set 1 labor case digest (1)

8/10/2019 Set 1 Labor Case Digest (1)

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1. CMS Estate vs SSS; GR No. L- 26298 September 28, 1984

FACTS:

Petitioner CMS Estate Inc is a domestic corporation engaged in the

real estate business. In December 1952, it began with only 6

employees. In 1956, it also engaged in the logging business and

obtained an ordinary license from the Bureau of Forestry to operate

forest concession (13,000 hectares) in Baganga, Davao. In January

1957, CMS Estate entered into a contract of management with

Eufracio Rojas for the operation of the logging concession which

began in April 1957 with four employees earning monthly salaries.

By September 1957, CMS Estate had 89 employees in the logging

operation. But on December 1957, CMS Estate revoked its contract

with Rojas. By August 1958, CMSEstate became a member of SSS

with respect to its real estate business and remitted to the SSS

P203.13 representing the initial premium of the salaries of the

employees in the logging business.

But on October 1958, petitioner demanded the refund of the

amount, alleging that it is not yet subject to compulsory coverage in

its logging business. Respondent SSS denied the petition on the

ground that the logging business is only an expansion of the

companys existing activities and that it should be considered amember since December 1952 when it opened its business.

CMS Estate contends that the SSS contributions required of

employees and employers under the SSS Act of 1954 are not in the

nature of excise taxes and therefore, not compulsory of employers.

ISSUE:

W/N Petitioners logging business is subject to compulsory coverage

in the SSS

HELD:

The Social Security Law was enacted pursuant to the policy to

develop, establish gradually and perfect a social security system

which shall be suitable to the needs of the people throughout the

Philippines and provide protection against the hazards of disability,

sickness, old age and death. It is clear then that the

implementation of the SSS Law is in line with the general welfare

mandate of the Constitution and as such, is a legitimate exercise of

the police power.

As held in Philippine Blooming Mills Co. vs. SSS: membership in theSSS is not a bilateral, consensual agreement where obligations and

rights of the parties are subject to their will. RA 1161 requires

compulsory coverage of employees and employers under the

system. As such, the principle of non-impairment of obligation of

contract cannot be raised as a defense.

The taxing power of the State is exercised for the purpose of raising

revenues. However, under our Social Security Law, the emphasis is

more on the promotion of the general welfare. The Act is not part ofout Internal Revenue Code nor are the contributions and premiums

therein dealt with and provided for, collectible by the Bureau of

Internal Revenue. The funds contributed to the System belong to

the members who will receive benefits, as a matter of right,

whenever the hazards provided by the law occur.


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2. People vs Pomar; GR No. L-22008 November 3, 1924

Facts:

That on or about the 27th day of August, 1923, and sometime prior

thereto, in the City of Manila, Philippine Islands, the said accused,

being the manager and person in charge of La Flor de la Isabela, a

tobacco factory pertaining to La Campania General de Tabacos de

Filipinas, a corporation duly authorized to transact business in said

city, and having, during the year 1923, in his employ and service as

cigar-maker in said factory, a woman by the name of Macaria

Fajardo, whom he granted vacation leave which began on the 16th

day of July, 1923, by reason of her pregnancy, did then and there

willfully, unlawfully, and feloniously fail and refuse to pay to said

woman the sum of eighty pesos (P80), Philippine currency, to which

she was entitled as her regular wages corresponding to thirty days

before and thirty days after her delivery and confinement which

took place on the 12th day of August, 1923, despite and over the

demands made by her, the said Macaria Fajardo, upon said accused,

to do so.

To said complaint, the defendant demurred, alleging that the facts

therein contained did not constitute an offense. The demurrer was

overruled, whereupon the defendant answered and admitted at thetrial all of the allegations contained in the complaint, and

contended that the provisions of said Act No. 3071, upon which the

complaint was based were illegal, unconstitutional and void.

Upon a consideration of the facts charged in the complaint and

admitted by the defendant, the Honorable C. A. Imperial, judge,

found the defendant guilty of the alleged offense described in the

complaint, and sentenced him to pay a fine of P50, in accordance

with the provisions of section 15 of said Act, to suffer subsidiary

imprisonment in case of insolvency, and to pay the costs.

Issue:W/N Section 13 of Act No. 3071 is unconstitutional?

Held:

Yes, Act No. 3071 is unconstitutional. Such Act violates the right to

enter into a lawful contract. The right to enter into lawful contracts

constitutes one of the liberties provided by the constitution for the

people of the State. Being such a right, it should not therefore be

arbitrarily interfered with. Even though it has been contended that

Act No. 3071 is within the police power of the State, such power

cannot be exercised in violation to the Constitution which is thefundamental and supreme law of the land.

Said section 13 was enacted by the Legislature of the Philippine

Islands in the exercise of its supposed police power, with the

praiseworthy purpose of safeguarding the health of pregnant

women laborers in "factory, shop or place of labor of any

description," and of insuring to them, to a certain extent,

reasonable support for one month before and one month after their

delivery. The question presented for decision by the appeal is

whether said Act has been adopted in the reasonable and lawfulexercise of the police power of the state.

In determining whether a particular law promulgated under the

police power of the state is, in fact, within said power, it becomes

necessary first, to determine what that power is, its limits and

scope. Literally hundreds of decisions have been promulgated in

which definitions of the police power have been attempted. An

examination of all of said decisions will show that the definitions are


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generally limited to particular cases and examples, which are as

varied as they are numerous.

Without further attempting to define what are the peculiar subjects

or limits of the police power, it may safely be affirmed, that every

law for the restraint and punishment of crimes, for the preservation

of the public peace, health, and morals, must come within this

category. But the state, when providing by legislation for the

protection of the public health, the public morals, or the public

safety, is subject to and is controlled by the paramount authority of

the constitution of the state, and will not be permitted to violate

rights secured or guaranteed by that instrument or interfere with

the execution of the powers and rights guaranteed to the people

under their law the constitution. (Mugler vs.Kansas, 123 U. S.,

623.)

The police power of the state is a growing and expanding power. As

civilization develops and public conscience becomes awakened, the

police power may be extended, as has been demonstrated in the

growth of public sentiment with reference to the manufacture and

sale of intoxicating liquors. But that power cannot grow faster than

the fundamental law of the state, nor transcend or violate the

express inhibition of the people's law the constitution. If the

people desire to have the police power extended and applied to

conditions and things prohibited by the organic law, they must first

amend that law.


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3. Magallanes vs Sun Yat Sen Elementary School; GR No. 160876

January 18, 2008

Facts:

Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented

by her heirs), petitioners, Grace Gonzales, and Bella Gonzales were

all employed as teachers in the Sun Yat Sen Elementary School in

Surigao City.

Paz Go and Elena Cubillan are principals of the said school. Willy Ang

Gan Teng and Benito Ang are its directors, while Teotimo Tan is the

school treasurer. They are all respondents herein.

On May 22, 1994, respondents terminated the services ofpetitioners. Thus, on August 3, 1994, they filed with the National

Labor Relations Commission (NLRC), Butuan City, complaints against

respondents for illegal dismissal, underpayment of wages, payment

of backwages, 13th month pay, ECOLA, separation pay, moral

damages, and attorneys fees. Likewise, on August 22, 1994,

petitioner Cotecson filed a separate complaint praying for the same

reliefs.

On June 3, 1995, Labor Arbiter Rogelio P. Legaspi rendered a

Decision declaring that petitioners were illegally dismissed from the

service and ordering respondents to reinstate them to their former

or equivalent positions without loss of seniority rights, and to pay

them their backwages, salary differential, 13th month pay

differential, and service incentive leave benefits "as of June 20,

1995." Respondents were likewise directed to pay petitioners moral

and exemplary damages.

On appeal by respondents, the NLRC, in its Decision dated February

20, 1996, reversed the Arbiters judgment, holding that petitioners

are contractual employees and that respondents merely allowed

their contracts to lapse.

Petitioners timely filed a motion for reconsideration, but it was

denied by the NLRC in its Resolution dated April 17, 1996.

Petitioners then filed with the Court of Appeals a petition for

certiorari, docketed as CA-G.R. SP No. 50531.

Issue:W/N the issuance by the NLRC of the Order dated March 30,

2001, amending the amounts of separation pay and backwages,

awarded to petitioners and computed by the Labor Arbiter, is

tantamount to grave abuse of discretion amounting to lack orexcess of jurisdiction?

Held:

We opt for liberality in the application of the rules to the instant

case in light of the following considerations. First, the rule that

negligence of counsel binds the client may be relaxed where

adherence thereto would result in outright deprivation of the

clients liberty or property or where the interests of justice so

require.5Second, this Court is not a slave of technical rules, shorn of

judicial discretionin rendering justice, it is guided by the norm

that on the balance, technicalities take a backseat against

substantive rights. Thus, if the application of the rules would tend to

frustrate rather than promote justice, it is always within this Courts

power to suspend the rules or except a particular case from its

application.
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This case involving a labor dispute has dragged on for over a decade

now. Petitioners have waited too long for what is due them under

the law. One of the original petitioners, Judith Cotecson, died last

September 28, 2003 and has been substituted by her heirs. It is time

to writefinisto this controversy. The Labor Code was promulgated

to promote the welfare and well-being of the working man. Its spirit

and intent mandate the speedy administration of justice, with least

attention to technicalities but without sacrificing the fundamental

requisites of due process.

Clearly, the Decision in CA-G.R. SP No. 50531 had long become final

and executory. The Labor Arbiter computed the monetary awards

due to petitioners corresponding to the period from June 1994 to

October 28, 1999, in accordance with the Decision of the Court of

Appeals (Special Sixteenth Division). The award for backwages and

money claims is in the total sum of P912,086.15.


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4. Calalang vs Williams; GR No. 47800 December 2, 1940

Facts:

The Secretary of Public Works and Communications (PWC)

approved with modification the recommendation that originated

from the National Traffic Commission (NTC), which was favorably

indorsed by the Director of Public Works (PW) that Rosario Street

and Rizal Avenue be closed to traffic of animal-drawn vehicles,

between the points and during the hours from 7 a.m. to 11 p.m., for

a period of one year from the date of the opening of the Colgante

Bridge to traffic; that the Mayor of Manila and the Acting Chief of

Police of Manila have enforced and caused to be enforced the rules

and regulations thus adopted; that as a consequence of such

enforcement, all animal drawn vehicles are not allowed to pass and

pick up passengers in the places abovementioned to the detriment

not only of their owners but of the riding public as well.

Commonwealth Act No. 548 gives the Director of Public Works the

authority to promulgate rules and regulations to regulate and

control the use of and traffic on national roads.

Maximo Calalang, in his capacity as private citizen and as a taxpayer

of Manila, filed a petition for a writ of prohibition against the

Chairman of NTC, Director of PW, Acting Secretary of PWC, Mayor

of Manila and Acting Chief of Police of Manila.

ISSUE:WON the rules and regulations complained of infringe the

constitutional precept regarding the promotion of social justice to

insure the well-being of all the people?

Held:

The promotion of social justice, however, is to be achieved not

through a mistaken sympathy towards any given group. Social

justice is "neither communism, nor despotism, nor atomism, nor

anarchy," but the humanization of laws and the equalization of

social and economic forces by the State so that justice in its rational

and objectively secular conception may at least be approximated.

Social justice means the promotion of the welfare of all the people,

the adoption by the Government of measures calculated to insure

economic stability of all the competent elements of society, through

the maintenance of a proper economic and social equilibrium in the

interrelations of the members of the community, constitutionally,

through the adoption of measures legally justifiable, or extra-

constitutionally, through the exercise of powers underlying the

existence of all governments on the time-honored principle of salus

populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the

necessity of interdependence among divers and diverse units of a

society and of the protection that should be equally and evenly

extended to all groups as a combined force in our social and

economic life, consistent with the fundamental and paramount

objective of the state of promoting the health, comfort, and quiet of

all persons, and of bringing about "the greatest good to the greatest

number.


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5. Manaya vs Alabang Country Club; GR No. 168988 June 19, 2007

Facts:

Petitioner alleged that on 21 August 1989, he was initially hired by

the respondent as a maintenance helper[3]

receiving a salary

of P198.00 per day. He was later designated as company

electrician. He continued to work for the respondent until 22

August 1998 when the latter, through its Engineering and

Maintenance Department Manager, Engr. Ronnie B. de la Cruz,

informed him that his services were no longer required by the

company.[4]

Petitioner alleged that he was forcibly and illegally

dismissed without cause and without due process on 22 August

1998.[5]

Hence, he filed a Complaint[6]

before the Labor Arbiter. He

claimed that he had not committed any infraction of company

policies or rules and that he was not paid his service incentive leavepay, holiday pay and 13

thmonth pay. He further asserted that with

his more or less nine years of service with the respondent, he had

become a regular employee. He, therefore, demanded his

reinstatement without loss of seniority rights with full backwages

and all monetary benefits due him.[7]

In its Answer, respondent denied that petitioner was its

employee. It countered by saying that petitioner was employed by

First Staffing Network Corporation (FSNC), with which respondent

had an existing Memorandum of Agreement dated 21 August1989. Thus, by virtue of a legitimate job contracting, petitioner, as

an employee of FSNC, came to work with respondent, first, as a

maintenance helper, and subsequently as an

electrician. Respondent prayed for the dismissal of the complaint

insisting that petitioner had no cause of action against it.

Issue:W/N the interpretation must be liberally construed?

Held:

In all these, the Court allowed liberal interpretation given the

extraordinary circumstances that justify a deviation from an

otherwise stringent rule.[29]

Clearly, emphasized in these cases is that the policy of liberal

interpretation is qualified by the requirement that there must be

exceptional circumstances to allow the relaxation of the rules.[30]

Absent exceptional circumstances, we adhere to the rule that

certain procedural precepts must remain inviolable, like those

setting the periods for perfecting an appeal or filing a petition for

review, for it is doctrinally entrenched that the right to appeal is a

statutory right and one who seeks to avail oneself of that right must

comply with the statute or rules. The rules, particularly the

requirements for perfecting an appeal within the reglementary

period specified in the law, must be strictly followed as they are

considered indispensable interdictions against needless delays and

for orderly discharge of judicial business. Furthermore, the

perfection of an appeal in the manner and within the period

permitted by law is not only mandatory but also jurisdictional and

the failure to perfect the appeal renders the judgment of the court

final and executory. Just as a losing party has the right to file an

appeal within the prescribed period, the winning party also has the

correlative right to enjoy the finality of the resolution of his/hercase.

[31]

In this particular case, we adhere to the strict interpretation of

the rule for the following reasons:

Firstly, in this case, entry of judgment had already been

made[32]

which rendered the Decision of the Labor Arbiter as final

and executory.
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Secondly, it is a basic and irrefragable rule that in carrying out and in

interpreting the provisions of the Labor Code and its implementing

regulations, the workingmans welfare should be the primordial and

paramount consideration. The interpretation herein made gives

meaning and substance to the liberal and compassionate spirit of

the law enunciated in Article 4 of the Labor Code that all doubts in

the implementation and interpretation of the provisions of the

Labor Code including its implementing rules and regulations shall be

resolved in favor of labor

Without doubt, to allow the appeal of the respondent as what the

Court of Appeals had done and remand the case to the NLRC would

only result in delay to the detriment of the petitioner. In Narag v.

National Labor Relations Commission,[38] citing Vir-Jen Shipping andMarine Services, Inc. v. National Labor Relations Commission,

[39]we

held that delay in most instances gives the employers more

opportunity not only to prepare even ingenious defenses, what with

well-paid talented lawyers they can afford, but even to wear out the

efforts and meager resources of the workers, to the point that not

infrequently the latter either give up or compromise for less than

what is due them.[40]

Nothing is more settled in our jurisprudence than the rule that

when the conflicting interest of loan and capital are weighed on thescales of social justice, the heavier influence of the latter must be

counter-balanced by the sympathy and compassion the law must

accord the under-privileged worker.[41]

Thirdly, respondent has not shown sufficient justification to

reverse the findings of the Labor Arbiter as affirmed by the NLRC.
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6. Duncan Association vs Glaxo Wellcome; GR No. 162994

September 17, 2004

Facts:

Petitioner Pedro A. Tecson was hired by respondent GlaxoWellcome Philippines, Inc. (Glaxo) as medical representative on

October 24, 1995, after Tecson had undergone training and

orientation.

Thereafter, Tecson signed a contract of employment which

stipulates, among others, that he agrees to study and abide by

existing company rules; to disclose to management any existing or

future relationship by consanguinity or affinity with co-employees

or employees of competing drug companies and should

management find that such relationship poses a possible conflict ofinterest, to resign from the company.

Tecson was initially assigned to market Glaxos products in the

Camarines Sur-Camarines Norte sales area.

Subsequently, Tecson entered into a romantic relationship with

Bettsy, an employee of Astra Pharmaceuticals3(Astra), a competitor

of Glaxo. Bettsy was Astras Branch Coordinator in Albay. She

supervised the district managers and medical representatives of her

company and prepared marketing strategies for Astra in that area.

Even before they got married, Tecson received several reminders

from his District Manager regarding the conflict of interest which his

relationship with Bettsy might engender. Still, love prevailed, and

Tecson married Bettsy in September 1998.

In January 1999, Tecsons superiors informed him that his marriage

to Bettsy gave rise to a conflict of interest. Tecsons superiors

reminded him that he and Bettsy should decide which one of them

would resign from their jobs, although they told him that they

wanted to retain him as much as possible because he was

performing his job well.

Tecson requested for time to comply with the company policy

against entering into a relationship with an employee of a

competitor company. He explained that Astra, Bettsys employer,

was planning to merge with Zeneca, another drug company; and

Bettsy was planning to avail of the redundancy package to be

offered by Astra. With Bettsys separation from her company, the

potential conflict of interest would be eliminated. At the same time,

they would be able to avail of the attractive redundancy package

from Astra.

In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to

reconsider its decision, but his request was denied.

Tecson sought Glaxos reconsideration regarding his transfer and

brought the matter to Glaxos Grievance Committee. Glaxo,

however, remained firm in its decision and gave Tescon until

February 7, 2000 to comply with the transfer order. Tecson defied

the transfer order and continued acting as medical representative in

the Camarines Sur-Camarines Norte sales area.

Issue:W/N the policy of a pharmaceutical company prohibiting its

employees from marrying employees of any competitor company is

valid

Held:

Glaxo argues that the company policy prohibiting its employees

from having a relationship with and/or marrying an employee of a


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competitor company is a valid exercise of its management

prerogatives and does not violate the equal protection clause; and

that Tecsons reassignment from the Camarines Norte-Camarines

Sur sales area to the Butuan City-Surigao City and Agusan del Sur

sales area does not amount to constructive dismissal.

It likewise asserts that the policy does not prohibit marriageper

sebut only proscribes existing or future relationships with

employees of competitor companies, and is therefore not violative

of the equal protection clause. It maintains that considering the

nature of its business, the prohibition is based on valid grounds.11

No reversible error can be ascribed to the Court of Appeals when it

ruled that Glaxos policy prohibiting an employee from having a

relationship with an employee of a competitor company is a valid

exercise of management prerogative.

Glaxo has a right to guard its trade secrets, manufacturing formulas,

marketing strategies and other confidential programs and

information from competitors, especially so that it and Astra are

rival companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with

employees of competitor companies upon Glaxos employees is

reasonable under the circumstances because relationships of that

nature might compromise the interests of the company. In laying

down the assailed company policy, Glaxo only aims to protect its

interests against the possibility that a competitor company will gain

access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests

cannot be denied. No less than the Constitution recognizes the right

of enterprises to adopt and enforce such a policy to protect its right

to reasonable returns on investments and to expansion and

growth.20 Indeed, while our laws endeavor to give life to the

constitutional policy on social justice and the protection of labor, it

does not mean that every labor dispute will be decided in favor of

the workers. The law also recognizes that management has rights

which are also entitled to respect and enforcement in the interest

of fair play.


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7. Abella vs NLRC; GR No. 71813 July 20, 1987

Facts:

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a

farm land in Monteverde, Negros Occidental, known as HaciendaDanao-Ramona, for a period of ten (10) years, renewable, at her

option, for another ten (10) years (Rollo, pp. 16-20).On August 13,

1970, she opted to extend the lease contract for another ten (10)

years (Ibid, pp. 26-27).

During the existence of the lease, she employed the herein private

respondents. Private respondent Ricardo Dionele, Sr. has been a

regular farm worker since 1949 and he was promoted to Cabo in

1963. On the other hand, private respondent Romeo Quitco started

as a regular employee in 1968 and was promoted to Cabo in

November of the same year.Upon the expiration of her leasehold

rights, petitioner dismissed private respondents and turned over the

hacienda to the owners thereof on October 5, 1981, who continued

the management, cultivation and operation of the farm (Rollo, pp.

33; 89).

On November 20, 1981, private respondents filed a complaint

against the petitioner at the Ministry of Labor and Employment,

Bacolod City District Office, for overtime pay, illegal dismissal and

reinstatement with backwages. After the parties had presented

their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in aDecision dated July 16, 1982 (Ibid, pp. 29-31), ruled that the

dismissal is warranted by the cessation of business, but granted the

private respondents separation pay.

Issue:W/N respondents are entitled to separation pay?

Held:

The purpose of Article 284 as amended is obvious-the protection of

the workers whose employment is terminated because of the

closure of establishment and reduction of personnel. Without said

law, employees like private respondents in the case at bar will lose

the benefits to which they are entitled for the thirty three years

of service in the case of Dionele and fourteen years in the case of

Quitco. Although they were absorbed by the new management of

the hacienda, in the absence of any showing that the latter has

assumed the responsibilities of the former employer, they will be

considered as new employees and the years of service behind them

would amount to nothing. Moreover, to come under the

constitutional prohibition, the law must effect a change in the rights

of the parties with reference to each other and not with reference

to non-parties.

As correctly observed by the Solicitor General, Article 284 asamended refers to employment benefits to farm hands who were

not parties to petitioner's lease contract with the owner of

Hacienda Danao-Ramona. That contract cannot have the effect of

annulling subsequent legislation designed to protect the interest of

the working class.

In any event, it is well-settled that in the implementation and

interpretation of the provisions of the Labor Code and its

implementing regulations, the workingman's welfare should be the

primordial and paramount consideration. It is the kind of

interpretation which gives meaning and substance to the liberal andcompassionate spirit of the law as provided for in Article 4 of the

New Labor Code which states that "all doubts in the

implementation and interpretation of the provisions of this Code

including its implementing rules and regulations shall be resolved in

favor of labor." The policy is to extend the applicability of the

decree to a greater number of employees who can avail of the

benefits under the law, which is in consonance with the avowed

policy of the State to give maximum aid and protection to labor.


12/31

Case No 14

Sevilla v CA

On the strength of a contract entered into on Oct. 19, 1960 by and

between Mrs. Segundina Noguera; the Tourist World Service, Inc.,

represented by Mr. Eliseo Canilao as party of the second part, and

hereinafter referred to as appellants. Mrs. Sevilla was signatory to a

lease agreement dated 19 October 1960 covering the premises at

A. Mabini St., she expressly warranting and holding herself

'solidarily' liable with appellee Tourist World Service, Inc. for the

prompt payment of the monthly rentals thereof to other appellee

Mrs. Noguera.

Appellant Mrs. Sevilla did not receive any salary from appellee

Tourist World Service, Inc., which had its own, separate officelocated at the Trade & Commerce Building; nor was she an

employee thereof, having no participation in nor connection with

said business at the Trade & Commerce Building.

Appellant Mrs. Sevilla earned commissions for her own passengers,

her own bookings her own business (and not for any of the business

of appellee Tourist World Service, Inc.) obtained from the airline

companies. She shared the 7% commissions given by the airline

companies giving appellee Tourist World Service, Lic. 3% thereof

aid retaining 4% for herself.

Appellant Mrs. Sevilla likewise shared in the expenses of

maintaining the A. Mabini St. office, paying for the salary of an

office secretary, Miss Obieta, and other sundry expenses, aside

from desicion the office furniture and supplying some of fice

furnishings (pp. 15,18 tsn. April 6,1965), appellee Tourist World

Service, Inc. shouldering the rental and other expenses in

consideration for the 3% split in the co procured by appellant Mrs.

Sevilla (p. 35 tsn Feb. 16,1965).

It was the understanding between them that appellant Mrs. Sevilla

would be given the title of branch manager for appearances sake

only, appellee Eliseo Canilao admits that it was just a title for

dignity.

On or about November 24, 1961 the Tourist World Service, Inc.

appears to have been informed that Lina Sevilla was connected with

a rival firm, the Philippine Travel Bureau, and, since the branch

office was anyhow losing, the Tourist World Service considered

closing down its office

Because of this, and to comply with the mandate of the Tourist

World Service, thecorporate secretary Gabino Canilao went over to the branch office,

and, 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.

Tourist World Service, Inc., insists, on the other hand, that Lina

SEVILLA was a mere

employee, being "branch manager" of its Ermita "branch" office and

that inferentially, she had no say on the lease executed with the

private respondent, Segundina Noguera.

Issue: Was there an employer-employee relationship?


13/31

Held:

No. In this jurisdiction, 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." 10 Subsequently, 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 usedin connection therewith. In the first place, under the contract of

lease covering the Tourist Worlds Ermita office, she had bound

herself insolidum as and for rental payments, an arrangement that

would be like claims of a master-servant relationship. True the

respondent Court would later minimize her participation in the

lease as one of mere guaranty that does not make her an employee

of Tourist World, since in any case, a true employee cannot be

made to part with his own money in pursuance of his employer's

business, or otherwise, assume any liability thereof. In that event,

the parties must be bound by some other relation, but certainly notemployment.

In the second place, and as found by the Appellate Court, '[w]hen

the branch office was opened, the same was run by the herein

appellant Lina O. Sevilla payable to Tourist World Service, Inc. by

any airline for any fare brought in on the effort of Mrs. Lina Sevilla.

Under these circumstances, it cannot be said that Sevilla was under

the control of Tourist World Service, Inc. "as to the means used."

Sevilla in pursuing the business, obviously relied on her own gifts

and capabilities.

It is further admitted that Sevilla was not in the company's payroll.

For her efforts, she retained 4% in commissions from airline

bookings, the remaining 3% going to Tourist World. Unlike an

employee then, who earns a fixed salary usually, she earned

compensation in fluctuating amounts depending on her booking

successes.

The fact that Sevilla had been designated 'branch manager" does

not make her, ergo, Tourist World's employee. As we said,

employment is determined by the right-of-control test and certain

economic parameters. But titles are weak indicators.

We are convinced, considering the circumstances and from therespondent Court's recital of facts, that the ties had contemplated a

principal agent relationship, rather than a joint managament or a

partnership.


14/31

Case No. 15

Francisco v NLRC

Facts: In 1995, petitioner, Angelina Francisco, was hired by Kasei

Corporation during its incorporation stage. She was designated as

Accountant and Corporate Secretary and was assigned to handle all

the accounting needs of the company. She was also designated as

Liaison Officer to the City of Makati to secure business permits,

construction permits and other licenses for the initial operation of

the company. Although she was designated as Corporate Secretary,

she was not entrusted with the corporate documents; neither did

she attend any board meeting nor required to do so. She never

prepared any legal document and never represented the company

as its Corporate Secretary. However, on some occasions, she was

prevailed upon to sign documentation for the company. In 1996,

petitioner was designated Acting Manager for five years. In January2001, petitioner was replaced by Liza R. Fuentes as Manager.

Petitioner alleged that she was required to sign a prepared

resolution for her replacement but she was assured that she would

still be connected with Kasei Corporation. Thereafter, Kasei

Corporation reduced her salary by P2,500.00 a month beginning

January up to September 2001 for a total reduction of P22,500.00 as

of September 2001. Petitioner was not paid her mid-year bonus

allegedly because the company was not earning well. On October

2001, petitioner did not receive her salary from the company. OnOctober 15, 2001, petitioner asked for her salary from Acedo and

the rest of the officers but she was informed that she is no longer

connected with the company.

Since she was no longer paid her salary, petitioner did not report for

work and filed an action for constructive dismissal before the labor

arbiter.

Private respondents averred that petitioner is not an employee of

Kasei Corporation. As technical consultant, petitioner performed

her work at her own discretion without control and supervision of

Kasei Corporation. Petitioner had no daily time record and she came

to the office any time she wanted. The company never interfered

with her work except that from time to time, the management

would ask her opinion on matters relating to her profession.

Petitioner did not go through the usual procedure of selection of

employees, but her services were engaged through a Board

Resolution designating her as technical consultant

Issues: (1) Was there an employer-employee relationship between

petitioner and private respondent Kasei Corporation?

(2) Was the petitioner illegally dismissed?

Held: (1) Yes. The better approach would therefore be to adopt atwo-tiered test involving: (1) the putative employers power to

control the employee with respect to the means and methods by

which the work is to be accomplished; and (2) the underlying

economic realities of the activity or relationship.

The control test initially found application in the case of Viaa v. Al-

Lagadan and Piga, and lately in Leonardo v. Court of Appeals, where

we held that there is an employer-employee relationship when the

person for whom the services are performed reserves the right to

control not only the end achieved but also the manner and meansused to achieve that end.

In Sevilla v. Court of Appeals, we observed the need to consider the

existing economic conditions prevailing between the parties, in

addition to the standard of right-of-control, to give a clearer picture

in determining the existence of an employer-employee relationship

based on an analysis of the totality of economic circumstances of

the worker.


15/31

By applying the control test, there is no doubt that petitioner is an

employee of Kasei Corporation because she was under the direct

control and supervision of Seiji Kamura, the corporations Technical

Consultant. She reported for work regularly and served in various

capacities as Accountant, Liaison Off icer, Technical Consultant,

Acting Manager and Corporate Secretary, with substantially the

same job functions, that is, rendering accounting and tax services to

the company and performing functions necessary and desirable for

the proper operation of the corporation such as securing business

permits and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise

be said to be an employee of respondent corporation because she

had served the company for six years before her dismissal, receiving

check vouchers indicating her salaries/wages, benefits, 13th monthpay, bonuses and allowances, as well as deductions and Social

Security contributions from August 1, 1999 to December 18, 2000.

We likewise ruled in Flores v. Nuestro that a corporation who

registers its workers with the SSS is proof that the latter were the

formers employees. The coverage of Social Security Law is

predicated on the existence of an employer-employee relationship.

It is therefore apparent that petitioner is economically dependent

on respondent corporation for her continued employment in thelatters line of business.

(2) The corporation constructively dismissed petitioner when it

reduced her salary by P2,500 a month from January to September

2001. This amounts to an illegal termination of employment, where

the petitioner is entitled to full backwages.

A diminution of pay is prejudicial to the employee and amounts to

constructive dismissal. Constructive dismissal is an involuntary

resignation resulting in cessation of work resorted to when

continued employment becomes impossible, unreasonable or

unlikely; when there is a demotion in rank or a diminution in pay; or

when a clear discrimination, insensibility or disdain by an employer

becomes unbearable to an employee.


16/31

Case No. 16

Sonza v ABS-CBN Broadcasting Corporation

Facts: In May 1994, respondent ABS-CBN Broadcasting Corporation

(ABS-CBN) signed an Agreement (Agreement) with the 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.

On 1 April 1996, SONZA wrote a letter to ABS-CBNs President,

Eugenio Lopez III, a portion of which reads,: As you are well aware,

Mr. Sonza irrevocably resigned in view of recent events concerning

his programs and career. We consider these acts of the station

violative of the Agreement and the station as in breach thereof. In

this connection, we hereby serve notice of rescission of saidAgreement at our instance effective as of date.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before

the Department of Labor and Employment, National Capital Region

in Quezon City. SONZA complained that ABS-CBN did not pay 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).

Meanwhile, ABS-CBN continued to remit SONZAs monthly talentfees through his account at PCIBank, Quezon Avenue Branch,

Quezon City. In July 1996, ABS-CBN opened a new account with the

same bank where ABS-CBN deposited SONZAs talent fees and other

payments due him under the Agreement.

ABS-CBNs witnesses Soccoro Vidanes and Rolando V. Cruz, stated in

their affidavits that the prevailing practice in the television and

broadcast industry is to treat talents like SONZA as independent

contractors.

Issue: Was there and employer-employee relationship?

Held: No. 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. The last element, the so-called control test, is the

most important element.

(a) 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 ofhis unique skills, talent and celebrity status not possessed by

ordinary employees, is a circumstance indicative, but not

conclusive, of an independent contractual relationship.

(b) All the talent fees and benefits paid to SONZA were the result of

negotiations that led to the Agreement. If SONZA were ABS-CBNs

employee, there would be no need for the parties to stipulate on

benefits such as SSS, Medicare, x x x and 13th month paywhich

the law automatically incorporates into every employer-employee

contract. Whatever benefits SONZA enjoyed arose from contractand not because of an employer-employee relationship.

SONZAs talent fees, amounting to P317,000 monthly in the second

and third year, are so huge and out of the ordinary that they

indicate more an independent contractual relationship rather than

an employer-employee relationship.


17/31

(c) For violation of any provision of the Agreement, either party may

terminate their 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. During the life of the Agreement, ABS-CBN agreed to pay

SONZAs talent fees as long as AGENT and Jay Sonza shall faithfully

and completely perform each condition of this Agreement. Even if

it suffered severe business losses, ABS-CBN could not retrench

SONZA because ABS-CBN remained obligated to pay SONZAs talent

fees during the life of the Agreement. This circumstance indicates

an independent contractual relationship between SONZA and ABS-

CBN.

SONZA admits that even after ABS-CBN ceased broadcasting his

programs, ABSCBN still paid him his talent fees.

(d) Applying the control test to the present case, we find thatSONZA is not an employee but an independent contractor. This test

is based on the extent of control the hirer exercises over a worker.

The greater the supervision and control the hirer exercises, the

more likely the worker is deemed an employee. The converse holds

true as wellthe less control the hirer exercises, the more likely the

worker is considered an independent contractor.

ABS-CBN engaged SONZAs services specifically to co-host the Mel

& Jay programs. ABS-CBN did not assign any other work to SONZA.

How SONZA delivered his lines, appeared on television, andsounded on radio were outside ABS-CBNs control. SONZA did not

have to render eight hours of work per day. The Agreement

required SONZA to attend only rehearsals and tapings of the shows,

as well as pre- and post-production staff meetings. ABS-CBN could

not dictate the contents of SONZAs script. ABS-CBN merely

reserved the right to modify the program format and airtime

schedule for more effective programming. Clearly, ABS-CBN did

not exercise control over the means and methods of performance

of SONZAs work.

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. Even though ABS-CBN provided

SONZA with the place of work and the necessary equipment, SONZA

was still an independent contractor since ABS-CBN did not supervise

and control his work. ABS-CBNs sole concern was for SONZA to

display his talent during the airing of the programs.

Being an exclusive talent does not by itself mean that SONZA is an

employee of ABS-CBN. Even an independent contractor can validly

provide his services exclusively to the hiring party. In the broadcast

industry, exclusivity is not necessarily the same as control.


18/31

Case No. 17

San Miguel Corp v Aballa

Facts: Petitioner San Miguel Corporation (SMC), and Sunflower

Multi-Purpose Cooperative (Sunflower), entered into 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 Harvesting/ReceivingC. Sanitation/Washing/Cold Storage

2. To carry out the undertaking specified in the immediately

preceding paragraph, 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

4. There is no employer-employee relationship between the

company and the cooperative, or the cooperative and any of itsmembers, or the company and any members of the cooperative.

8. The cooperative undertakes to pay the wages or salaries of its

member-workers, as well as all benefits, premiums and protection

in accordance with the provisions of the labor code, cooperative

code and other applicable laws and decrees and the rules and

regulations promulgated by competent authorities, assuming all

responsibility therefor.

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 an

Amended Complaint to include illegal dismissal as additional cause

of action following SMCs closure of its Bacolod Shrimp Processing

Plant on September 15, 1995[5] which resulted in the termination

of their services.

In the meantime, on September 30, 1996, SMC filed before the

Regional Office at Iloilo City of the Department of Labor and

Employment (DOLE) a Notice of Closure of its aquaculture

operations effective on even date, citing serious business losses.

Issue: Was Sunflower a labor-only contrator?

Held: Yes. The test to determine the existence of independent

contractorship is whether one claiming to be an independent

contractor has contracted to do the work according to his own

methods and without being subject to the control of the employer,

except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-

employee relationship for a limited purpose, i.e., to ensure that theemployees 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.

In labor-only contracting, the statute creates an employer-

employee relationship for a comprehensive purpose: to prevent a


19/31

circumvention of labor laws. The contractor is considered merely an

agent of the principal employer and the latter is responsible to the

employees of the labor-only contractor as if such employees had

been directly employed by the principal employer.

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.

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 ofits principal, SMC, its apparent role having been merely to recruit

persons to work for SMC.

It is gathered from the evidence adduced by private respondents

before the labor arbiter that their daily time records were signed by

SMC supervisors which fact shows that SMC exercised the power of

control and supervision over its employees.

Sunflower did not cater to clients other than SMC, and with the

closure of SMCs

Bacolod Shrimp Processing Plant, Sunflower likewise ceased to exist.

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 regular employees of the

latter and as such are entitled to all 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.

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.


20/31

Case No. 18

Dumpit-Murillo v CA

Facts: On October 2, 1995, under Talent Contract No. NT95-1805,

private respondent Associated Broadcasting Company (ABC) hired

petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor

for Balitang-Balita, an early evening news program. The contract

was for a period of three months. In addition, petitioners services

were engaged for the program Live on Five. On September 30,

1999, after four years of repeated renewals, petitioners talent

contract expired. Two weeks after the expiration of the last

contract, petitioner sent a letter to Mr. Jose Javier, Vice President

for News and Public Affairs of ABC, informing the latter that she was

still interested in renewing her contract subject to a salary increase.

Thereafter, petitioner stopped reporting for work.

A month later, petitioner sent a demand letter to ABC, demanding:

(a) reinstatement to her former position; (b) payment of unpaid

wages for services rendered from September 1 to October 20, 1999

and full backwages; (c) payment of 13th month pay,

vacation/sick/service incentive leaves and other monetary benefits

due to a regular employee starting March 31, 1996. ABC replied that

a check covering petitioners talent fees for September 16 to

October 20, 1999 had been processed and prepared, but that the

other claims of petitioner had no basis in fact or in law.

On December 20, 1999, petitioner filed a complaint against ABC,

Mr. Javier and Mr. Edward Tan, for illegal constructive dismissal,

nonpayment of salaries, overtime pay, premium pay, separation

pay, holiday pay, service incentive leave pay, vacation/sick leaves

and 13th month pay in NLRC-NCR Case No. 30-12-00985-99.

Issue: Was there an employer-employee relationship?

Held:

Yes. The Court of Appeals committed reversible error when it held

that petitioner was a fixed-term employee. Petitioner was a regular

employee under contemplation of law. The practice of having fixed-

term contracts in the industry does not automatically make all

talent contracts valid and compliant with labor law. The assertion

that a talent contract exists does not necessarily prevent a regular

employment status.

Further, the Sonza case is not applicable. In Sonza, the television

station did not instruct Sonza how to perform his job. How Sonza

delivered his lines, appeared on television, and sounded on radio

were outside the television stations control. Sonza had a free hand

on what to say or discuss in his shows provided he did not attack

the television station or its interests. Clearly, the television station

did not exercise control over the means and methods of theperformance of Sonzas work. In the case at bar, ABC had control

over the performance of petitioners work. Noteworthy too, is the

comparatively low P28,000 monthly pay of petitioner vis the

P300,000 a month salary of Sonza,[26] that all the more bolsters the

conclusion that petitioner was not in the same situation as Sonza.

In Manila Water Company, Inc. v. Pena, we said that the elements

to determine the existence of an employment 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 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. The

duties of petitioner as enumerated in her employment contract

indicate that ABC had control over the work of petitioner. Aside

from control, ABC also dictated the work assignments and payment

of petitioners wages. ABC also had power to dismiss her. All these


21/31

being present, clearly, there existed an employment relationship

between petitioner and ABC.

Concerning regular employment, the law provides for two kinds of

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.[30] In other words, regular

status arises from either the nature of work of the employee or the

duration of his employment.


22/31

Case No. 19

ABS CBN v Nazareno

Facts: Petitioner employed respondents Nazareno, Gerzon,

Deiparine, and Lerasan as production assistants (PAs) on different

dates. They were assigned at the news and public affairs, for variousradio programs in the Cebu Broadcasting Station. They were issued

ABS-CBN employees identification cards and were required to work

for a minimum of eight hours a day, including Sundays and holidays.

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File

Employees executed a Collective Bargaining Agreement (CBA) to be

effective during the period from December 11, 1996 to December

11, 1999. However, since petitioner refused to recognize PAs as part

of the bargaining unit, respondents were not included to the CBA

On October 12, 2000, respondents filed a Complaint for Recognition

of Regular Employment Status, Underpayment of Overtime Pay,

Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay,

and 13th Month Pay with Damages against the petitioner before the

NLRC.

Respondents alleged that they were engaged by respondent ABS-

CBN as regular and full-time employees for a continuous period of

more than five (5) years.

Respondents insisted that they belonged to a "work pool" from

which petitioner chose persons to be given specific assignments at

its discretion, and were thus under its direct supervision and control

regardless of nomenclature.

For its part, petitioner alleged in its position paper that the

respondents were considered in the industry as "program

employees" in that, as distinguished from regular or station

employees, they are basically engaged by the station for a particular

or specific program broadcasted by the radio station. Petitioner

asserted that as PAs, the complainants were issued talent

information sheets which are updated from time to time, and are

thus made the basis to determine the programs to which they shall

later be called on to assist.

Issue: (1) Were the respondents regular employees?

(2) Was there an employer-employee relationship?

Held: (1) Yes. We agree with respondents contention that where a

person has rendered at least one year of service, regardless of the

nature of the activity performed, or where the work is continuous

or intermittent, the employment is considered regular as long as the

activity exists, the reason being that a customary appointment is

not indispensable before one may be formally declared as havingattained regular status.

The primary standard, therefore, of determining regular

employment is the reasonable connection between the particular

activity performed by the employee in relation to the usual trade or

business of the employer. The test is whether the former is usually

necessary or desirable in the usual business or trade of the

employer. The connection can be determined by considering the

nature of work performed and its relation to the scheme of the

particular business or trade in its entirety. Also, if the employee has

been performing the job for at least a year, even if the performance

is not continuous and merely intermittent, the law deems repeated

and continuing need for its performance as sufficient evidence of

the necessity if not indispensability of that activity to the business.

Hence, the employment is considered regular, but only with respect

to such activity and while such activity exists.


23/31

Not considered regular employees are "project employees," the

completion or termination of which is more or less determinable at

the time of employment, such as those employed in connection

with a particular construction project, and "seasonal employees"

whose employment by its nature is only desirable for a limited

period of time. Even then, any employee who has rendered at leastone year of service, whether continuous or intermittent, is deemed

regular with respect to the activity performed and while such

activity actually exists.

It is of no moment that petitioner hired respondents as "talents."

The fact that respondents received pre-agreed "talent fees" instead

of salaries, that they did not observe the required office hours, and

that they were permitted to join other productions during their free

time are not conclusive of the nature of their employment.

Respondents cannot be considered "talents" because they are notactors or actresses or radio specialists or mere clerks or utility

employees. They are regular employees who perform several

different duties under the control and direction of ABS-CBN

executives and supervisors.

Additionally, respondents cannot be considered as project or

program employees because no evidence was presented to show

that the duration and scope of the project were determined or

specified at the time of their engagement. The principal test is

whether or not the project employees were assigned to carry out a

specific project or undertaking, the duration and scope of which

were specified at the time the employees were engaged for that

project. In this case, it is undisputed that respondents had

continuously performed the same activities for an average of five

years.

(2) Yes. In the case at bar, however, the employer-employee

relationship between petitioner and respondents has been proven.

First. In the selection and engagement of respondents, no peculiar

or unique skill, talent or celebrity status was required from them

because they were merely hired through petitioners personnel

department just like any ordinary employee.

Second. The so-called "talent fees" of respondents correspond to

wages given as a result of an employer-employee relationship.Respondents did not have the power to bargain for huge talent

fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find

their work unsatisfactory, and respondents are highly dependent on

the petitioner for continued work.

Fourth. The degree of control and supervision exercised by

petitioner over respondents through its supervisors negates the

allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of

the regular business of the employer and when the worker, relativeto the employer, does not furnish an independent business or

professional service, such work is a regular employment of such

employee and not an independent contractor. The Court will peruse

beyond any such agreement to examine the facts that typify the

parties actual relationship.


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Lolita Lopez vs. Bodega City (Video-Disco Kitchen of the

Philippines)

G.R. No. 155731, Sept. 3, 2007

Facts:

Petitioner was the "lady keeper" of Bodega City tasked with

manning its ladies' comfort room. In a letter signed by Yap

(owner/manager) dated February 10, 1995, petitioner was made to

explain why the concessionaire agreement between her and

respondents should not be terminated or suspended in view of an

incident that happened on February 3, 1995, wherein petitioner was

seen to have acted in a hostile manner against a lady customer of

Bodega City who informed the management that she saw petitioner

sleeping while on duty. In a subsequent letter dated February 25,

1995, Yap informed petitioner that because of the incident thathappened on February 3, 1995, respondents had decided to

terminate the concessionaire agreement between them.

Issue: Whether or not employer-employee relationship exists

Ruling:The Court applied the four-fold test expounded in Abante v.

Lamadrid Bearing and Parts Corp.,to wit:

To ascertain the existence of an employer-employee relationship,jurisprudence has invariably applied the four-fold test, namely: (1)

the manner of selection and engagement; (2) the payment of

wages; (3) the presence or absence of the power of dismissal; and

(4) the presence or absence of the power of control. Of these four,

the last one is the most important. The so-called "control test" is

commonly regarded as the most crucial and determinative indicator

of the presence or absence of an employer-employee relationship.

Under the control test, an employer-employee 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

and means to be used in reaching that end.

Petitioner failed to cite a single instance to prove that she was

subject to the control of respondents insofar as the manner inwhich she should perform her job as a "lady keeper" was

concerned. It is true that petitioner was required to follow rules and

regulations prescribing appropriate conduct while within the

premises of Bodega City. However, this was imposed upon

petitioner as part of the terms and conditions in the concessionaire

agreement.

Petitioner is likewise estopped from denying the existence of the

subject concessionaire agreement. She should not, after enjoying

the benefits of the concessionaire agreement with respondents, be

allowed to later disown the same through her allegation that she

was an employee of the respondents when the said agreement was

terminated by reason of her violation of the terms and conditions

thereof. The principle of estoppel in pais applies wherein -- by one's

acts, representations or admissions, or silence when one ought to

speak out -- intentionally or through culpable negligence, induces

another to believe certain facts to exist and to rightfully rely and act

on such belief, so as to be prejudiced if the former is permitted to

deny the existence of those facts. Petitioner insists that her ID card

is sufficient proof of her employment. In Domasig v. National Labor

Relations Commission, this Court held that the complainant's IDcard and the cash vouchers covering his salaries for the months

indicated therein were substantial evidence that he was an

employee of respondents, especially in light of the fact that the

latter failed to deny said evidence. This is not the situation in the

present case...As to the ID card, it is true that the words

"EMPLOYEE'S NAME" appear printed below petitioner's name.

However, she failed to dispute respondents' evidence consisting of

Habitan's testimony, that he and the other "contractors" of Bodega


25/31

City such as the singers and band performers, were also issued the

same ID cards for the purpose of enabling them to enter the

premises of Bodega City.

Hence, going back to the element of control, the concessionaire

agreement merely stated that petitioner shall maintain thecleanliness of the ladies' comfort room and observe courtesy

guidelines that would help her obtain the results they wanted to

achieve. There is nothing in the agreement which specifies the

methods by which petitioner should achieve these results.

Respondents did not indicate the manner in which she should go

about in maintaining the cleanliness of the ladies' comfort room.

Neither did respondents determine the means and methods by

which petitioner could ensure the satisfaction of respondent

company's customers. In fact, the last paragraph of the

concessionaire agreement even allowed petitioner to engagepersons to work with or assist her in the discharge of her functions.

Moreover, petitioner was not subjected to definite hours or

conditions of work. The fact that she was expected to maintain the

cleanliness of respondent company's ladies' comfort room during

Bodega City's operating hours does not indicate that her

performance of her job was subject to the control of respondents as

to make her an employee of the latter. Instead, the requirement

that she had to render her services while Bodega City was open for

business was dictated simply by the very nature of her undertaking,

which was to give assistance to the users of the ladies' comfort

room. Lastly, the Court finds that the elements of selection andengagement as well as the power of dismissal are not present in the

instant case. It has been established that there has been no

employer-employee relationship between respondents and

petitioner. Their contractual relationship was governed by the

concessionaire agreement embodied in the 1992 letter. Thus,

petitioner was not dismissed by respondents. Instead, as shown by

the letter of Yap to her dated February 15, 1995, their contractual

relationship was terminated by reason of respondents' termination

of the subject concessionaire agreement, which was in accordance

with the provisions of the agreement in case of violation of its terms

and conditions.


26/31

ABANTE VS. LAMADRID

G.R. No 159890. May 28, 2004

FACTS:

Petitioner, Empermaco B. Abante, was employed by respondent

company Lamadrid Bearing and Parts Corporation as a salesman

covering the whole area of Mindanao. His average monthly income

was more or less P16,000.00, but later was increased to

approximately P20, 269.50. Aside from selling the merchandise of

Respondent Corporation, he was also tasked to collect payments

from his various customers. Petitioner encountered five

customers/clients with bad accounts. Petitioner was confronted by

respondent Lamadrid over the bad accounts and warned that if he

does not issue his own checks to cover the said bad accounts, his

commissions will not be released and he will lose his job. Notcontented with the issuance of the foregoing checks as security for

the bad accounts, respondents "tricked" petitioner into signing two

documents, which he later discovered to be a Promissory Note and

a Deed of Real Estate Mortgage. Due to financial difficulties,

petitioner inquired about his membership with the SSS in order to

apply for a salary loan. To his dismay, he learned that he was not

covered by the SSS and therefore was not entitled to any benefit.

While doing his usual rounds as commission salesman, petitioner

was handed by his customers a letter from the respondent company

warning them not to deal with petitioner since it no longerrecognized him as a commission salesman. Petitioner thus filed a

complaint for illegal dismissal with money claims against

respondent company and its president, Jose Lamadrid, before the

NLRC.

ISSUE: Whether or not an employer-employee relationship exists

between plaintiff and respondentcompany

RULING:

To ascertain the existence of an employer-employee relationship,

jurisprudence has invariably applied the four-fold test, namely: (1)

the manner of selection and engagement; (2) the payment of

wages; (3) the presence or absence of the power of dismissal; and

(4) the presence or absence of the power of control. Of these four,

the last one is the most important. Under the control test, anemployer-employee 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 and means to be used in

reaching that end. 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. Petitioner Abante was a commission

salesman who received 3% commission of his gross sales. No quota

was imposed on him by the respondent. He was not required toreport to the office at anytime or submit any periodic written report

on his sales performance and activities. 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. 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. Applying the

aforementioned test, an employer-employee relationship is notably

absent in this case.


27/31

R TRANSPORT CORP. vs. ROGELIO EJANDRA

[G.R. No. 148508 May 20, 2004]

FACTS: Private respondent Rogelio Ejandra alleged that, for almost

six years, he worked as a bus driver of petitioner R TransportCorporation. An officer of LTO of Guadalupe, Makati City,

apprehended him for obstruction of traffic for which his license was

confiscated. He was able to retrieve his license only after a week.

Private respondent informed Mr. Pasquin (his manager) that he was

ready to report for work. However, 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. He was asked to take a vacation which the manager

did not specify for how long. Petitioner claimed that private

respondent abandoned his job. He also claimed that there was no

employer and employee relationship between him and the

respondent. Labor arbiter Rogelio Yulo decided in favor of private

respondent. NLRC rendered a decision affirming the decision of the

labor arbiter. In disputing petitioner's claim that private respondent

was not its employee and was not therefore entitled to notice and

hearing before termination, the NLRC held that complainant was

not afforded his right to due process prior to the severance of his

employment with respondents. Appellants' defense of denying the

existence of employer-employee relationship with the complainant

based on the manner by which complainant was being paid his

salary, cannot hold water.

ISSUE: Whether or not, the respondent abandoned his work.

HELD: No, 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.

In the instant case, petitioner fell short of proving the requisites.Petitioner's absence was justified because the LTO, Guadalupe

Branch, did not release his license until after a week. The process of

redeeming a confiscated license, based on common experience,

depended on when the apprehending officer turned over the same.

Second, private respondent never intended to sever his

employment as he in fact reported for work as soon as he got his

license back. Third, labor arbiter Yulo correctly observed that, if

private respondent really abandoned his work, petitioner should

have reported such fact to the nearest Regional Office of the

Department of Labor and Employment. Petitioner made no such

report.

In addition to the fact that petitioner had no valid cause to

terminate private respondent from work, it violated the latter's

right to procedural due process by not giving him the required

notice and hearing.


28/31

Manila Electric v. Quisumbing

G.R. No. 127598 February 22, 2000

Facts:

Members of the Private respondent union, MERALCO Employees

and Workers Association (MEWA), were dissatisfied with the terms

of a CBA with petitioner. The parties in this case were ordered by

the Sec. of Labor to execute a collective bargaining agreement (CBA)

wherein. The CBA allowed for the increase in the wages of the

employees concerned. The petitioner argues that if such increase

were allowed, it would pass off such to the consumers.

Issue: W/N matters of salary are part of management prerogative

RULING: Yes. There is no need to consult the Secretary of Labor in

cases involving contracting out for 6 months or more as it is part of

management prerogative. However, a line must be drawn with

respect to management prerogatives on business operations per se

and those which affect the rights of the workers. Employers must

see to it that that employees are properly informed of its decisions

to attain harmonious labor relations and enlighten the worker as to

their rights. The contracting out business or services is an exercise

of business judgment if it is for the promotion of efficiency and

attainment of economy. Management must be motivated by goodfaith and contracting out should not be done to circumvent the law.

Provided there was no malice or that it was not done arbitrarily, the

courts will not interfere with the exercise of this judgment.


29/31

Philippine Airlines v Ligan

G.R. No. 146408. February 29, 2008.

Facts: PAL (as owner) and Synergy Services Corp (as contractor)

entered into an Agreement where the latter undertook to provideloading, unloading, delivery and other related services. It was

expressly stated that Synergy was an independent contractor and

that no employer-employee relationship would exist between its

employees and PAL. Ligan et al (laborer-respondents) filed

complaints against PAL and Synergy for 1) underpayment, non-

payment of 13th month pay/holiday pay/premium pay etc. and for

2) regularization of employment. The Labor Arbiter found Synergy

an independent contractor and dismissed the complaint against PAL

for regularization. NLRC set aside this decision and held that

Synergy was a labor-only contractor. CA affirm

set 1 labor case digest (1)

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