao is a company employee or an independent contractor. HELD Yes. In Investment Planning Corporation of the Philippines us. 14 Social Security System a case almost on all fours with the present one, this Court held that there was no employeremployee relationship between a commission agent and an investment company, but that the former was an independent contractor where said agent and others similarly placed were: (a) paid compensation in the form of commissions based on
percentages of their sales, any balance of commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the company and termination of their services for certain causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to submit a record of their activities, and who, finally, shouldered their own selling and transportation expenses. The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance." The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship with the Company. The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and premature to consider Basiao's claim for commissions on its merits. (ROBERT)
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CHAVEZ VS. NLRC G.R. No. 146530. January 17, 2005 FACTS: Pedro Chavez was the truck driver of Supreme Packaging, Inc., a business manufacturing cartons and other packaging materials for export and distribution. Initially, the petitioner was paid the sum of P350.00 per trip. This was later adjusted to P480.00 per trip and, at the time of his alleged dismissal, the petitioner was receiving P900.00 per trip. Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent companys plant manager, his (the petitioners) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so. On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month pay, among others. The Labor Arbiter rendered decision finding the respondents guilty of illegal dismissal. The Labor Arbiter declared that the petitioner was a regular employee of the respondent company as he was performing a service that was necessary and desirable to the latters business. Respondent then filed an appeal with the NLRC. The later ruled affirming the decision of the labor arbiter. A motion for reconsideration was filed by the respondent, at this time, NLRC reversed its earlier decision holding that no employer-employee relationship existed between the respondent company and the petitioner.Thus, dismissing the petitioners complaint for illegal dismissal. The petitioner sought reconsideration but it was denied by the NLRC. He then filed a petition for certiorari to this court but was referred to the CA. The Court of Appeals held that the respondents failed to discharge their burden to show that the petitioners dismissal was for a valid and just cause and declaring the respondent guilty of illegal dismissal and the decision of the Labor Arbiter was reinstated. A motion for reconsideration was filed by the respondent, CA made a complete turn around. Consequently, the CA reinstated the July 10, 1998 Decision of the NLRC dismissing the petitioners complaint for illegal dismissal. Hence, the recourse to this court by the petitioner. ISSUE: Whether or not there existed an employer-employee relationship between the respondent company and the petitioner. RULING:
YES. There is an employer-employee relationship between the respondent company and the petitioner. 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; and (4) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. All the four elements are present in this case. First, it was the respondents who engaged the services of the petitioner without the intervention of a third party. Second, Wages are defined as remuneration or earnings, however designated, capable of being expressed in terms of money, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered. That the petitioner was paid on a per trip basis is not significant. Third, the respondents power to dismiss the petitioner was inherent in the fact that they engaged the services of the petitioner as truck driver. Fourth, of the four elements of the employer-employee relationship, the control test is the most important. Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the respondents supervision and control. These circumstances, to the Courts mind, prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. This established the existence of an employer-employee relationship between the respondent company and the petitioner. (SYLVESTER)
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SAN MIGUEL CORPORATION, petitioner vs. PROSPERO A. ABALLA, et al FACTS: Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative (Sunflower) entered into 1 a one-year Contract of Services commencing on January 1, 1993, to be renewed on a month to month basis until terminated by either party. The pertinent provisions of the contract read: 1. The cooperative agrees and undertakes to perform and/or provide for the company, on a non-exclusive basis for a period of one year the following services for the Bacolod Shrimp Processing Plant: A. Messengerial/Janitorial; B. Shrimp 2 Harvesting/Receiving; C. Sanitation/Washing/Cold Storage 2 the cooperative shall employ the necessary personnel and provide adequate equipment, materials, tools and apparatus, to efficiently, fully and speedily accomplish the work and services undertaken by the cooperative. xxx 3. x x x The cooperative shall have the entire charge, control and supervision of the work and services herein agreed upon. xxx 4. There is no employer-employee relationship between the company and the cooperative, or the cooperative and any of its members, or the company and any members of the cooperative. x x x 8. The cooperative undertakes to pay the wages or salaries of its member-workers x x x Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by the parties every month after its expiration on January 1, 1994 and private respondents continued to perform their tasks until September 11, 1995. In July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Private respondents subsequently filed on September 25, 1995 4 an Amended Complaint to include illegal dismissal as additional cause of action following SMCs closure of its 5 Bacolod Shrimp Processing Plant on September 15, 1995 which resulted in the termination of their services. Labor Arbiter Drilon dismissed private respondents complaint for lack of merit. Private respondents appealed to the NLRC. By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding that third party respondent Sunflower was an independent contractor in light of its observation that "[i]n all the activities of private respondents, they were under the actual direction, control and supervision of third party respondent Sunflower, as well as the payment of wages, and power of dismissal." Private respondents filed a petition for certiorari before the Court of Appeals. The CA reversed the NLRC decision and accordingly found for private respondents. ISSUE: Whether or not employer-employee relationship exists between SMC and private respondents.
HELD: Yes, there exists an employer-employee relationship between SMC and respondents. The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the existence of an employer-employee relationship between SMC and private respondents. The language of a contract is not, however, determinative of the parties relationship; rather it is the totality of the facts and surrounding circumstances of the case. A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or job contractor, it being crucial that its character be measured in terms of and determined by the criteria set by statute. SMC argues that Sunflower could not have been issued a certificate of registration as a cooperative if it had no 54 substantial capital. While indeed Sunflower was issued Certificate of Registration 55 No. IL0-875 on February 10, 1992 by the Cooperative Development Authority, this merely shows that it had at least P2,000.00 in paid-up share capital as mandated by Section 5 56 of Article 14 of Republic Act No. 6938, otherwise known as the Cooperative Code, which amount cannot be considered substantial capitalization. What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. On the other hand, it is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC. And from the job description provided by SMC itself, the work assigned to private respondents was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that they are considered directly related 58 to the principal business of the employer has been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. Thus, it is gathered from the evidence adduced by private respondents before the labor arbiter that their daily time 59 records were signed by SMC supervisors. And control of the premises in which private respondents worked was by SMC. These tend to disprove the independence of the contractor. More, Private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors. This circumstance is another indicium of the existence of a labor-only contractorship. All the foregoing considerations affirm by more than substantial evidence the existence of an employer-employee relationship between SMC and private respondents.
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Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed 66 regular employees of the latter and as such are entitled to all 67 the benefits and rights appurtenant to regular employment. They should thus be awarded differential pay corresponding to the difference between the wages and benefits given them and those accorded SMCs other regular employees. Those performing janitorial and messengerial services however acquired regular status only after rendering one-year service pursuant to Article 280 of the Labor Code. The law of course provides for two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. As for those of private respondents who were engaged in janitorial and messengerial tasks, they fall under the second category and are thus entitled to differential pay and benefits extended to other SMC regular employees from the day immediately following their first year of service. WHEREFORE, the petition is DENIED. The assailed Decision dated February 7, 2001 and Resolution dated July 11, 2001 of the Court of Appeals are AFFIRMED with MODIFICATION. Petitioner San Miguel Corporation and Sunflower MultiPurpose Cooperative are hereby ORDERED to jointly and severally pay each private respondent differential pay from the time they became regular employees up to the date of their termination; separation pay equivalent to at least one (1) month pay or to at least one-half month pay for every year of service, whichever is higher, as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the retrenchment, depending on which is most beneficial to private respondents; and ten percent (10%) attorneys fees based on the herein modified award. Petitioner San Miguel Corporation is further ORDERED to pay each private respondent the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process. The award of backwages is DELETED. SO ORDERED. (CLAU)
LOPEZ VS. MWSS G.R. No. 154472. June 30, 2005 FACTS: Petitioners were engaged by the Metropolitan Waterworks and Sewerage System (MWSS) as collectors-contractors, wherein the former agreed to collect from the concessionaires of MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services which the MWSS bills from time to time. In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS. Regular employees of the MWSS, except those who had retired or opted to remain with the latter, were absorbed by the concessionaires. Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Petitioners filed a complaint with the CSC but was denied including the petitioners claim for retirement benefits and terminal leave pay were likewise denied. Petitioner sought reconsideration but was also denied. Discontented with the decision of the CSC, the petitioners filed a petition for review with the Court of Appeals. The latter affirmed the ruling of the CSC and ruled that Agreement entered into by petitioners and MWSS was clear and unambiguous, and should be read and interpreted according to its literal sense. Petitioners now assert that the Court of Appeals rendered a decision not in accord with law and applicable jurisprudence. ISSUE: Whether or not petitioners were employees of the MWSS and consequently entitled to the benefits they claim. RULING: YES. The herein petitioners were employees of the MWSS. For purposes of determining the existence of employeremployee relationship, the Court has consistently adhered to the four-fold test, namely: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. A review of the circumstances surrounding the case reveals that petitioners are employees of MWSS. MWSS wielded its power of selection when it contracted with the individual petitioners, undertaking separate contracts or agreements. The same goes true for the power to dismiss. Although termed as causes for termination of the Agreement, a review of the same shows that the grounds indicated therein can similarly be grounds for termination of employment.
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On the issue of remuneration, MWSS claims that the compensation received by petitioners does not fall under the definition of wages as provided in Section 2(i) of P.D. 1146, which is the basic pay or salary received by an employee, pursuant to his employment appointments, excluding per diems, bonuses, overtime pay and allowances; thus petitioners are not its employees. This assertion, however, simply begs the question. The provision is a simple statement of meaning, operating on the a priori premise or presumption that the recipient is already classified as an employee, and does not lay down any basis or standard for determining who are employees and who are not. Significantly, MWSS granted petitioners benefits usually given to employees, to wit: COLA, meal, emergency, and traveling allowances, hazard pay, cash gift, and other bonuses. Now the aspect of control, It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in an agreement and providing therein that the employee is not an MWSS employee when the terms of the agreement and the surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be. Although petitioner was not obliged to absorb the private respondents, by engaging their services, paying their wages in the form of commission, subjecting them to its rules and imposing punishment in case of breach thereof, and controlling not only the end result but the manner of achieving the same as well, an employment relationship existed between them. Petitioners are indeed regular employees of the MWSS. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. The repeated and continuing need for the performance of the job has been deemed sufficient evidence of the necessity, if not indispensability of the activity to the business. (SYLVESTER)
LAZARO V. SSS FACTS: Private respondent Rosalina M. Laudato (Laudato) filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star Marketing (Royal Star), which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudatos social security contributions. Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star. After the parties submitted their respective position papers, the SSC promulgated a Resolutionruling in favor of Laudato. Applying the control test, it held that Laudato was an employee of Royal Star, and ordered Royal Star to pay the unremitted social security contributions of Laudato. ISSUE: It is argued that Royal Star had no control over Laudatos activities, and that under the so-called control test, Laudato could not be deemed an employee. HELD: It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods [14] by which the same is accomplished. The SSC, as sustained by the Court of Appeals, applying the control test found that Laudato was an employee of Royal Star. We find no reversible error. Lazaros arguments are nothing more but a mere reiteration of arguments unsuccessfully posed before two bodies: the SSC and the Court of Appeals. They likewise put to issue factual questions already passed upon twice below, rather than questions of law appropriate for review under a Rule 45 petition. The determination of an employer-employee relationship depends heavily on the particular factual circumstances attending the professional interaction of the [15] parties. The Court is not a trier of facts and accords great weight to the factual findings of lower courts or agencies [16] whose function is to resolve factual matters. Lazaros arguments may be dispensed with by applying precedents. Suffice it to say, the fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee [17] relationship. In Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person
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[18]
insured. The relevant factor remains, as stated earlier, 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 [19] same is to be accomplished. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. [20] Maalat, the employer similarly denied the existence of an employer-employee relationship, as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was an employer-employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he [21] makes. It should also be emphasized that the SSC, also as upheld by the Court of Appeals, found that Laudato was a [22] sales supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. We are disinclined to reverse this finding, in the absence of countervailing evidence from Lazaro and also in light of the fact that Laudatos calling cards from Royal Star indicate that she is indeed a sales supervisor. (FAITH)
EDDIE DOMASIG,Petitioner, RELATIONS COMMISSION.
vs.
NATIONAL
LABOR
FACTS: Complainant alleged that he started working with the respondent on July 6, 1986 as Salesman when the company was still named Cato Garments Corporation; that three (3) years ago, because of a complaint against respondent by its workers, it changed its name to Cata Garments Corporation; and that on August 29, 1992, he was dismissed when respondent learned that he was being pirated by a rival corporation which offer he refused. Prior to his dismissal, complainant alleged that he was receiving a salary of P1,500.00 a month plus commission. On September 3, 1992 he filed the instant complaint. Respondent denied complainants claim that he is a regular employee contending that he is a mere commission agent who receives a commission. The Labor Arbiter held that complainant was illegally dismissed and entitled to reinstatement and backwages as well as underpayment of salary; 13th month pay; service incentive leave and legal holiday. On Appeal, the NLRC found that decision of the Labor Arbiter not supported by evidence on record. ISSUE: Whether or not there exists an employer-employee relationship between private respondents and petitioner. HELD: It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship. No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. In a business establishment, an identification card is usually provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, we agree with the labor arbiter that these matters constitute substantial evidence adequate to support a conclusion that petitioner was indeed an employee of private respondent. Having been in the employ of private respondents continuously for more than one year, under the law, petitioner is considered a regular employee. Proof beyond reasonable doubt is not required as a basis for judgment on the legality of an employers dismissal of an employee, nor even preponderance of evidence for that matter, substantial evidence being sufficient. Petitioners contention that private respondents terminated his employment due to their suspicion that he was being enticed by another firm to work for it was not refuted by private respondents. The labor arbiters conclusion that petitioners dismissal is therefore illegal, is not necessarily arbitrary or erroneous. It is entitled to great weight and respect. (KICIANG)
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Abante, Jr. v. Lamadrid Bearing & Parts Corp. GR No. 159890, 28 mar 2004 Ynares-Santiago, J. Facts: Petitioner was employed by respondent company Lamadrid as a salesman earning a commission of 3% of the total paid-up sales covering Mindanao. Aside from selling merchadise, he was also tasked to collect payments from his various customers. Respondent corporation had complete control over his work because its President frequently directed him to report to a particular area for his sales & collection activities, & occasionally required him to go to Manila to attend conferences. When he was confronted by respondent over some bad accounts, he was warned that if he did not issued his own checks to cover said bad accounts, his commissions will not be released & he will lose his job. Petitioner issued personal checks in favor of respondent corporation on condition that the same shall not be deposited for clearing & that they shall be offset against his periodic commissions. Due to financial difficulties, petitioner applied for a loan w/ the SSS. When he learned that he was not covered by the SSS, he brought the matter to respondent. The latter berated him & consequently deposited the personal checks which were dishonored by the drawee bank due to Account Closed. Petitioner was sent a letter by respondent, demanding that he make good the dishonored checks. Petitioner wrote back offering that the amount be charged to the commissions that he earned as commission salesman. While doing his usual rounds as commission salesman, petitioner was handed by his customers a letter from respondent company warning them not to deal w/ petitioner since it no longer recognized him as a commission salesman. Petitioner filed a complaint for illegal dismissal w/ money claims against respondent company & its president. Respondents countered that petitioner was not its employee but a freelance salesman on commission basis. Based on the position papers submitted by the parties, the Labor Arbiter declared respondents liable to pay petitioner separation pay, backwages, unpaid commissions, refund of deductions, damages, & attorneys fees. The NLRC reversed the decision & dismissed the case for lack of cause of action. The CA affirmed the NLRC decision. It concluded that there was no ErEe relationship since the control-test was wanting in the case. Issue: Whether petitioner, as a commission salesman, is an employee of respondent corporation Held: No. Applying the control test, an employer-employee relationship is notably absent in this case. It is undisputed that petitioner Abante was a commission salesman who received 3% commission of his gross sales. Yet no quota was imposed on him by the respondent; such that a dismal performance or even a dead result will not result in any sanction or provide a ground for dismissal. He was not required to report to the office at any time or submit any periodic written report on his sales performance and activities. Although he had the whole of Mindanao as his base of operation, he was not designated by respondent to conduct his sales activities at any particular or specific place. He pursued his selling activities without interference or supervision from respondent company and
relied on his own resources to perform his functions. Respondent company did not prescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy to entice his customers. While it is true that he occasionally reported to the Manila office to attend conferences on marketing strategies, it was intended not to control the manner and means to be used in reaching the desired end, but to serve as a guide and to upgrade his skills for a more efficient marketing performance. As correctly observed by the appellate court, reports on sales, collection, competitors, market strategies, price listings and new offers relayed by petitioner during his conferences to Manila do not indicate that he was under the control of respondent. Moreover, petitioner was free to offer his services to other companies engaged in similar or related marketing activities as evidenced by the certifications issued by various customers. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, no relationship of employer-employee exists. Petitioners contention that Art. 280 is a crucial factor in determining the existence of an employment relationship is wrong. Said provision merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining their rights to certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. (LORI)
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INDEPENDENT CONTRACTOR & LABOR-ONLY CONTRACTOR ASIAN ALCOHOL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, CEBU CITY and ERNESTO A. CARIAS, ROBERTO C. MARTINEZ, RAFAEL H. SENDON, CARLOS A. AMACIO, LEANDRO O. VERAYO and ERENEO S. TORMO, respondents. FACTS: Parsons family, who originally owned the controlling stocks in Asian Alcohol, sold their majority rights to Prior Holdings, Inc. (Prior Holdings). The next month, Prior Holdings took over its management and operation. To thwart losses, they implemented organizational plan and other cost-saving measures including termination of 117 employees. The six (6) private respondents are members of the union whose positions were abolished due to redundancy. They received individual notices of termination effective November 30, 1992. They were paid the equivalent of one month salary for every year of service as separation pay and all other benefits. However, respondents filed an illegal dismissal case with the Labor Arbiter. They alleged that Asian Alcohol used the retrenchment program as a subterfuge for union busting. They claimed that they were singled out for separation by reason of their active participation in the union. They also asseverated that Asian Alcohol was not bankrupt as it has engaged in an aggressive scheme of contractual hiring. The Arbiter dismissed the case. Appealed to NLRC, it reversed the decision of the Arbiter. Therefore, Asian Alcohol appealed. ISSUE: Whether or not private respondents were illegally dismissed? HELD: NO. The right of management to dismiss workers during periods of business recession and to install labor saving devices to prevent losses is governed by Art. 283 of the labor Code. Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands on the enterprise. Retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. In exercising its right, however, management must faithfully comply with the substantive and procedural requirements laid down law and jurisprudence. It should be observed that Article 283 of the Labor Code uses the phrase "retrenchment to prevent losses". In its ordinary connotation, this phrase means that retrenchment must be undertaken by the employer before losses are actually sustained. We have, however, interpreted the law to mean that the employer need not keep all his employees until after his losses shall have materialized. Otherwise, the law could be vulnerable of attack as undue taking of property for the benefit of another. (NICOLE)
(This case is quiet long and entails various topics that might be helpful in understanding various labor concepts. I suggest that this case be read in full text, most especially the discussion on SC's ruling.) MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE SECRETARY OF LABOR LEONARDO QUISUMBING AND MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents. MARTINEZ, J.: Facts: MEWA is the duly recognized labor organization of the rankand-file employees of MERALCO. On September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years starting from December 1, 1995 to November 30, 1997. MERALCO signified its willingness to re-negotiate through its letter dated October 17, 1995[2] and formed a CBA negotiating panel for the purpose. Thereafter, collective bargaining negotiations proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable to both of them. On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) on the grounds of bargaining deadlock and unfair labor practices. Faced with the imminence of a strike, MERALCO on May 2, 1996, filed an Urgent Petition with the Department of Labor and Employment praying that the Secretary assume jurisdiction over the labor dispute and to enjoin the striking employees to go back to work. The Labor Secretary granted the petition and assumed jurisdiction over the labor case. Dissatisfied with the decision, petitioner filed this petition contending that the Secretary of Labor gravely abused his discretion: 1). . . in awarding wage increases of P2,200.00 for 1996 and P2,200.00 for 1997; 2) . . . in awarding the following economic benefits: a. Two months Christmas bonus; b. Rice Subsidy and retirement benefits for retirees; c. Loan for the employees cooperative; d. Social benefits such as GHSIP and HMP for dependents, employees cooperative and housing equity assistance loan; e. Signing bonus; f. Integration of the Red Circle Rate Allowance g. Sick leave reserve of 15 days h. The 40-day union leave; i. High pole/high voltage and towing allowance; and j. Benefits for collectors
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3) . . . in expanding the scope of the bargaining unit to all regular rank and file employees hired by the company in all its offices and operating centers and those it may employ by reason of expansion, reorganization or as a result of operational exigencies; 4) . . . in ordering for a closed shop when his original order for a maintenance of membership arrangement was not questioned by the parties; 5) . . . in ordering that Meralco should consult the union before any contracting out for more than six months; 6) . . . in decreeing that the union be allowed to have representation in policy and decision making into matters affecting personnel welfare, rights and benefits as well as duties; 7) . . . in ruling for the inclusion of all terms and conditions of employment in the collective bargaining agreement; 8) . . . in exercising discretion in determining the retroactivity of the CBA; The union disputes the allegation of MERALCO that the Secretary abused his discretion in issuing the assailed orders arguing that he acted within the scope of the powers granted him by law and by the Constitution. Issue: WON Sec of Labor decided the case brought before him with grave abuse of discretion Held: In this case we believe that the more appropriate and available standard - and one does not require a constitutional interpretation - is simply the standard of reasonableness. In laymans terms, reasonableness implies the absence of arbitrariness;[16] in legal parlance, this translates into the exercise of proper discretion and to the observance of due process. We find, based on our consideration of the parties positions and the evidence on record, that the Secretary of Labor disregarded and misappreciated evidence, particularly with respect to the wage award. The Secretary of Labor apparently also acted arbitrarily and even whimsically in considering a number of legal points; even the Solicitor General himself considered that the Secretary gravely abused his discretion on at least three major points: (a) on the signing bonus issue; (b) on the inclusion of confidential employees in the rank and file bargaining unit, and (c) in mandating a union security closedshop regime in the bargaining unit. We find after considering the records that the Secretary gravely abused his discretion in making this wage award because he disregarded evidence on record. Where he considered MERALCOs evidence at all, he apparently misappreciated this evidence in favor of claims that do not have evidentiary support. To our mind, the MERALCO projection had every reason to be reliable because it was based on actual and undisputed figures for the first six months of 1996.[23] On the other hand, the union projection was based on a speculation of Yuletide consumption that the union failed
to substantiate. In fact, as against the unions unsubstantiated Yuletide consumption claim, MERALCO adduced evidence in the form of historical consumption data showing that a lengthy consumption does not tend to rise during the Christmas period.[24] Additionally, the All-Asia Capital Report was nothing more than a newspaper report that did not show any specific breakdown or computations. While the union claimed that its cited figure is based on MERALCOs 10-year income stream,[25] no data or computation of this 10-year stream appear in the record. Both parties extensely discussed the factors that the decision maker should consider in making a wage award. To our mind, the best way in approaching this task holistically is to consider the available objective facts, including, where applicable, factors such as the bargaining history of the company, the trends and amounts of arbitrated and agreed wage awards and the companys previous CBAs, and industry trends in general. As a rule, affordability or capacity to pay should be taken into account but cannot be the sole yardstick in determining the wage award, especially in a public utility like MERALCO. In considering a public utility, the decision maker must always take into account the public interest aspects of the case; MERALCOs income and the amount of money available for operating expenses - including labor costs - are subject to State regulation. We must also keep in mind that high operating costs will certainly and eventually be passed on to the consuming public as MERALCO has bluntly warned in its pleadings. After considering the various factors the parties cited, we believe that the interests of both labor and management are best served by a wage increase of P1,900.00 per month for the first year and another P1,900.00 per month for the second year of the two-year CBA term. Our reason for this is that these increases sufficiently protects the interest of the worker as they are roughly 15% of the monthly average salary of P11,600.00.[26] They likewise sufficiently consider the employers costs and its overall wage structure, while at the same time, being within the range that will not disrupt the wage trends in Philippine industries. (ROBERT)
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PHILIPPINE AIRLINES vs. LIGAN Facts: Petitioner Philippine Airlines (PAL) and Synergy Services Corporation (Synergy) entered into an Agreement whereby Synergy undertook to "provide loading, unloading, delivery of baggage and cargo and other related services to and from petitioner's aircraft. The agreement specified a scope of services including the stipulation that the contractor shall furnish all the necessary capital, workers, materials, facilities, supplies, equipment and tools. It expressly provided that Synergy was "an independent contractor and that there would be no employer-employee relationship between the contractor and/or its employees on one hand, and owner, on the other. Respondents assigned by Synergy to petitioner filed complaints against petitioner for underpayment, non-payment of premium pay for holidays, premium pay for rest days, service incentive leave pay, 13th month pay and allowances, and for regularization of employment status with petitioner, they claiming to be "performing duties for the benefit of petitioner since their job is directly connected with its business." The labor arbiter found Synergy an independent contractor and dismissed respondents complaints but granted their money claims. On appeal by respondents to the NLRC, the decision was vacated and set aside, declaring that respondent Synergy is a labor-only contractor and ordering PAL to accept, as its regular employees, all the complainants, and to give each of them the salaries, allowances and other employment benefits and privileges of a regular employee. Thus, this present petition. Issue: WON Synergy is a job-only contractor or a legitimate contractor. Ruling: Synergy is a job-only contractor. For labor-only contracting to exist, any of the two elements should be present: (1) 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 (2) The contractor does not exercise the right to control over the performance of the work of the contractual employee. Even if only one of the two elements is present then, there is labor-only contracting. It is gathered that the work performed by almost all of the respondents is directly related to the main business of petitioner and the equipment used by respondents are owned by petitioner. While petitioner steadfastly asserted before the Labor Arbiter and the NLRC that Synergy has a substantial capital to engage in legitimate contracting, it failed to present evidence thereon. More significantly, however, is that respondents worked alongside petitioner's regular employees who were performing identical work. The express provision in the Agreement that Synergy was an independent contractor and there would be "no employeremployee relationship between Synergy and/or its employees
on one hand, and petitioner on the other" is not legally binding and conclusive as contractual provisions are not valid determinants of the existence of such relationship, for it is the totality of the facts and surrounding circumstances of the case which is determinative of the parties' relationship. The control test element echoes the prevailing jurisprudential trend elevating such element as a primary determinant of employer-employee relationship in job contracting agreements. (DEUS)
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JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO, Petitioners, vs. SHANGRI-LA'S MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITO, Respondents. FACTS: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician. In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. VII 1 (NLRC-RAB No. VII) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. The case was docketed as RAB Case No. 07-112089-02. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor whom it retained via 2 Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code, as amended. Respondent doctor for her part claimed that petitioners were already working for the previous retained physicians of Shangri-la before she was retained by Shangri-la; and that she maintained petitioners services upon their request. By Decision of May 6, 2003, Labor Arbiter Ernesto F. Carreon declared petitioners to be regular employees of Shangri-la. The Arbiter thus ordered Shangri-la to grant them the wages and benefits due them as regular employees from the time their services were engaged. Shangri-la and respondent doctor appealed to the NLRC. the NLRC granted Shangri-las and respondent doctors appeal and dismissed petitioners complaint for lack of merit, it finding that no employer-employee relationship exists between petitioner and Shangri-la. Petitioners thereupon brought the case to the Court of Appeals 5 which, by Decision of May 22, 2007, affirmed the NLRC Decision that no employer-employee relationship exists between Shangri-la and petitioners. The appellate court concluded that all aspects of the employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la. ISSUE: Whether respondent doctor can be considered a legitimate independent contractor HELD: Yes. Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met:
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(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. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary 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. (c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. (Emphasis supplied) The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and 11 labor; and the mode, manner and terms of payment. On the other hand, existence of an employer- employee relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by
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whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall 12 consideration. Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-las principal business operation of hotels and restaurants. As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and 13 other benefits of the staff ; group life, group personal accident 14 insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employees last drawn salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS premium as well as their 15 wages if they were not indeed her employees. With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, "Clinic Policies 16 and Employee Manual" claimed to have been prepared by respondent doctor exists, to which petitioners gave their 17 conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-las regular workers, governs how they perform their respective tasks and responsibilities. As Shangri-la does not control how the work should be performed by petitioners, it is not petitioners employer. WHEREFORE, the petition is hereby DENIED. The Decision of the Court of Appeals dated May 22, 2007 and the Resolution dated July 10, 2007 are AFFIRMED. (CLAU)
COCA-COLA vs. DELA CRUZ Facts: Respondents, route helpers assigned to work in petitioner Coca-Cola Bottlers trucks, filed a consolidated suit against the latter. Respondents state that they were hired either by the petitioner or by its contractors, but they do not enjoy the full remuneration, benefits and privileges granted to the petitioners regular sales force. They argued that the services they render are necessary and desirable in the regular business of the petitioner and that the petitioners contracts of services with Peerless and Excellent are in the nature of "labor-only" contracts prohibited by law. In defense, the petitioner contended that it entered into contracts of services with Peerless and Excellent to provide allied services. Under these contracts, Peerless and Excellent retained the right to select, hire, dismiss, supervise, control and discipline and pay the salaries of all personnel they assign to the petitioner. Petitioner posited that there is no employeremployee relationship between the company and the respondents and belied the respondents submission that their jobs are usually necessary and desirable in its main business as a softdrinks manufacturer and the respondents tasks of handling, loading and unloading of the manufactured softdrinks are not part of the manufacturing process. Issue: WON Excellent and Peerless are independent contractors or labor-only contractors. Ruling: Excellent and Peerless are labor-only contractors. 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 persons 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 alter were directly employed by him On the matter of labor-only contracting, DO 18-02, Section 5, implemented by DOLE, provides: Prohibition against labor-only contracting. - Labor-only contracting is hereby declared prohibited x x x 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 sufficient 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 contract between the principal and the contractor is not the final word on how the contracted workers relate to the principal and the purported contractor; the relationships must be tested on the basis of how they actually operate.
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Excellent and Peerless were not independently selling and distributing company products, using their own equipment, means and methods of selling and distribution; they only supplied the manpower that helped the company in the handing of products for sale and distribution. Respondents who served as route helpers were really engaged in functions directly related to the overall business of the petitioner. They were under the companys supervision and control since sales and distribution were in fact not the purported contractors independent, discrete and separable activities, but were component parts of sales and distribution operations that the company controlled in its softdrinks business. Peerless and Excellent were mere suppliers of labor who had no sufficient capitalization and equipment to undertake sales and distribution of softdrinks as independent activities separate from the manufacture of softdrinks, and who had no control and supervision over the contracted personnel. They are therefore labor-only contractors. Consequently, the contracted personnel, engaged in component functions in the main business of the company under the latters supervision and control, cannot but be regular company employees. In these lights, the petition is totally without merit and hence must be denied. (DEUS)
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, GODOFREDO MORILLO, JR., SUNDAY BACEA, ALFREDO COS and ROGELIO VILLANUEVA, respondents. FACTS: Private respondents Godofredo Morillo, Sunday Bacea, Alfredo Cos and Rogelio Villanueva were hired as security guards by Confidential Investigation and Security Corporation ("CISCOR"). They were assigned to secure the premises of Development Bank of the Philippines ("DBP")Riverside Mills Corporation. Respondents resigned from CISCOR and claimed the return of their cash bond and payment of their 13th month pay and service incentive leave pay, but CISCOR failed to pay. CISCOR claimed that it incurred losses when respondents secured the premises of Riverside Mills Corporation. Hence, they were asked to first secure an individual/agency clearance from petitioner to show that no losses were incurred while they were guarding Riverside Mills Corporation. Instead of getting such clearance from the petitioner, private respondents secured their clearance from CISCORs detachment commander. Hence, for failure to secure the required clearance, private respondents cash bond deposit, their proportionate 13th month pay and service incentive leave pay were withheld to answer for liabilities incurred while private respondents were guarding Riverside Mills Corporation. CISCOR filed a motion with leave to implead petitioner bank and averred therein that in view of its contract with the petitioner whereby, for a certain service fee, CISCOR undertook to guard petitioners premises, both CISCOR and petitioner, under the Labor Code, are jointly and severally liable to pay the salaries and other statutory benefits due the private respondents, petitioner being an indispensable party to the case. Respondents filed their opposition and alleged, among others, that petitioner, not being an employer of the private respondents, was not a proper, necessary or indispensable party to the case. ISSUE: Whether or not the DBP is really liable for any of the claims of private respondents HELD: Petitioners interpretation of Article 106 of the Labor Code is quite misplaced. Nothing in said Article 106 indicates that insolvency or unwillingness to pay by the contractor or direct employer is a prerequisite for the joint and several liability of the principal or indirect employer. In fact, the rule is that in job contracting, the principal is jointly and severally liable with the contractor. The statutory basis for this joint and 5 6 several liability is set forth in Articles 107 and 109 in relation 7 to Article 106 of the Labor Code. There is no doubt that private respondents are entitled to the cash benefits due them. The petitioner is also, no doubt, liable to pay such benefits because the law mandates the joint and several liability of the principal and the contractor for the protection of labor. In Eagle Security Agency, Inc. vs. NLRC, this Court, explaining the aforesaid liability, held:
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This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3]. (FAITH)
UNITED SPECIAL WATCHMAN AGENCY vs CA FACTS: The Contract for Security Services[1]entered into between USWA and Banco Filipino Savings and Mortgage Bank (BF) took effect on 1 June 1994. However, on 3 June 1994, or two (2) days later, BF terminated the contract. The termination letter dated 3 June 1994, but received on June 17, advised USWA of the termination to take effect 30 days from receipt thereof. USWA alleged that, upon receipt of the letter, Mr. Angel Baliwag, its Operations Manager, immediately notified all the affected employees stationed at the BF branches about the termination of their contract. He advised them to report to the office for reassignment. Only thirty (30) out of the sixty-seven (67) guards reported and they were given new assignments. Out of the remaining thirty-seven (37), twenty-one (21) filed, on 4 August 1994, a complaint for illegal dismissal and payment of money claims against USWA and BF with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC). On 29 August 1994, the complaint was amended to include all thirty-seven (37) employees. In the course of the proceedings, five (5) of the thirty-seven employees reported to the office and were given new posts.[4] The Labor Arbiter ordered USWA to pay the employees separation pay, and both USWA and BF to pay the salary differential and attorneys fees. On appeal, the NLRC, on 23 July 1998, remanded the case, finding the conclusions on the issues of illegal dismissal and wage differential by the Arbiter without sufficient basis. However a compromise settlement was reached between BF and the employees.[7]The Arbiter approved the settlement. Aggrieved, the employees filed an appeal with the NLRC. The NLRC ordered USWA to pay the employees their separation pay in light of its conclusion that there was no proof that the employees were notified to report for reassignment after the termination of the contract. ISSUE: HELD: It is fundamental that (f)indings of facts of administrative bodies charged with their specific field of expertise, are afforded great weight by the courts, and in the absence of substantial showing that such findings are made from an erroneous estimation of the evidence presented, they are conclusive, and in the interest of stability of the governmental structure, should not be disturbed.The NLRC, in its decision established that the respondents were put on a temporary offdetail, which exceeded the allowable period of six (6) months, amounting to constructive dismissal.There is thus no further need to dwell on the questions of fact raised in this petition. Proceeding from the fact that the dismissal of the employees was illegal and pursuant to a legitimate job contracting, USWA and BF are jointly and severally liable in the payment of the wages of the employees, and for violation of any provision of the Labor Code. We note that a compromise agreement of the employees was executed between BF and the employees. However, the compromise agreement dealt only with salary differential. It did not include nor does it preclude the award of separation pay. In light of the illegal dismissal of the respondents, USWA is liable to pay the respondents separation pay equivalent to one (1) month pay for every year of service. (KICIANG)
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New Golden City Builders & Development Corp. v. CA GR No. 154715, 11 Dec 2003 Ynares-Santiago, J. Facts: Petitioner, a corporation engaged in the construction business, entered into a construction contract w/ Prince David Devt Corp. It engaged the services of Nilo Layno Builders to do the specialized concrete works. Pursuant to the contract Nilo Layno Builders hired private respondents to perform work at the project. After completion of the phase for which NLB was contracted, private respondents filed a complaint against petitioner & its president for unfair labor practice, nonpayment th of 13 month pay, illegal dismissal, & severance pay in lieu of reinstatement. The Labor Arbiter found that NLB was a laboronly contractor; thus, private respondents were deemed employees of the petitioner. It ordered petitioner to provide work for private respondents or pay separation pay. The monetary claims of private respondents were dismissed for lack of merit. Both parties appealed to the NLRC w/c held that private respondents were illegally dismissed & ordered petitioner to reinstate them & to pay their full backwages. The petition for certiorari filed by petitioner was denied by the CA. Issue: 1) Whether Nilo Layno Builders was an independent contractor or a labor-only contractor 2) Whether an ErEe relationship existed between petitioner & private respondents Held: 1) Independent contractor. Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor Code, an independent contractor is one who undertakes job contracting, i.e., a person who: (a) 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 (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises, and other materials which are necessary in the conduct of the business. Juxtaposing this provision vis--vis the facts of this case, Nilo Layno Builders is undertaking permissible labor or job contracting. Nilo Layno Builders is a duly licensed labor contractor carrying on an independent business for a specialized work that involves the use of some particular, unusual and peculiar skills and expertise, like concrete works, form works and steel rebars works. As a licensed labor contractor, it complied with the conditions set forth in Section 5, Rule VII-A, Book III, Rules to Implement the Labor Code, among others, proof of financial capability and list of equipment, tools, machineries and implements to be used in the business. Further, it entered into a written contract with the petitioner, a requirement under Section 3, Rule VII-A, Book III, Rules to Implement the Labor Code to assure the employees of the minimum labor standards and benefits provided by existing laws. The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work 2)
according to his own methods and without being subject to the control of the employer, except only to the results of the work. This is exactly the situation obtaining in the case at bar. Nilo Layno Builders hired its own employees, the private respondents, to do specialized work in the Prince David Project of the petitioner. The means and methods adopted by the private respondents were directed by Nilo Layno Builders except that, from time to time, the engineers of the petitioner visited the site to check whether the work was in accord with the plans and specifications of the principal. As admitted by Nilo G. Layno, he undertook the contract work on his own account and responsibility, free from interference from any other persons, except as to the results; that he was the one paying the salaries of private respondents; and that as employer of the private respondents, he had the power to terminate or dismiss them for just and valid cause. Indubitably, the Court finds that Nilo Layno Builders maintained effective supervision and control over the private complainants. Thus, it was plain conjecture on the part of the Labor Arbiter, the NLRC and the Court of Appeals to conclude that Nilo Layno Builders was a labor-only contractor merely because it does not have investment in the form of tools or machineries. They failed to appreciate the fact that Nilo Layno Builders had substantial capitalization for it did not only provide labor to do the specified project and pay their wages, but it furnished the materials to be used in the construction. Yes. There existed an employer-employee relationship between petitioner and private respondents albeit for a limited purpose. In legitimate job contracting, the law creates an employeremployee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees. From the foregoing disquisition, the petitioner did not, as it could not, illegally dismissed the private complainants. Hence, it could not be held liable for backwages and separation pay. Nevertheless, it is jointly and severally liable with Nilo Layno Builders for the private complainants wages, in the same manner and extent that it is liable to its direct employees. This liability covers the payment of service incentive leave th and 13 month pay of the private complainants during the time they were working at petitioners Prince David Project. So long as the work, task, job or project has been performed for petitioners benefit or on its behalf, the liability accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere. (LORI)
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PCi Automation v. NLRC GR No. 115920, Jan 29, 1996 Puno, J. 252 SCRA 493 (NICOLE)
WILLIAM L. TIU, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and HERMES DELA CRUZ, respondents. MENDOZA, J.: Facts: Petitioner, as operator of the D'Rough Riders Transportation, is engaged in the transportation of passengers from Cebu City to the northern towns of Cebu. Private respondent worked in petitioner's bus terminals as a "dispatcher," assisting and guiding passengers and carrying their bags. Petitioner denies that private respondent was his employee. He alleges that he did not have the power of selection and dismissal nor the power of control over private respondent. According to petitioner, private respondent, together with socalled "standbys," hung around his bus terminals, assisting passengers with their baggages as "dispatchers." Petitioner alleges that he had no choice but to allow private respondent and other "standbys" to carry on their activities within the premises of his bus terminals.2 He also claims he allowed them to do so even if their services as so-called "dispatchers" were not needed in his business. Petitioner insists that as "dispatcher," private respondent worked in his own way, without supervision by him. The Labor Arbiter and the NLRC found private respondent to be an employee of petitioner. Issue: Won an employer-employee relationship existed between petitioner and private respondent Held: We agree with the finding that an employer-employee relationship existed between petitioner and private respondent, such finding being supported by substantial evidence. Petitioner has failed to refute the evidence presented by private respondent. He points to his Chief Dispatcher, Regino de la Cruz, as the one who exercised the powers of an employer over the "dispatchers." Petitioner argues that under an agreement with Regino de la Cruz, it is the latter who selects and engages the "dispatchers," dictates their time, supervises the performance of their work, and pays their wages. He further argues that the "disciplinary memorandum" issued by him was not addressed to private respondent but to Regino de la Cruz, as employer of private respondent, to remind him regarding the discipline of the "dispatchers." Petitioner's contention is without merit. In determining whether there is an employer-employee relationship between the parties the following questions must be considered: (a) who has the power of selection and engagement of the employee? (b) who pays the wages of employee? (c) who has the power of dismissal? and; (d) who has the power to control the employee's conduct?4 Of these powers the power of control over the employees' conduct is generally regarded as determinative of the existence of the relationship. Indeed the "control test" only requires the existence of the right to control the manner of doing the work in a person, not necessarily the actual exercise of the power by him, which he can delegate. Consequently, in the case at bar, the power is exercised by Regino de la Cruz but it is power which is only delegated to him so that in truth the power inherently and
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primarily is possessed by petitioner. De la Cruz is a mere supervisor, while petitioner is the real employer. Petitioner does not claim that Regino de la Cruz and his dispatchers were independent contractors. Even if this be his contention, however, the argument would still be without merit. Job contracting is permissible only 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. In the absence of these requisites, what exists is a "labor-only" contract under which the person acting as contractor is considered merely an agent or intermediary of the employer who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him.9 For this reason, we hold that Regino de la Cruz can, at most, be considered a "labor-only" contractor and, therefore, a mere agent of petitioner. As he is acting in behalf of petitioner, private respondent Hermes de la Cruz is actually the employee of petitioner. (ROBERT)
GALLEGO vs. BAYER Facts: Gallego was contracted by Bayer Philippines as crop protection technician to promote and market Bayer products by making farm visits to convince the farmers to buy their products. Petitioners employment came to a halt, prompting him to seek another employment, but was reemployed by Product Image which is actually performing the same task as crop protection technician. Gallego was directed to submit a resignation letter and was ordered to quit, calling for him to return all pieces of service equipment, in which he refused. He continued performing his duties and received compensation. He received a memorandum that he will be transferred to Luzon and that he heard that respondents spread rumors that reached the dealers in Antique that he is no longer connected with Bayer and any transaction with him will not be honored. Believing he was terminated, he instituted a complaint before the NLRC. Respondents Bayer and Guillermo denied the existence of employment relationship, while respondents Product Image and Bergonia admitted that the petitioner was hired as contractual employee and that he has stopped reporting for work among other things. The Labor Arbiter declared that respondents were guilty of illegal dismissal. On appeal by the respondents, the NLRC reversed the Arbiters decision and contended that petitioner was not dismissed but has abandoned his employment by failure to report on his duties. Hence, this petition for review. Issue: Whether Product Image is a labor-only contractor and Bayer should be deemed petitioners principal employer. Ruling: Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out with a contractor or subcontractor the performance of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work or, service is to be performed or completed within or outside the premises of the principal. Under this arrangement, the following conditions must be met: (a) the contractor carries on a distinct and independent business and undertakes the contract work on his 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 his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. The court finds substantial evidence to support that Product Image is a legitimate job or independent contractor. Among the circumstances that establish the status of Product Image as a legitimate job contractor are: (1) Product Image had, during the period in question, a contract with Bayer for the promotion and marketing of Bayer products; and (2) Product Image has an independent business and provides services nationwide to big companies such as Ajinomoto Philippines and Procter and Gamble Corporation. Product Image also posted a bond to answer for any claim of its employees for unpaid wages and other benefits that may arise out of the implementation of its contract with Bayer.
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As to the question of Product Image being the employer of petitioner, the existence of an employer-employee relationship is determined on the basis of four standards, namely: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or absence of power of dismissal; and (4) the presence or absence of control of the putative employees conduct. Most determinative among these factors is the so-called control test. If at all, the only control measure retained by Bayer over petitioner was to act as his de facto supervisor in certifying to the veracity of the accomplishment reports he submitted to Product Image. This is by no means the kind of control that establishes an employer-employee relationship as it pertains only to the results and not the manner and method of doing the work. It would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Surely, it would be foolhardy for any company to completely give the reins and totally ignore the operations it has contracted out. In fine, Product Image is ineluctably the employer of petitioner. (DEUS)
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kapisanan ng mga kargador sa pier

ASSIGNMENT #2 CASE DIGESTS EMPLOYER-EMPLOYEE RELATIONSHIP

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category, managers, vis-a-vis employers, employees.

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G.R. No. 169136

July 14, 2006

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EDDIE DOMASIG,Petitioner, RELATIONS COMMISSION.

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