36716189 labor digests 1 part one secs 6 to 7 (1)

7/31/2019 36716189 Labor Digests 1 Part One Secs 6 to 7 (1)

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PART ONE. INTRODUCTORY MATERIALS

SECTION 6. WORK RELATIONSHIP

6.01. WORK RELATIONSHIP

A. Definitions: Employer and Employee

Employer A person who controls and directs a worker under anexpress or implied contract of hire and who pays the workers salaryor wages. Blacks Law DictionaryEmployee A person who works in the service of another person (theemployer) under an express or implied contract of hire, under whichthe employer has the right to control the details of work performance.Blacks Law Dictionary

97 (a), (b), (c);Article 97. Definitions. As used in this Title;

(a) Person means an individual, partnership,association, corporation, business trust, legalrepresentative, or any organized group of persons.

(b) Employer includes any person acting directly orindirectly in the interest of an employer in relation toan employee and shall include the government and allits branches, subdivisions and instrumentalities, allgovernment-owned or controlled corporations andinstitutions, as well as non-profit private institutions ororganizations.

(c) Employee includes any individual employed by anemployer.

Person- Individual- Partnership- Association- Corporation- Business trust- Legal representative- Any organized group of persons

Individual or single proprietorshipRefers to a business unit owned and controlled by only one person

PartnershipRefers to an association of two or more persons who bind themselvesto contribute money, property or industry to a common fund with theintention of dividing the profits among themselves or for the exerciseof a profession

Corporation1. Stock Corporation refers to one organized for profit and

issues shares of stock to its stockholders.2. Non-stock, non-profit corporation refers to one organized

principally for public purposes such as charitable, educational,cultural or similar purposes and does not issue shares of stockto its members.

Business trust, legal representatives or any organized group ofpersons

- A business trustis neither a corporation nor a partnership. It isa practice that originated in Massachusetts where a businessor certain real estate is vested in a group of trustees whichmanages it for the benefit of the beneficial owners; theownership of the latter is evidenced bynegotiable/transferable shares.

- Legal representatives may refer to agents under the principleof agency in the Civil Code

- Any organized group of persons refers to a duly registeredassociation of persons who voluntarily join together to form

business establishments which they own, control andpatronize. E.g. Cooperatives (credit, consumers, producers,marketing, service or multi-purpose)

167 (f), (g);

Article 167. Definition of Terms. As used in this Title, unlessthe context indicates otherwise:

(f) Employer means any person, natural or juridical,employing the services of the employee.

(g) Employee means any person compulsorily covered bythe GSIS under Commonwealth Act Numbered Onehundred eighty-six, as amended, including themembers of the Armed Forces of the Philippines, andany person employed as casual, emergency,temporary, substitute or contractual, or any personcompulsorily covered by the SSS under Republic ActNumbered Eleven hundred sixty-one, as amended.

Employer- Any person, natural or juridical, domestic or foreign, who

carries on in the Philippines any trade, business, industry,undertaking or activity of any kind and uses the services ofanother person who is under his orders as regards theemployment.

- Classification of employer

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o Public Sector: covered by the GSIS, comprising theNational Government, including GOCCs, the Phil.

Tuberculosis Society, the Phil. Natl Red Cross, and thePhil. Veterans Bank

o Private Sector: covered by the SSS, comprising allemployees other than those defined above

Employee

- Any person who performs services for an employer- Classification of employee

o Public Sector: covered by the GSIS, includingmembers of the AFP, elective officials who arereceiving regular salary, and any person employed ascasual, emergency, temporary, substitute orcontractual

o Private Sector: comprising the employed workers whoare covered by the SSS

212 (e), (f)Article 212.

(e) Employer includes any person acting in the interest

of an employer, directly or indirectly. The term shallnot include any labor organization or any of its officersor agents except when acting as employer.

(f) Employee includes any person in the employ of anemployer. The term shall not be limited to theemployees of a particular employer, unless the Code soexplicitly states. It shall include any individual whosework has ceased as a result of or in connection withany current labor dispute or because of any unfairlabor practice if he has no obtained any othersubstantially equivalent and regular employment.

Employee

UY v. VILLANUEVA

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU) V.LAGUESMA

Date: March 25, 1998Ponente: MendozaDoctrine: A distinction exists between those who have the authorityto devise, implement and control strategic and operational policies(top and middle managers) and those whose task is simply to ensurethat such policies are carried out by the rank-and-file employees of anorganization (first-level managers/supervisors). What distinguishes

them from the rank-and-file employees is that they act in the interestof the employer in supervising such rank-and-file employees.

Facts: UPSU, a union of supervisory employees, filed a petition for

certification election on behalf of the route managers at Pepsi.

The petition was denied by the med-arbiter and the Secretaryof Labor and Employment on the ground that the routemanagers are managerial employees, and, therefore,ineligible for union membership under Art. 245.

Issues:1. W/N route managers at Pepsi are managerial employees, not

supervisors.2. W/N Art. 245 violates the Constitution as it prohibits

managerial employees from forming, joining or assisting laborunions

Ratio:1. Yes, route managers at Pepsi are managerial employees.

A distinction exists between those who have theauthority to devise, implement and control strategic andoperational policies (top and middle managers) and thosewhose task is simply to ensure that such policies arecarried out by the rank-and-file employees of anorganization (first-level managers/supervisors). Whatdistinguishes them from the rank-and-file employees isthat they act in the interest of the employer in supervisingsuch rank-and-file employees. The nature of the job of a route manager, as given in afour-page pamphlet prepared by Pepsi states that a routemanager manages his job and his people. They areresponsible for the success of the companys main line of

business through management of their respective salesteams. They are not mere functionaries with simpleoversight functions but business administrators in theirown right. Route managers also perform operational, HR,financial and marketing functions for the company. Routemanagers, therefore, protect and expand the companysbusiness.

2. No, Art. 245 is not unconstitutional. Art. 245, in relation to Art. 212 (m), faithfully carriesout the intent of the Constitutional Commission of notallowing top-level and middle managers to organize forlabor purposes.

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Those who qualify as top or middle managers areexecutives who receive from their employers informationthat not only is confidential but also is not generallyavailable to the public, to their competitors, or to otheremployees.

B. Employer-Employee Relationship

Factual Test

TAPE v SERVAA | Tinga, J.

GR No. 167648 | January 28, 2008Nature: Petition for Review on Certiorari of the Decision andResolution of the CAPetitioner: Television and Production Exponents (TAPE), Antonio

TuvieraRespondent: Roberto Servaa

Quick Summary: Servaa, a security guard of TAPE stationed atBroadway Centrum, was dismissed due to redundancy and thecompanys decision to engage the services of a professional securityagency. The Court held that although the existence of an employer-employee relationship is a factual issue, the Court can still assume

jurisdiction especially if the findings of lower courts/ agencies areconflicting (NLRC with those of CA and Labor Arbiters).

Looking at the following facts, the Court held that Servaa is anemployee of TAPE:

Vis--vis the four fold testo Servaa was absorbed by TAPE, thus, he was hired by

TAPE.o He received a fixed amount as monthly compensation

for the services he rendered to TAPE.o The Memorandum informing respondent of the

discontinuance of his service proves that TAPE had thepower to dismiss respondent.

o Control is manifested in the bundy cards submitted byrespondent in evidence. He was required to reportdaily and observe definite work hours.

Identification card of Servaa shows he is an employee. TAPE failed to adduce any evidence to prove that it complied

with the requirements laid down in Policy Instruction No. 40

for Servaa to qualify as Independent contractor. (did notpresent contract , did not comply with contract registrationrequirement)

He had been continuously under the employ of TAPE from1995 until his termination in March 2000, or for a span of 5years. He is considered a regular employee under Article 280of the Labor Code.

Facts: Roberto Servaa had served as a security guard for TAPE from

March 1987 until he was terminated on March 3, 2000. He was first connected with Agro-Commercial Security

Agency, which assigned him to assist TAPE in its liveproductions. When the security agencys contract with RPN-9expired in 1995, respondent was absorbed by TAPE.

The parties have agreed that Servaa would render hisservices until such time that TAPE shall have engaged theservices of a professional security agency.

TAPE started negotiations for the engagement of aprofessional security agency, Sun Shield Security Agency.

TAPE issued a memorandum to Servaa informing him of hisimpending dismissal due to TAPEs decision to contract theservices of Sun Shield and redundancy.

Servaa filed a complaint for illegal dismissal and non-payment of benefits against TAPE.

Labor Arbiter: declared Servaa regular employee of TAPE citingnature of his work as necessary and desirable in the usual businessactivity of TAPE. Termination was valid on the ground of redundancyand ordered the payment of respondents separation pay.NLRC: reversed the Labor Arbiters decision and considered Servaa amere program employee.CA: regular employee of TAPE.

Issue:WON an employer-employee relationship exists between TAPE andServaa

Held/ Ratio:

YES. Employee-Employer relationship exists. CA decision modified,exempted Antonio Tuviera from liability absent bad faith.

The factors to be considered in determining the existence ofemployer-employee relationship are:

Selection and engagement of the employee

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Payment of wages Power of dismissal Employers power to control the employee with respect to the

means and method by which the work is to be accomplished

The most important factor involves the control test under which anemployer-employee relationship exists when the person for whom the

services are performed reserves the right to control not only the endachieved but also the manner and means used to achieve the end.

Factual Considerations:

In 1995, Servaa was absorbed by TAPE or, in TAPEslanguage, retained as talent. Thus, he was hired by TAPE.

He presented his identification card to prove that he is indeedan employee of TAPE. It has been held that in a businessestablishment, an identification card is usually provided not

just as a security measure but to mainly identify the holderthereof as a bona fide employee of the firm who issues it.

The Memorandum informing Servaa of the discontinuance ofhis service proves that TAPE had the power to dismiss him.

Control is manifested in the Bundy cards submitted byServaa in evidence. These showed that he was required toreport daily and observe definite work hours.

NOT Independent Contractor. Servaa cannot be consideredas an independent contractor1as TAPE alleges.

TAPEs reliance on Dept. of Labor Policy No. 40 in classifyingServaa as a program employee2 and equating him to be anindependent contractor is misplaced. The aforementionedtheories of TAPE run counter to each other. An independentcontractor is not an employee of the employer, while a talentor program employee is an employee.

Servaa had been continuously under the employ of TAPE

from 1995 until his termination. Regardless of whether or notServaa had been performing work that is necessary or

1 A legitimate job contractor or subcontractor carries on a distinct andindependent business and undertakes to perform the job, work or service on itsown account and under its own responsibility according to its own manner andmethod, and free from the control and direction of the principal in all mattersconnected with the performance of the work except as to the results thereof.

TAPE failed to show that Servaa has substantial capital or investment to bequalified as an independent contractor.2Program employees are those whose skills, talents or services are engagedby the station for a particular or specific program or undertaking and who arenot required to observe normal working hours.

desirable to the usual business of TAPE, he is still considered aregular employee by virtue of A280 of LC. As such, he cannotbe terminated except for just cause or when authorized bylaw.

REMINGTON INDUSTRIAL SALES CORP. v. CASTANEDAA. Facts:

1.Erlinda Castaneda had instituted a complaint for illegaldismissal, underpayment of wages, non-payment of overtimeservice incentive leave pay and non-payment of 13th month payagainst Remington (a trading business) before the NLRC.2.Arguments:

a. Castaneda alleged: She started working in August 1983 as company cook

for Remington, worked for six days a week. 6 am asshe markets until 5:30 pm after employees leave.

She continuously worked with Remington untilunceremoniously prevented from reporting for workwhen it transferred to a new site. When she reported

for work at the new site but was informed thatRemington no longer needed her services. She was illegally dismissed because she was not given

the notices required by law. So she filed hercomplaint for reinstatement without loss of seniorityrights etc.

b. Remington: denied that it dismissed Erlinda illegally, saying she

was a domestic helper, not a regular employee Her job did not have anything to do with the business

of trading in construction or hardware materials. She did not work eight hours. After cooking lunch and

snack, her time was hers. Remington did not exercise any degree of control over

her work. She did not even need to punch any time card.

3.Labor Arbiter: dismissed Castaneda complaint. She was adomestic helper.4.NLRC: reversed Labor Arbiter.

Not a domestic helper. No allegation that she workedin the house of director or Remington, Mr. Tan.

Facts-wise, she worked as a cook in the office so thatit benefited not the family of Mr. Tan but hisemployees.

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There is a certification issued by the corporatesecretary certifying that she was a bonafideemployee.

Her work schedule and the fact of being paid amonthly salary indicate that she is a companyemployee. The food she prepares are part of thebenefit the business provides for the employees.

5.CA: affirmed NLRC.

B. Issues/Decision: Was Castaneda a regular employee inRemington? YES.

C. Rationale: Apex Mining Co., Inc. v. NLRC: a househelper in the staff

houses of an industrial company was a regular employee ofthe said firm. The criterion is the personal comfort andenjoyment of the family of the employer in the home of saidemployer.

That she works within company premises and that she does

not cater exclusively to the personal comfort of Mr. Tan andhis family reflects the existence of Remington's right ofcontrol over her functions, which is the primary indicator ofthe existence of an employer-employee relationship.

Wrong to say that if the work is not directly related to theemployer's business, then the person performing such workcould not be considered an employee. The existence of theemployer-employee relationship is defined by law according tothe facts of each case, regardless of the nature of theactivities involved.

Doctrine, also laid out in Apex:

The mere fact that the househelper or domestic servant is

working within the premises of the business , as in staffhousesfor its guest or even for its officers and employees, warrants theconclusion that such househelper or domestic servant is andshould be considered as a regular employee of the employer.NOTE: It was held she was illegally dismissed. She enjoyssecurity of tenure. She may not be dismissed in the absence of

just or authorized cause.

Established

MIGUEL v. JCT GROUP, INC.

WACK-WACK GOLF AND COUNTRY CLUB v. NLRC

Facts:

- Nov. 29, 1996: A fire destroyed a large portion of the Wack-wackGolf and Country Club, including its kitchen. Due to the need for

reconstruction of the clubhouse, Wack-wack had to suspend theoperations of the Food and Beverage Department, requiring thesuspension of 54 employees. The Wack-wack Employees Union foundthe suspension arbitrary and constitutive of union-busting, and wenton strike.

The parties soon entered into an amicable settlement to resolve thedispute, whereby a special separation benefit/retirement packagewas formulated. The terms and conditions of the package include thefollowing:

1. The UNION and the affected employees of F & B who aremembers of the UNION hereby agree to accept the specialseparation benefit package agreed upon between the CLUBmanagement on the one hand, and the UNION officers and theUNION 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 otherbenefits due them, namely, the cash equivalent of unused

vacation and sick leave credits, proportionate 13th

monthpay; and other benefits, if any, computed without premium;

XXX

4. . All qualified employees who may have beenseparated from the service under the above package

shall be considered under a priority basis foremployment by concessionaires and/or contractors,and even by the Club upon full resumption ofoperations, upon the recommendation of the UNION.The Club may even persuade an employee-applicant foravailment under the package to remain on his/her job,or be assigned to another position.

- The package was availed of by 3 employees (Cagasan, Dominguez,and Baluyot), who received large sums of money as separation pay.

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- Soon after, WW entered into a Management Contract with BusinessStaffing and Management Inc (BSMI), whereby the latter will providemanagement services for WW.

- Cagasan and Dominguez filed their application for employment withBMSI. They, by reason of the priority given by the separation package,were rehired on probationary status by BMSI. Cagasan was made a

personnel officer and Dominguez, a telephone operator.

- WW also engaged other contractors in the operations of the club(like janitorial services, Finance and accounting services). Because ofthe various management service contracts, BMSI made anorganizational analysis and manpower evaluation to streamline itsoperations. It found the positions of Cagasan and Domiguezredundant. In the case of respondent Cagasan, her tasks aspersonnel officer were likewise taken care of by the differentmanagement service contractors; on the other hand, Dominguezswork as telephone operator was taken over by the personnel of theaccounting department. BMSI subsequently terminated them.

- They then filed complaints in the NLRC for illegal dismissal againstWW. NLRC ordered reinstatement

ISSUE:

1. WON BMSI is an independent contractor (which will answer thequestion as WON there was an employer-employee relationship)

2. WON the employees were illegally dismissed

HELD

1. YES

Reasoning

- An independent contractor is one who undertakes job contracting,i.e., a person who: (a) carries on an independent business andundertakes the contract work on his own account under his ownresponsibility according to his own manner and method, free from thecontrol and direction of his employer or principal in all mattersconnected with the performance of the work except as to the resultsthereof; and (b) has substantial capital or investment in the form oftools, equipments, machineries, work premises and other materialswhich are necessary in the conduct of the business. Jurisprudenceshows that determining the existence of an independent contractorrelationship, several factors may be considered, such as, but not

necessarily confined to, whether or not the contractor is carrying onan independent business; the nature and extent of the work; the skillrequired; the term and duration of the relationship; the right to assignthe performance of specified pieces of work; the control andsupervision of the work to another; the employers power with respectto the hiring, firing, and payment of the contractors workers; thecontrol of the premises; the duty to supply premises, tools,

appliances, materials and labor; and the mode, manner and terms ofpayment.- There is indubitable evidence showing that BSMI is an independentcontractor, engaged in the management of projects, businessoperations, functions, jobs and other kinds of business ventures, andhas sufficient capital and resources to undertake its principalbusiness. It had provided management services to various industrialand commercial business establishments.- In December 1993, Labor Sec. Laguesma, in a case, recognized BSMIas an independent contractor. As a legitimate job contractor, therecan be no doubt as to the existence of an employer-employeerelationship between the contractor and the workers.

Thus, there is no employer-employee relation between WW and theworkers.

2. NO

Ratio As there was no employer-employee relationship between WWand the complainants, there can be no illegal dismissal.

Reasoning

- The complainants (private respondents herein) were validlyterminated upon their option to take the separation package providedby WW. Thus, the same have no cause of action against WW.

- When the respondents voluntarily signed their quitclaims andaccepted 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 assuredthe respondents of continuous employment in Wack Wack. Qualifiedemployees were given priority in being hired by its concessionairesand/or contractors such as BSMI when it entered into a managementcontract with the petitioner.

Disposition Petition granted. CA and NLRC decisions set aside

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Factors

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. v.SCHONFELD

Facts:In 1997, PCIJ, a Japan-based company, decided to set itself up in the

Philippines. In October 1997, respondent (a Canadian citizen) wasemployed by PCIJ, through its president, Henrichsen, as SectorManager of PPI (PCIJs subsidiary in Phil) in its Water and SanitationDepartment. However, PCIJ assigned him as PPI sector manager in thePhilippines. His salary was to be paid partly by PPI and PCIJ.Henrichsen transmitted a letter of employment to respondent inCanada, requesting him to accept the same and affix his conformitythereto. Respondent made some revisions in the letter of employmentand signed the contract which he subsequently sent to Henrichsen.Respondent arrived in the Philippines and assumed his position as PPISector Manager. He was accorded the status of a resident alien.As required by Rule XIV (Employment of Aliens) of the Omnibus RulesImplementing the Labor Code, PPI applied for an Alien EmploymentPermit (Permit) for respondent before the Department of Labor andEmployment (DOLE). It appended respondents contract ofemployment to the application.On May 5, 1999, respondent received a letter from Henrichseninforming him that his employment had been terminated effectiveAugust 4, 1999 for the reason that PCIJ and PPI had not beensuccessful in the water and sanitation sector in the Philippines.However, on July 24, 1999, Henrichsen, by electronic mail, requestedrespondent to stay put in his job after August 5, 1999, until such timethat he would be able to report on certain projects and discuss all theopportunities he had developed. Respondent continued his work withPPI until October 1, 1999.Respondent filed with PPI several money claims, including unpaid

salary, leave pay, air fare from Manila to Canada, and cost ofshipment of goods to Canada. PPI partially settled some of his claims(US$5,635.99), but refused to pay the rest.

Arguments:Petitioners contend that it was the PCIJ which employed respondent asan employee; it merely seconded him to petitioner PPI in thePhilippines, and assigned him to work in Manila as Sector Manager.Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never theemployer of respondent. They insist that PCIJ paid respondentssalaries and only coursed the same through petitioner PPI. PPI, beingits subsidiary, had supervision and control over respondents work,

and had the responsibilities of monitoring the "daily administration" ofrespondent. Petitioners further contend that, although Henrichsen wasboth a director of PCIJ and president of PPI, it was he who signed thetermination letter of respondent upon instructions of PCIJ. This isbuttressed by the fact that PCIJs letterhead was used to inform himthat his employment was terminated. Petitioners further assert that allwork instructions came from PCIJ and that petitioner PPI only served

as a "conduit."

Respondent averred that the absence or existence of a writtencontract of employment is not decisive of whether he is an employeeof PPI. He said that PPI, through its president Henrichsen, directed hiswork/duties as Sector Manager of PPI. He emphasized that as gleanedfrom Alien Employment Permit (AEP) No. M-029908-5017 issued tohim by DOLE on February 26, 1999, he is an employee of PPI. It wasPPI president Henrichsen who terminated his employment; PPI alsopaid his salary. The two corporations have separate and distinctpersonalities.

Issue: Are the factors in determining the existence of an employer-employee relationship between respondent and petitioner attendantin this case?

Held: Yes.

Ratio:The SC agreed with the conclusion of the CA that there was anemployer-employee relationship between petitioner PPI andrespondent using the four-fold test. Jurisprudence is firmly settledthat whenever the existence of an employment relationship is indispute, four elements constitute the reliable yardstick: (a) theselection and engagement of the employee; (b) the payment of

wages; (c) the power of dismissal; and (d) the employers power tocontrol the employees conduct. It is the so-called "control test"which constitutes the most important index of the existence of theemployer-employee relationshipthat is, whether the employercontrols or has reserved the right to control the employee not only asto the result of the work to be done but also as to the means andmethods by which the same is to be accomplished. Stated otherwise,an employer-employee relationship exists where the person for whomthe services are performed reserves the right to control not only theend to be achieved but also the means to be used in reaching suchend.

The SC quoted the CA: There is, indeed, substantial evidence onrecord which would erase any doubt that the respondent company is

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the true employer of petitioner. In the case at bar, the power tocontrol and supervise petitioners work performance devolved uponthe respondent company. Likewise, the power to terminate theemployment relationship was exercised by the President of therespondent company. It is not the letterhead used by the company inthe termination letter which controls, but the person who exercisedthe power to terminate the employee. It is also inconsequential if the

second letter of employment executed in the Philippines was notsigned by the petitioner. An employer-employee relationship mayindeed exist even in the absence of a written contract, so long as thefour elements are all present.

GABRIEL v. BILON

PHILIPPINE GLOBAL COMMUNICATIONS INC V DE VERA

459 SCRA 260

GARCIA; June 7, 2005

NATURE petition for review on certiorari

FACTS

- Petitioner Philippine Global Communications, Inc. (PhilCom), is acorporation engaged in the business of communication services andallied activities, while respondent Ricardo De Vera is a physician byprofession whom petitioner enlisted to attend to the medical needs ofits employees.

- It appears that on 15 May 1981, De Vera, via a letter dated 15 May1981, offered his services to the petitioner, therein proposing his planof works required of a practitioner in industrial medicine.

- The parties agreed and formalized respondents proposal in adocument denominated as RETAINERSHIP CONTRACT which will be fora period of one year subject to renewal, it being made clear thereinthat respondent will cover the retainership the Company previouslyhad with Dr. K. Eulau and that respondents retainer fee will be atP4,000.00 a month. Said contract was renewed yearly. Theretainership arrangement went on from 1981 to 1994 with changes inthe retainers fee. However, for the years 1995 and 1996, renewal ofthe contract was only made verbally. On December 1996 Philcom,thru a letter bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision todiscontinue the latters retainers contract with the Company

effective at the close of business hours of December 31, 1996because management has decided that it would be more practical toprovide medical services to its employees through accreditedhospitals near the company premises.

- On 22 January 1997, De Vera filed a complaint for illegal dismissalbefore the National Labor Relations Commission (NLRC), alleging that

that he had been actually employed by Philcom as its companyphysician since 1981 and was dismissed without due process. Heaverred that he was designated as a company physician on retainerbasis for reasons allegedly known only to Philcom. He likewiseprofessed that since he was not conversant with labor laws, he did notgive 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.

- On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes cameout with a decision dismissing De Veras complaint for lack of merit,on the rationale that as a retained physician under a valid contractmutually agreed upon by the parties, De Vera was an independentcontractor and that he was not dismissed but rather his contractwith [PHILCOM] ended when said contract was not renewed afterDecember 31, 1996.

NLRC reversed (the word used is modified) that of the Labor Arbiter,on a finding that De Vera is Philcoms regular employee andaccordingly directed the company to reinstate him to his formerposition without loss of seniority rights and privileges and with fullbackwages from the date of his dismissal until actual reinstatement.

- Court of Appeals modified NLRCs decision that of the NLRC bydeleting the award of traveling allowance, and ordering payment ofseparation pay to De Vera in lieu of reinstatement.

ISSUES

WON an employer-employee relationship exists between petitionerand respondent

HELD

NO

- De Vera was an independent contractor beinf the retained physicianof petitioner company.

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- In a long line of decisions, the Court, in determining theexistence of an employer-employee relationship, has invariablyadhered to the four-fold test, to wit: the selection and engagement ofthe employee; the payment of wages; the power of dismissal; andthe power to control the employees conduct, or the so-called controltest, considered to be the most important element.

- Applying the four-fold test to this case, we initially find that it wasrespondent himself who sets the parameters of what his duties wouldbe in offering his services to petitioner in the letter which he sent topetitioner.

- The letter was substantially the basis of the labor arbiters findingthat there existed no employer-employee relationship betweenpetitioner and respondent, in addition to the following factual settings:

- The fact that the complainant was not considered an employee wasrecognized by the complainant himself in a signed letter, the tenor ofwhich indicated that the complainant was proposing to extend histime with the respondent and seeking additional compensation forsaid extension. This shows that the respondent PHILCOM did not have

control over the schedule of the complainant as it [is] the complainantwho is proposing his own schedule and asking to be paid for thesame. This is proof that the complainant understood that hisrelationship with the respondent PHILCOM was a retained physicianand not as an employee. If he were an employee he could notnegotiate as to his hours of work.

- De Veras service for the respondent was covered by a retainershipcontract [which] was renewed every year from 1982 to 1994. Uponreading the contract dated September 6, 1982, signed by thecomplainant himself (Annex C of Respondents Position Paper), itclearly states that is a retainership contract. The retainer fee isindicated thereon and the duration of the contract for one year is also

clearly indicated in paragraph 5 of the Retainership Contract. Thecomplainant cannot claim that he was unaware that the contract wasgood only for one year, as he signed the same without anyobjections. The complainant also accepted its renewal every yearthereafter until 1994. As a literate person and educated person, thecomplainant cannot claim that he does not know what contract hesigned and that it was renewed on a year to year basis.

- The labor arbiter added the indicia, not disputed by respondent, thatfrom the time he started to work with petitioner, he never wasincluded in its payroll; was never deducted any contribution forremittance to the Social Security System (SSS); and was in factsubjected by petitioner to the ten (10%) percent withholding tax for

his professional fee, in accordance with the National Internal RevenueCode, matters which are simply inconsistent with an employer-employee relationship.

- Clearly, the elements of an employer-employee relationship arewanting in this case. We may add that the records are replete withevidence showing that respondent had to bill petitioner for his

monthly professional fees It simply runs against the grain of commonexperience to imagine that an ordinary employee has yet to bill hisemployer to receive his salary.

- We note, too, that the power to terminate the parties relationshipwas mutually vested on both. Either may terminate the arrangementat will, with or without cause.Finally, remarkably absent from theparties arrangement is the element of control, whereby the employerhas reserved the right to control the employee not only as to theresult of the work done but also as to the means and methods bywhich the same is to be accomplished.

- Here, petitioner had no control over the means and methods bywhich respondent went about performing his work at the company

premises. He could even embark in the private practice of hisprofession, not to mention the fact that respondents work hours andthe additional compensation therefor were negotiated upon by theparties. In fine, the parties themselves practically agreed on everyterms and conditions of respondents engagement, which therebynegates the element of control in their relationship. For sure,respondent has never cited even a single instance when petitionerinterfered with his work.

Disposition petition is GRANTED and the challenged decision of theCourt of Appeals REVERSED and SET ASIDE. The 21 December 1998decision of the labor arbiter is REINSTATED.

Control Test

LOPEZ v. METROPOLITAN WATERWORKS and SEWERAGESYSTEM (MWSS)

Facts:Petitioners were engaged by the MWSS as collectors-contractors byvirtue of an Agreement wherein the petitioners agreed to collect fromthe concessionaires of MWSS charges, fees, assessments of rents forwater, etc. However, when MWSS entered into a ConcessionAgreement with Manila Water and Benpress-Lyonnaise, the collection

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of the bills was transferred to said private concessionaires. Regularemployees of the MWSS (except those who chose to remain withMWSS or retired) were absorbed by the concessionaires.

Relying on a Civil Service Commission Resolution, MWSS refused togive the petitioners retirement benefits, saying that they werecontract-collectors and not employees. On the other hand, the

petitioners claim that they are employees, saying that with the natureand extent of their work at the MWSS, they served as collectors ofMWSS only, and that they never provided collections services tocustomers as an independent business.

Issue:W/N petitioners are regular employees.

Held and Ratio:According to the Court, they are indeed regular employees of MWSS.

The primary standard of determining regular employment is thereasonable connection between the particular activity performed bythe employee in relation to the usual business or trade of the

employer, which can be determined by looking at the nature of thework performed and its relation to the scheme of the particularbusiness or trade in its entirety.

UERMMMC R.D.U. V. LAGUESMA (AS CITED IN FELIX V.BUENASEDA)

Quick Facts (Felix v. Buenaseda):

Felix was employed as a resident physician (temporary status) by theNational Mental Hospital. When NMH reorganized itself as the NationalCenter for Mental Health, upon review of the board of the NCMH an in

pursuit of new requirements laid down, Felix was dismissed. Felix filedfor illegal dismissal.

Issue: WON he was legally dismissed.

Held: Yes

Ratio: (UERMMMC Doctrine used in case):

Under this system, residents, specialty those in university teachinghospitals 18 enjoy their right to security of tenure only to the extentthat they periodically make the grade, making the situation quiteunique as far as physicians undergoing post-graduate residencies and

fellowships are concerned. While physicians (or consultants) ofspecialist rank are not subject to the same stringent evaluationprocedures, 19 specialty societies require continuing education as arequirement for accreditation for good standing, in addition to peerreview processes based on performance, mortality and morbidityaudits, feedback from residents, interns and medical students andresearch output. The nature of the contracts of resident physicians

meet traditional tests for determining employer-employeerelationships, but because the focus of residency is training, they areneither here nor there.

Finally, it is crystal clear, from the facts of the case at bench, that thepetitioner accepted a temporary appointment (Medical Specialist I). Asrespondent Civil Service Commission has correctly pointed out 23, theappointment was for a definite and renewable period which, when itwas not renewed, did not involve a dismissal but an expiration of thepetitioner's term.

R TRANSPORT CORP V EJANDRA

NATURE Petition for review of the decision of the CFI of Iloilo

FACTS

- Rogelio Ejandra worked for petitioner bus company as a driver.

- On Jan 31 1996, he was apprehended for obstruction of traffic. Hislicense was confiscated. He reported this to his manager, OscarPasquin, who gave him P500 to redeem the license. He was able toretrieve the license after a week since the apprehending officer turnedit in only then.

- On feb 8, 1996, he reported for work. The company said they werereviewing if they were going to allow him drive again. Also, he was

being blamed for damage to the bus. Ejandra said the bus wasdamaged during the week he wasnt able to drive.

- Petitioner, on the other hand, claims that Ejandra is a habitualabsentee and has abandoned his job. To belie private respondentsallegation that his license had been confiscated, petitioner assertedthat, had it been true, he should have presented an apprehensionreport and informed petitioner of his problems with the LTO. But hedid not. Petitioner further argued that private respondent was not anemployee because theirs was a contract of lease and not ofemployment, with petitioner being paid on commission basis

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- The labor arbiter ruled in favor of Ejandra. It was held that he didntabandon his work, since there was valid reason for his 1 weekabsence. He also was not afforded due process. NLRC and CAaffirmed.

ISSUES

1. WON there was an employee employer relationship2. WON Ejandra was dismissed for a just cause

HELD

1.YES. Petitioner is barred to negate the existence of an employer-employee relationship. In its petition filed before this Court, petitionerinvoked our rulings on the right of an employer to dismiss anemployee for just cause. Petitioner maintained that privaterespondent was justifiably dismissed due to abandonment of work. Byadopting said rulings, petitioner impliedly admitted that it was in factthe 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 thatprivate respondent was legally dismissed for abandonmentwas in fact a negative pregnant: an acknowledgement thatthere was no mutual termination of the alleged contract oflease and that private respondent was its employee. The factthat petitioner paid private respondent on commission basisdid not rule out the presence of an employee-employerrelationship. Article 97(f) of the Labor Code clearly providesthat an employees wages can be in the form of commissions.

2. NO. To constitute abandonment, two elements must concur: (1)the failure to report for work or absence without valid or justifiablereason and (2) a clear intention to sever the employer-employee

relationship. Petitioner did not fulfill the requisites. First, Ejandrasabsence was justified since his license wasnt release until after aweek. Second, Ejandra did not want to sever their relationship whenhe got his license back. Third, labor arbiter Yulo correctly observedthat, if private respondent really abandoned his work, petitionershould have reported such fact to the nearest Regional Office of theDepartment of Labor and Employment in accordance with Section 7,Rule XXIII, Book V of Department Order No. 9, series of 1997 (RulesImplementing Book V of the Labor Code). Petitioner made no suchreport.

- In addition, he wasnt also given due process by not giving himnotice and hearing.

Disposition Decision reversed

INSULAR LIFE v. NLRC (1989)

Economic Test

SEVILLA v. CA | Sarmiento, J.G.R. No. L-41182-3 | April 16, 1988

Petitioner: Dr. Carlos Sevilla and Lina SevillaRespondent: CA, Tourism World Service, Inc.

Quick Summary:Sevilla and Tourism World Service (TWS) entered into a contractinvolving the management of a branch office of the latter. The issuehere is the nature of the relationship between the parties. This stemsfrom the unilateral disconnection of phone lines and padlocking of thesaid offices by TWS, wherein Sevilla feeling aggrieved, filed acomplaint under Articles 19, 20 and 21 of the Civil Code.In this case the petitioner Lina Sevilla claims that a joint businessventure was entered into by and between her and Tourist WorldService with offices at the Ermita branch office and that she was notan employee of the TWS to the end that her relationship with TWSwas one of a joint business venture. TWS contends that she is anemployee, and therefore bound by the acts of TWS, the employer.

The Court held, using the Economic test, that she is not an employee:(USING the existing economic conditions prevailing betweenthe parties, like the inclusion of the employee in the payrolls, indetermining the existence of an employer-employeerelationship)

a true employee cannot be made to part with his own moneyin pursuance of his employer's business (Sevilla bound herselfin solidumas and for rental payments of the said office)

unlike an employee then, who earns a fixed salary usually, sheearned compensation in fluctuating amounts depending onher booking successes.BUT, also held that it is not a jointventure but a contract of agency, thus the unilateralrescission of TWS made it liable for damages.

Facts: Sevilla and TWS entered into a contract in relation to the

management of a branch office of the latter. TWS appears to have been informed that Lina Sevilla was

connected with a rival firm, the Philippine Travel Bureau, and,

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since the branch office was anyhow losing, the Tourist WorldService considered closing down its office.

TWS indeed, closed down the premises. Hence Sevillas actionfor damages.

Lina Sevilla claims that a joint business venture was enteredinto by and between her and appellee TWS with offices at theErmita branch office and that she was not an employee of the

TWS to the end that her relationship with TWS was one of ajoint business venture. TWS contend that the appellant was anemployee of the appellee Tourist World Service, Inc. and assuch was designated manager.

RTC: TWS, being the true lessee, it was within its prerogativeto terminate the lease and padlock the premises. It likewisefound the petitioner, Lina Sevilla, to be a mere employee ofsaid Tourist World Service, Inc. and as such, she was bound bythe acts of her employer

Hence this appeal

Issue: WON employee-employer relationship exist (important in thematter of jurisdiction)

Held/ Ratio: NO. It is a Contract of Agency, thus lower court hasjurisdiction. Court awarded damages to Sevilla. In this jurisdiction,there has been no uniform test to determine the evidence of anemployer-employee relation. In general, we have relied on the so-called right of control test, "where the person for whom theservices are performed reserves a right to control not only the end tobe achieved but also the means to be used in reaching such end."

Subsequently, however, we have considered, in addition to thestandard of right-of control, the existing economic conditionsprevailing between the parties, like the inclusion of theemployee in the payrolls, in determining the existence of anemployer-employee relationship.

The records will show that the petitioner, Lina Sevilla, was notsubject to control by the private respondent Tourist World Service,Inc., either as to the result of the enterprise or as to the means usedin connection therewith. In the first place, under the contract of leasecovering the Tourist Worlds Ermita office, she had bound herself insolidumas and for rental payments, an arrangement that would be likeclaims of a master-servant relationship.

True the respondent Court would later minimize her participation inthe lease as one of mere guaranty, that does not make her anemployee of Tourist World, since in any case, a true employeecannot be made to part with his own money in pursuance ofhis employer's business, or otherwise, assume any liability thereof.In that event, the parties must be bound by some other relation, butcertainly not employment.

In the second place, and as found by the Appellate Court, '[w]hen thebranch office was opened, the same was run by the herein appellantLina O. Sevilla payable to Tourist World Service, Inc. by any airline forany fare brought in on the effort of Mrs. Lina Sevilla. Under thesecircumstances, it cannot be said that Sevilla was under the control of

Tourist World Service, Inc. "as to the means used." Sevilla in pursuingthe business, obviously relied on her own gifts and capabilities.

It is further admitted that Sevilla was not in the company'spayroll. For her efforts, she retained 4% in commissions from airlinebookings, the remaining 3% going to Tourist World. Unlike anemployee then, who earns a fixed salary usually, she earned

compensation in fluctuating amounts depending on herbooking successes.FRANCISCO v. NLRC | Ynares-Santiago, J.G.R. No. 170087 | August 31, 2006

Petitioner: Angelina FranciscoRespondent: NLRC, KASEI Corp.

Quick Summary:Angelina Francisco filed a complaint for constructive dismissal. Kaseisdefense was that no employee-employer relationship exist since hewas only hired as a technical consultant. The Court held, usingeconomic test that she is an employee and DEPENDENT to the

company since:

she had served the company for six years before herdismissal, receiving check vouchers indicating hersalaries/wages, benefits, 13th month pay, bonuses andallowances, as well as deductions and Social Security

When petitioner was designated General Manager, respondentcorporation made a report to the SSS signed by IreneBallesteros. Petitioners membership in the SSS as manifestedby a copy of the SSS specimen signature card which wassigned by the President of Kasei Corporation and the inclusionof her name in the on-line inquiry system of the SSS evinces

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the existence of an employer-employee relationship betweenpetitioner and respondent corporation.

IMPORTANT NOTES:In addition to the control test, economic realities of the employmentrelations help provide a comprehensive analysis of the trueclassification of the individual, whether as employee, independent

contractor, corporate officer or some other capacity.The better approach would therefore be to adopt a two-tiered testinvolving: (1) the putative employers power to control the employeewith respect to the means and methods by which the work is to beaccomplished; and (2) the underlying economic realities of the activityor relationship.

The determination of the relationship between employer andemployee depends upon the circumstances of the whole economicactivity, such as:

(1) the extent to which the services performed are an integralpart of the employers business;

(2) the extent of the workers investment in equipment andfacilities;

(3) the nature and degree of control exercised by the employer;(4) the workers opportunity for profit and loss;(5) the amount of initiative, skill, judgment or foresight required

for the success of the claimed independent enterprise;(6) the permanency and duration of the relationship between the

worker and the employer; and(7) the degree of dependency of the worker upon the employer

for his continued employment in that line of business.The proper standard of economic dependence : whether theworker is dependent on the alleged employer for his continuedemployment in that line of business.

Agreement

CHAVEZ v. NLRC

SAN MIGUEL CORPORATION v. ABELLA

Penned by J. Carpio-Morales

Facts: Petitioner SMC entered into a one-year Contract of Services(renewable) with Sunflower Multi-Purpose Cooperative. The latterundertakes to provide janitorial, shrimp harvesting, sanitation, andstorage services for the Bacolod Shrimp Processing Plant. Noteworthyis the explicit stipulation in the contract that there is no employer-employee relationship between the company and the cooperative or

the company and the cooperatives employees. Pursuant to thecontract Sunflower engaged the services of private respondents. Aftersometime, private respondents filed a complaint praying that they bedeclared as regular employees which was amended subsequently toinclude illegal dismissal. In the meantime, SMC filed before the DOLEa Notice of Closure.

Labor Arbiter: The private respondents complaint is DISMISSED forlack of merit. The law allows for job contracting. NLRC: Appeal isDISMISSED. Sunflower was an independent contractor. CA: Petition isGRANTED reversing and setting aside the NLRC decision.

Issue: Whether private respondents should be considered asemployees of SMC. Intertwined to the resolution of this main issue iswhether Sunflower is an independent as an independent contractor.

Held: Private respondents are employees of SMC. In this case,procedural objections where presented by SMC but the Court brushedaway technical infirmities in deference with the time-honoredliberality when it comes to labor cases and proceeded to dispose thesubstantive part. The test to determine the existence of independent

contractorship is whether one claiming to be an independentcontractor has contracted to do the work according to his ownmethods and without being subject to the control of employer, exceptonly as to the results of the work. In legitimate labor contracting, thelaw creates an employer-employee relationship for a limited purpose(w/c is to ensure the employees are paid their wages). In labor-onlycontracting, the statute creates an employer-employee relationshipfor a comprehensive purpose: to prevent a circumvention of laborlaws. The contractor is considered merely an agent of the principalemployer.

Although, the parties to the contract disavowed the existence of anemployer-employee relationship, that did not prevent the Court from

examining the totality of the facts and the surrounding circumstances.The relationship between SMC and Sunflower was a labor-onlycontractorship as inferred from the following indicia: (1) Sunflowerdoes not have substantial capitalization or investment in the form oftools, equipment, machineries, work premises and other materials toqualify it as an independent contractor; (2) The lot, building,machineries and all other working tools utilized by respondents wereowned by SMC, not to mention that the alleged office of Sunflower isfound within the confines of a carinderia with a typewriter (inhindsight, this must be very precious) as the only property; (3) thework assigned to private respondents was directly related to theoperations of SMC; (4) Sunflower did not carry an independentbusiness or undertake the performance of its service contract

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according to its own manner and method, free from control andsupervision. To reiterate, in labor-only contracting, the statute createsan employer-employee relationship for a comprehensive purpose: toprevent a circumvention of labor laws.

(I think this is the relevant part with respect to the topic). The law ofcourse provides for two kinds of regular employees: (1) those who are

engaged to perform activities which are usually necessary or desirablein the usual business or trade of the employer; and (2) those whohave rendered at least one year of service, whethercontinuous or broken, with respect to the activity in whichthey are employed. As for those of private respondents who wereengaged in janitorial and managerial tasks, they fall under the secondcategory and are thus entitled to differential pay and benefits.

There was also a discussion about retrenchment but let us not belaborourselves and just await the wisdom of time for it is still off-topic.

By: Mark Xavier Oyales

LOPEZ v. METROPOLITAN WATERWORKS and SEWERAGE

SYSTEM (MWSS)

Facts:Petitioners were engaged by the MWSS as collectors-contractors byvirtue of an Agreement wherein the petitioners agreed to collect fromthe concessionaires of MWSS charges, fees, assessments of rents forwater, etc. However, when MWSS entered into a ConcessionAgreement with Manila Water and Benpress-Lyonnaise, the collectionof the bills was transferred to said private concessionaires. Regularemployees of the MWSS (except those who chose to remain withMWSS or retired) were absorbed by the concessionaires.

Relying on a Civil Service Commission Resolution, MWSS refused to

give the petitioners retirement benefits, saying that they werecontract-collectors and not employees. On the other hand, thepetitioners claim that they are employees, saying that with the natureand extent of their work at the MWSS, they served as collectors ofMWSS only, and that they never provided collections services tocustomers as an independent business.

Issue:W/N petitioners are regular employees.

Held and Ratio:

According to the Court, they are indeed regular employees of MWSS.The primary standard of determining regular employment is thereasonable connection between the particular activity performed bythe employee in relation to the usual business or trade of theemployer, which can be determined by looking at the nature of thework performed and its relation to the scheme of the particularbusiness or trade in its entirety.

SONZA vs. ABS-CBN

Facts: ABS-CBN signed an agreement with the Mel and JayManagement and Development Corporation where MJMDC as agentagreed to provide Sonzas services exclusively to ABS-CBN as talentfor radio and television. Sonza is also the President and GeneralManager of MJMDC. ABS-CBN agreed to pay for Sonzas services amonthly talent fee. Eventually, Sonza wrote a letter to ABS-CBNsPresident tendering his irrevocable resignation in view of recentevents concerning his programs and career. The letter also served asnotice of the rescission of the agreement between the parties.

Issue: W/N an employer-employee relationship existed betweenSonza and ABS-CBN

Held/Ratio: NO. Sonzas claims are all based on the agreement andnot on the Labor Code. The present case does not call for anapplication of the Labor Code provisions but an interpretation andimplementation of the parties agreement. Sonzas cause of action isfor breach of contract, a civil dispute cognizable by the regular courts.

Sonza Four-fold Test as Applied by SCThe discretion usedby ABS-CBN inspecifically selectingand hiring Sonza over

other broadcasters ofpossibly similarexperience andqualification as hisbelies the claim ofindependentcontractorship.

The specific selection and hiring of Sonzabecause of his unique skills, talent andcelebrity status not possessed by ordinaryemployees is a circumstance indicative, but

not conclusive, of an independent contractualrelationship. If Sonza did not possess suchunique skills, talent and celebrity status, ABS-CBN would not have entered into theagreement with Sonza but would have hiredhim through its personnel department justlike any other employee. The method ofselecting and engaging Sonza does notconclusively determine his status.

ABS-CBN directly paidSonza his monthlytalent fees and

All the talent fees and benefits paid toSonza were the result of negotiationsthat led to the agreement. If Sonza were

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benefits with no partof his fees going toMJMDC.

ABS-CBNs employee, there would be no needfor the parties to stipulate on benefits such asSSS, Medicare and 13th month pay which thelaw automatically incorporates into everyemployer-employee contract. Whateverbenefits Sonza enjoyed arose from contractand not because of an employer-employee

relationship.

Moreover, Sonzas talent fees are so huge andout of the ordinary that they indicate more anindependent contractual relationship ratherthan an employer-employee relationship.Such power to bargain talent fees wayabove the salary scales of ordinaryemployees is a circumstance indicative,but not conclusive, of an independentcontractual relationship.

Sonzas rescission ofthe agreement wasnot an admission ofhis status as a non-employee.

For violation of any provision of theagreement, either party may terminate theirrelationship. Sonza failed to show that ABS-CBN could not terminate his services ongrounds other than breach of contract. Sucha circumstance indicates an independentcontractual relationship between Sonza andABS-CBN. Whether Sonza rescinded theagreement or resigned from work does notdetermine his status as employee orindependent contractor.

ABS-CBN exercisedcontrol over themeans and methodsof his work, subjectedhim to its rules and

standards of performance, and hisexclusivity as atalent.

Sonza is not an employee but an independentcontractor. The greater the supervisionand control the hirer exercises, the morelikely the worker is deemed anemployee. The less control the hirer

exercises, the more likely the worker isconsidered an independent contractor.

Sonza had a free hand on what to say ordiscuss in his shows provided that he did notattack ABS-CBN or his interests. ABS-CBNscontrol was limited only to the result ofSonzas work, whether to broadcast the finalproduct or not.

The agreement does not require Sonza tocomply with the rules and standards of

performance prescribed for employees ofABS-CBN. The code of conduct imposed onSonza under the agreement refers to theTelevision and Radio Code of the KBP whichhas been adopted by ABS-CBN as its Code ofEthics. In any event, not all rules imposed bythe hiring party on the hired party indicate

that the latter is an employee of the former.General rules are merely guidelines towardsthe achievement of the mutually desiredresult, which are top-rating television andradio programs.

Lastly, being an exclusive talent does not byitself mean that Sonza is an employee of ABS-CBN. Even an independent contractor canvalidly provide his services exclusively to thehiring party. In the broadcast industry,exclusivity is not necessarily the same ascontrol. This practice is not designed tocontrol the means and methods of work of thetalent, but simply to protect the investment ofthe broadcast station.

INSULAR LIFE ASSURANCE CO. LTD. V. NLRC (1998)

Facts:

Petitioner Insular Life entered into an agency contract with respondentPantaleon de los Reyes authorizing the latter to solicit within thePhilippines applications for life insurance and annuities for which hewould be paid compensation in the form of commissions. It containedthe stipulation that no employer-employee relationship shall be

created between the parties and that the agent shall be free toexercise his own judgment as to time, place and means of solicitinginsurance. De los Reyes however was prohibited by petitioner fromworking for any other life insurance company, and violation of thisstipulation was sufficient ground for termination of the contract.

Private respondent was later appointed as Acting Unit Manager underits office and was also expressly obliged to participate in thecompanys conservation program. Private respondent workedconcurrently as agent and Acting Unit Manager until he was notifiedby petitioner that his services were terminated. He filed a complaintbefore the Labor Arbiter on the ground that he was illegally dismissedand that he was not paid his salaries and separation pay.

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Issue: W/N there is an employer-employee relationship.

Held/Ratio:

Four-fold test, i.e., (a) selection and engagement of employee, (b)payment of wages, (c) power of dismissal, and, (d) power of control most important element. De los Reyes was under the effective controlof petitioner in the critical and most important aspects of his work asUnit Manager. This conclusion was derived from the provisions in thecontract which appointed private respondent as Acting Unit Manager,to wit: (a) De los Reyes was to serve exclusively the company,therefore, he was not an independent contractor; (b) he was requiredto meet certain manpower and production quota; and, (c) petitionercontrolled the assignment to and removal of soliciting agents from hisunit.

Doctrine: Not every form of control over the conduct of the partyhired in relation to the service rendered establishes employer-employee relationship.

Broadcasts Talents - Performers

TELEVISION ETC. v. SERVANA, supra

DUMAPIT-MURLLO v. CA

Facts: Dumapit-Murillo hired as co-anchor for ABC. Her fixed-termcontract was for a period of 3 mos but it was renewed by ABCcontinually for 4 yrs. LA dismissed her complaint for illegal dismissal.NLRC reversed LAs decision, CA reversed NLRC.

Issue/Held: W/N she is a fixed employee or regular employee?REGULAR EMPLOYEE

Ratio: A 280 provides regular employees are those who wereengaged to perform activities w/c are usually necessary or desirable inthe usual business or trade of the employer her work as an anchor isobviously desirable for the business of news and public dissemination,also being hired for 4 years is a manifestation of her necessity in thecompany. Also fixed term contract are only valid when it is not usedto circumvent the acquisition of tenurial security and it is shown thatboth parties agreed to it voluntarily.

ABS-CBN v. NAZARENO 503 SCRA 204 (06)

Facts:

Petitioner ABS-CBN hired respondents (Nazareno, Gerzon, Deiparine,and Lerasan) as Production Assistants (PAs), with a monthlycompensation of P4,000, were issued IDs, and were required to workfor a minimum of 8 hours per day, including Sundays and holidays.

They were under the control and supervision of the Assistant StationManager and News Manager.

When petitioner and the Rank-and-File Employees Union executed aCBA, petitioner refused to recognize PAs as part of the bargainingunit, and thus, they were not included under the CBA. Thereafter,respondents filed a Complaint with the NLRC for Recognition ofRegular Employment Status, Underpayment of OT Pay, Holiday Pay,etc. with Damages against petitioner. As proof of their regular status,they presented machine copies of their Employee IDs and salaryvouchers. They want to be declared regular and permanentemployees so as to be covered under the CBA and avail of thebenefits thereof. On the other hand, petitioner asserts that therespondents are merely considered as talents, not regularemployees.

Issue:W/N respondents are regular employees.

Held and Ratio:The Court gave credence to respondents assertions that where aperson has rendered at least 1 year of service, regardless of thenature of the activity performed, or where the work is continuous, theemployment is considered regular as long as the activity exists. Acustomary appointment is not a requisite before one can be formallydeclared to have attained regular status. The primary standard ofdetermining regular employment is the reasonable connectionbetween the particular activity performed by the employee in relationto the usual trade or business of the employer. The test is whether theformer is usually necessary or desirable in the employers business.

In this case, it doesnt matter if the respondents were hired astalents. The factual circumstances (i.e. that they received pre-agreedtalent fees instead of salaries, that they did not observe therequired office hours, and were permitted to join other productions intheir free time) werent conclusive proof of the nature of theiremployment. They are not talents; rather, they are regular employeeswho perform several different duties under the control and direction ofABS-CBN executives and supervisors.

Method Wage Payment

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ALMIREZ v. INFINITE CORP. TECHNOLOGY CORP.

LAZARO v. SSS

Hours of Work

LAZARO v. SSS, supra

Proof

TELEVISION AND PRODUCTION EXPONENTS, INC. v. SERVANA,supra

LOPEZ v. BODEGA CITY

MCLEOD v NLRC

Jan 23, 2007Carpio, J:

Facts: John F. McLeod filed a complaint for retirement benefits,vacation and sick leave benefits, non-payment of unused airlinetickets, holiday pay, underpayment of salary and 13th month pay,moral and exemplary damages, attorneys fees plus interest againstFilipinas Synthetic Corporation (Filsyn), Far Eastern Textile Mills, Inc.,Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu. He alleges that at thetime of his retirement complainant was receiving P60,000.00 monthlywith vacation and sick leave benefits; 13th month pay, holiday payand two round trip business class tickets on a Manila-London-Manila

itinerary every three years which is convertible to cash if unused.Respondents accordingly failed to pay vacation and leave credits andrequested complainant to wait as it was short of funds but the sameremain unpaid at present. Respondents likewise failed to paycomplainants holiday pay up to the present. There were morebenefits which were not honored.

The Labor Arbiter, held all respondents jointly and severally liable forthe money claims of Mcleod. However, the NLRC reversed and madePeggy Mills as the sole entity liable for the retirement pay of Mcleod.

This was affirmed by the CA.

Issue: WON an employer-employee relationship exists between theprivate respondents and the petitioner for purposes of determiningemployer liability to the petitioner.

Held: No employer-employee relationship, McLeod was a managerialemployee of PMI from 20 June 1980 to 31 December 1992.

Ratio: McLeod could have presented evidence to support hisallegation of employer-employee relationship between him and any ofFilsyn, SRTI, and FETMI, but he did not. Appointment letters oremployment contracts, payrolls, organization charts, SSS registration,personnel list, as well as testimony of co-employees, may serve asevidence of employee status. It is a basic rule in evidence that partiesmust prove their affirmative allegations. While technical rules are notstrictly followed in the NLRC, this does not mean that the rules onproving allegations are entirely ignored. Bare allegations are notenough. They must be supported by substantial evidence at the veryleast

McLeods reliance on Annex M can hardly carry the day for him. AnnexM, which is McLeods letter addressed to "Philip Lim, VPAdministration," merely contains McLeods proposals for the grant ofsome benefits to supervisory and confidential employees. Contrary toMcLeods allegation, Patricio did not sign the letter. Hence, the letterdoes not embody any agreement between McLeod and themanagement that would entitle McLeod to his money claims. Neithercan McLeods assertions find support in Annex U. Annex U is theAgreement which McLeod and Universal Textile Mills, Inc. executed in1959. The Agreement merely contains the renewal of the serviceagreement which the parties signed in 1956.

DOMASIG v. NLRC

Doctrine: Substantial evidence is enough to prove the existence of anemployer-employee relationship. Substantial evidence defined below.

Facts:

Eddie Domasig said he started working for Cata GarmentsCorporation even when its name was still Cato GarmentsCorporation

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The management of the said corporation dismissed him whenthey learned that he was being pirated by a rival corporationwhich had an offer he refused.

Domasig went to the Labor Arbiter which ruled in favor of him.Management appealed to the NLRC and the NLRC ruled infavor of the management.

The Labor Arbiter found the identification card issued by Cata

as well as the salary vouchers of Domasig as sufficientevidence to prove that there was an employer-employeerelationship between them.

The NLRC on the other hand, said that the Labor Arbiter actedarbitrarily on ruling in favor of Domasig since Cata wasasserting that Domasig was merely a commissions agentevidenced by the list of sales collections which included thecommissions due, expenses incurred and cash advancesreceived.

Issue: Whether or not there enough/sufficient/substantial evidence asto establish the employee-employer relationship between Domasigand Cata Garments.

Held: There was enough evidence to establish the employer-employee relationship.

It has long been established that substantial evidence is enough toprove the existence of an employer-employee relationship.Substantial evidence has been defined to be such relevantevidence as a reasonable mind might accept as adequate tosupport a conclusion, and its absence is not shown bystressing that there is contrary evidence on record, direct orcircumstantial, for the appellate court cannot substitute itsown judgment or criterion for that of the trial court indetermining wherein lies the weight of evidence or whatevidence is entitled to belief.

It was wrong for the NLRC to be not convinced with the uncontestedissuance of the identification card which petitioners submitted toprove that there was evidence of an employer-employee relationship.Also, Domasig was employed for more than one year and under thelaw, he is considered to be a regular employee. Domasig wasreinstated in this case.

Absence of Relationship

LOPEZ v. BODEGA CITY, supra

ABANTE v. LAMADRID

Petitioner: Empermaco B Abante, JrRespondents: Lamadrid Bearing & Parts Corp and its President Jose

Lamadrid

Facts:Abante was employed by the Lamadrid company in 1985 as asalesman for Mindanao w/ a commission of 3% of the total paid-upsales.

Petitioner had 5 bad accounts worth P687K in 1998 & Jose warned himthat if he doesnt issue his own checks to cover the bad accounts, hiscommissions wont be released & he will lose his job. He issuedchecks on condition that these will not be deposited for clearing &that the deficiencies shall be charged against his commissions. Thecompany tricked him into signing a Promissory Note and a Deed ofReal Estate Mortgage. Some checks were returned to Abante.

Abante was to apply for a salary loan w/ SSS but learned that hewasnt covered. When he inquired w/ Jose, the latter berated & hurledinvectives at him. Jose deposited the remaining checks, contrary totheir agreement. These were dishonored due to Account Closed.

Company demanded that he make good his checks. Abante repliedcommitting his commissions as payment for the balance of the sales.

Abantes customer handed to him a letter from the companyinforming clients that Abante is no longer recognized as a salesman.Abante received a subpoena for violation of BP 22.

ABante filed a complaint for illegal dismissal w/ money claims beforethe NLRC. The respondents aver that Abante is a freelance salesman,not an employee because he was on commission basis, he doesnthave a monthly salary, he doesnt report to work daily, he didnt havea pay-slip, he is not enrolled w/ the SSS, he is also a salesman for 5other companies, and he shouldnt have executed a Promissory Note& Deed of Real Estate Mortgage..

The Labor Arbiter ruled in favor of Abante. The NLRC reversed theNLRCs decision for lack of cause of action. The CA denied Abantespetition for review.

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Issue/Held: WON Abante is an employee of Lamadrid. NO

Ratio:Abante allege that he was doing work that is necessary or desirable inLamadrids usual business or trade (pursuant to Art 280, Labor Code).He also said that the company had the power of control over him. Hecollected payments from sales. The company directs him to report inMindanao for sales & collection activities and sends him toconferences. He says that even though he doesnt report daily towork, it doesnt mean that hes not an employee.

The court applied the four-fold test and found out that there was noER-EE relationship between Lamadrid & Abante.

1. Selection & engagement- he was free to offer his services to other companies

2. Payment of wages- he was paid on commission

3. Power of dismissal- he had no sales quote w/c, if not reached, would be a

ground for his dismissal4. Power of control

- he was not required to submit a period report on his sales& activities

- he was not assigned to particular areas only, he wasassigned to the whole of Mindanao

- he was left alone to adopt any style/strategy to sell hisproducts

- the things he learned from the marketing conferences inManila served only as guidelines

Art 280 is not a crucial factor in determining the existence of an ER-EErelationship. It merely distinguishes between two kinds of employees,i.e., regular employees and casual employees, for purposes ofdetermining their rights to certain benefits, such as to join or form aunion, or to security of tenure. Article 280 does not apply where the

existence of an employment relationship is in dispute.While in Songco v NLRC the court said that commission under Art. 96of the Labor Code was construed as being included in the definition ofwage, there is no categorical pronouncement that the payment ofcompensation on commission basis is conclusive proof of theexistence of an employer-employee relationship. After all,commission, as a form of remuneration, may be availed of by both anemployee or a non-employee.

CA decision affirmed in toto.

Denial Negative Pregnant Rule

R TRANSPORT CORP. v. EJANDRA, supra

6.02. INDEPENDENT CONTRACTOR AND LABOR ONLY CONTRACTOR

106 Contractor or SubcontractorART. 106. Contractor or subcontractor. - Whenever anemployer enters into a contract with another person for theperformance of the formers work, the employees of thecontractor and of the latters subcontractor, if any, shall bepaid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to paythe wages of his employees in accordance with this Code, theemployer shall be jointly and severally liable with hiscontractor or subcontractor to such employees to the extentof the work performed under the contract, in the samemanner and extent that he is liable to employees directly

employed by him.The Secretary of Labor and Employment may, by appropriateregulations, restrict or prohibit the contracting-out of labor toprotect the rights of workers established under this Code. Inso prohibiting or restricting, he may make appropriatedistinctions between labor-only contracting and jobcontracting as well as differentiations within these types ofcontracting and determine who among the parties involvedshall be considered the employer for purposes of this Code, toprevent any violation or circumvention of any provision of thisCode.

There is "labor-only" contracting where the person supplying

workers to an employer does not have substantial capital orinvestment in the form of tools, equipment, machineries, workpremises, among others, and the workers recruited andplaced by such person are performing activities which aredirectly related to the principal business of such employer. Insuch cases, the person or intermediary shall be consideredmerely as an agent of the employer who shall be responsibleto the workers in the same manner and extent as if the latterwere directly employed by him.

107 Indirect EmployerART. 107. Indirect employer. - The provisions of theimmediately preceding article shall likewise apply to any

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person, partnership, association or corporation which, notbeing an employer, contracts with an independent contractorfor the performance of any work, task, job or project.

109 Solidary LiabilityART. 109. Solidary liability. - The provisions of existing laws tothe contrary notwithstanding, every employer or indirectemployer shall be held responsible with his contractor orsubcontractor for any violation of any provision of this Code.For purposes of determining the extent of their civil liabilityunder this Chapter, they shall be considered as directemployers.

Contracting and Subcontracting Arrangements- Expressly allowed by law- Arrangement whereby a principal or indirect or statutory

employer agrees to put out or farm out with a contractor orsubcontractor the performance or completion of a specific job,work or service within a definite or predetermined period,regardless of whether such job, work or service is to beperformed or completed w/in or outside the premises of the

principal.- Subject to regulation for the promotion of employment and

the observance of the rights of workers to just and humaneconditions of work, security of tenure, self-organization andcollective bargaining.

- Trilateral arrangement:o Contract for a specific job, work or service bet.

principal and contractor/subcontractoro Contract of employment bet.

contractor/subcontractor and its workers

Principal farms out work, job, task, project or service to a

contractor or subcontractor; not the direct employer of theworkers employed by the contractor/subcontractor andassigned to the principal; indirect employer; statutoryemployer; employer

Contractor/Subcontractor has the capacity to independentlyundertake the performance of the work, job, etc.; exercisesindependent employment and contracts to do a piece of workaccdg to its own methods and w/o being subject of control bythe principal, except as to the results thereof; direct employerof the contractual employees who are supplied to the principal

Contractual workers engaged by thecontractor/subcontractor to accomplish the work, job, etc.

Legitimate Job Contracting- Conditions to be met:

1. Right of Control Test. The contractor/subcontractorcarries on an independent business and undertakes the

contract work on his own account under his ownresponsibility accdg to his own manner and method, freefrom the control and direction of his employer or principalin all matters connected w/ the performance of the workexcept as to the results thereof

2. Substantial Capital or Investment Test. Thecontractor/subcontractor has substantial capital orinvestment in the form of tools, equipment, machineries,work premises, and other materials which are necessaryin the conduct of the business

3. Legal Rights and Benefits Compliance Test. Theagreement between the principal andcontractor/subcontractor assures the contractual

employees entitlement to all labor and occupational safetyand health standards, free exercise of the right to self-organization, security of tenure, and social and welfarebenefits

- Absence of any of the requisites makes it a labor-onlycontracting arrangement

- Other factors indicative of permissible jobcontracting/subcontracting arrangement1. Whether the C/SC is carrying on an independent business;2. Nature and extent of the work;3. Skill required;4. Term and duration of relationship;5. Right to assign the performance of specified pieces of

work;6. Control and supervision of the workers;7. Power of the employer with respect to the hiring, firing

and payment of workers of the contractor;8. Control of the premises;9. Duty to supply premises, tools, appliances, materials, and

labor; and10. Mode, manner and terms of payment.

Labor-only Contracting (PROHIBITED)- A labor-only contractor is one who presents himself as an

employer even if he does not have capital to run a business or

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capacity to ensure that his workers are paid their wages andother benefits as prescribed by law.

- He cannot independently undertake to perform asubcontracted job or service.

- To allow a labor-only contractor to operate is to give him anopportunity to circumvent the law and to exploit workers.

- Elements:

1. The C/SC does not have substantial capital or investmentwhich relates to the job, work or service to be performedand the employees recruited, supplied or placed by suchc/sc are performing activities w/c are directly related tothe main business of the principal, OR

2. The C/SC does not exercise the right of control over theperformance of the work of the contractual employee.

- Even if only one of the two elements is present, there is labor-only contracting

- Bases in prohibiting labor-only contracting:a. 3, Art. XIII, 1987 Consti. Section 3. The State shall afford

full protection to labor, local and overseas, organized andunorganized, and promote full employment and equalityof employment opportunities for all. X X X

b. Art. 106, Labor Code.o Objective:

Ensure that labor laws are followed Prevent exploitation of workers

DOLE Order No. 18-02, Series of 2002DEPARTMENT ORDER NO. 18 - 02(Series of 2002)..RULES IMPLEMENTING ARTICLES 106 TO 109OF THE LABOR CODE, AS AMENDED..By virtue of the power vested in the Secretary of Labor andEmployment under Articles 5 (Rule-making) and 106(Contractor or Subcontractor) of the Labor Code of thePhilippines, as amended, the following regulations governingcontracting and subcontracting arrangements are herebyissued:Section 1. Guiding principles. - Contracting andsubcontracting arrangements are expressly allowed by lawand are subject to regulation for the promotion ofemployment and the observance of the rights of workers to

just and humane conditions of work, security of tenure, self-

organization, and collective bargaining. Labor-onlycontracting as defined herein shall be prohibited.Section 2 . Coverage. - These Rules shall apply to all parties ofcontracting and subcontracting arrangements whereemployer-employee relationship exists. Placement activitiesthrough private recruitment and placement agencies asgoverned by Articles 25 to 39 of the Labor Code are notcovered by these Rules.

Section 3. Trilateral Relationship in ContractingArrangements. - In legitimate contracting, there exists atrilateral relationship under which there is a contract for aspecific job, work or service between the principal and thecontractor or subcontractor, and a contract of employmentbetween the contractor or subcontractor and its workers.Hence, there are three parties involved in thesearrangements, the principal which decides to farm out a job orservice to a contractor or subcontractor, the contractor orsubcontractor which has the capacity to independentlyundertake the performance of the job, work or service, andthe contractual workers engaged by the contractor or

subcontractor to accomplish the job work or service.

Section 4. Definition of Basic Terms. - The following terms asused in these Rules, shall mean:

(a) "Contracting" or "subcontracting" refers to anarrangement whereby a principal agrees to put out or farmout with a contractor or subcontractor the performance orcompletion of a specific job, work or service within a definiteor predetermined period, regardless of whether such job,work or service is to be performed or completed within oroutside the premises of the principal.(b) "Contractor or subcontractor" refers to any person or

entity engaged in a legitimate contracting or subcontractingarrangement.

(c) "Contractual employee" includes one employed by acontractor or subcontractor to perform or complete a job,work or service pursuant to an arrangement between thelatter and a principal.

(d) "Principal" refers to any employer who puts out or farmsout a job, service or work to a contractor or subcontractor.

36716189 labor digests 1 part one secs 6 to 7 (1)

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