1.

ABELLA VS NLRC
G.R. No. 71818
Date: July 20, 1987
Petitioners: Rosalina Perez Abella/Hda. Danao-Ramona
Respondents: The Honorable National Labor Relations Commission, Romeo Quitco and Ricardo Dionele,
Sr.,
Ponente: Paras, J.

FACTS:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, that in line with the policy of the bank to familiarize bank employees
with the various phases of bank operations and further strengthen the existing internal control system[,] all
officers and employees are subject to reshuffle of assignments. Moreover, this resolution does not
preclude the transfer of assignment of bank officers and employees from the branch office to the head
office and vice-versa.. Pursuant to Board Res. No. 95-52 the following branch employees; Joyce V. Zeta,
Clodualdo Zagala, Elmer M. Mendoza and Chona R. Mendoza are reshuffled to their new assignments
without changes in their compensation and other benefits.

FACTS:
On June 27, 1960 the petioner, Rosalina Perez Abella leased a farm land known as Hacienda
Danao-Ramona, for a period of ten (10) years. She opted to extend the leased contract for another ten
(10) years. During the existence of the lease, she employed the private respondents Ricardo Dionele, Sr.,
and Romeo Quitco. 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.
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 a Decision dated July 16, 1982, ruled that the dismissal is warranted by the
cessation of business, but granted the private respondents separation pay. Petitioner appealed, the
National Labor Relations Commission, in a Resolution affirmed the decision and dismissed the appeal for
lack of merit. Petitioner filed a Motion for Reconsideration, but the same was denied. Hence, the present
petition.

ISSUE:

Whether or not private respondents are entitled to separation pay?

HELD:
The petition is devoid of merit. Article 284 of the Labor Code as amended by BP 130 is the
law applicable in this case. 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.
2. MENDOZA VS RURAL BANK OF LUCBAN
G.R. No. 155421
Date: July, 7, 2004
Petitioner: Elmer M. Mendoza
Respondent: Rural Bank of Lucban
Ponente: Panganiban, J.

Petitioner Elmer Mendoza in an antedated letter expressed his opinion on the reshuffled to the
management. Upon the reply of the Bank Chairman, Daya, it informed it informed that it was never in their
intention to downgrade the position of the petitioner in the bank considering that his due compensation as
bank appraiser is maintained and no future reduction was intended. Petitioner filed a leave of absence for
10 days due to ailment and then another 20 days leave of absence.
While on his second leave of absence, petitioner filed a Complaint before Arbitration Branch No.
IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal,
underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban and/or its
president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada.
Petitioner argues that he was compelled to file an action for constructive dismissal, because he
had been demoted from appraiser to clerk and not given any work to do, while his table had been placed
near the toilet and eventually removed. He adds that the reshuffling of employees was done in bad faith,
because it was designed primarily to force him to resign.
The Labor Arbiter rendered the decision in favor the petitioner, the respondent Bank appealed
and the NLRC reversed the Decision. After the NLRC denied his Motion for Reconsideration, petitioner
brought before the Court of Appeals a Petition for Certiorari assailing the foregoing Resolution. The Court
of appeals Find that no grave abuse of discretion could be attributed to the NLRC. Hence, this Petition.
ISSUE:

Whether petitioner was constructively dismissed from his employment?

HELD:
No. The petition has no merit. Constructive dismissal is defined as an involuntary resignation
resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee. In the case at bar, the reshuffling of its employees was
done in good faith and cannot be made the basis of a finding of constructive dismissal.
In the pursuit of its legitimate business interest, management has the prerogative to transfer or
assign employees from one office or area of operation to another -- provided there is no demotion in rank
or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege
is inherent in the right of employers to control and manage their enterprise effectively. The right of

employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them.

On December 12, 1988, GELMART filed before this Court a special civil action for certiorari with a prayer
for the issuance of a temporary restraining order.

There appears no justification for denying an employer the right to transfer employees to expand
their competence and maximize their full potential for the advancement of the establishment. Petitioner
was not singled out; other employees were also reassigned without their express consent. Neither was
there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits.
This fact is clear in respondent's Board Resolutions, the April 30, 1999 letter of Bank President Daya to
Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner.

On January 18, 1989, this Court, without necessarily giving due course to the petition, issued a temporary
restraining order enjoining respondents from enforcing the assailed decision.

The law protects both the welfare of employees and the prerogatives of management. Courts will
not interfere with business judgments of employers, provided they do not violate the law, collective
bargaining agreements, and general principles of fair play and justice. The transfer of personnel from one
area of operation to another is inherently a managerial prerogative that shall be upheld if exercised in good
faith -- for the purpose of advancing business interests, not of defeating or circumventing the rights of
employees.
3. Gelmart Industries Phils., Inc. vs. NLRC
G.R. No. 85668
August 10, 1989
FIRST DIVISION: GANCAYCO, J.:

Issue:
Whether or not the NLRC committed a grave abuse of discretion for rendering a decision that is contrary to
law and existing jurisprudence in ordering the reinstatement of private respondent to his former position
with payment of backwages.
Held:
We find no merit in this petition.
Consistent with the policy of the State to bridge the gap between the underprivileged workingmen and the
more affluent employers, the NLRC rightfully tilted the balance in favor of the workingmen and this was
done without being blind to the concomitant right of the employer to the protection of his property.
On the other hand, without being too harsh to the employer, and naively liberal to labor, on the other, the
NLRC correctly pointed out that private respondent cannot totally escape liability for what is patently a
violation of company rules and regulations.

Facts:
Private respondent Felix Francis started working as an auto-mechanic for petitioner Gelmart Industries
Phils., Inc. (GELMART) sometime in 1971. As such, his work consisted of the repair of engines and
underchassis, as well as trouble shooting and overhauling of company vehicles. He is likewise entrusted
with some tools and spare parts in furtherance of the work assigned to him.
On April 11, 1987, private respondent was caught by the security guards taking out of GELMART's
premises one (1) plastic container filled with about 16 ounces of "used' motor oil, without the necessary
gate pass to cover the same as required under GELMART's rules and regulations which provides that theft
and/or pilferage of company property merits an outright termination from employment. By reason thereof,
petitioner was placed under preventive suspension pending investigation for violation of company rules
and regulations on April 13, 1987.
After due investigation, or on May 20, 1987, private respondent was found guilty of theft of company
property. As a consequence, his services were severed.

To reiterate, be it of big or small commercial value, intended to be re-used or altogether disposed of or

wasted, the "used" motor oil still remains, in legal contemplation, the property of GELMART. As such, to
take the same out of GELMART's premises without the corresponding gate pass is a violation of the
company rule on theft and/or pilferage of company property.
In this score, it is very difficult for this Court to discern grave abuse of discretion on the part of the NLRC in
modifying the appealed decision. The suspension imposed upon private respondent is a sufficient penalty
for the misdemeanor committed.
Considering that private respondent herein has no previous derogatory record in his fifteen (15) years of
service with petitioner GELMART the value of the property pilfered (16 ounces of used motor oil) is very
minimal, plus the fact that petitioner failed to reasonably establish that non-dismissal of private respondent
would work undue prejudice to the viability of their operation or is patently inimical to the company's
interest, it is more in consonance with the policy of the State, as embodied in the Constitution, to resolve
all doubts in favor of labor.

Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a decision dated
February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private respondent was illegally dismissed
and, accordingly, ordered the latter's reinstatement with full backwages from April 13, 1987 up to the time
of actual reinstatement.

Thus, the penalty of preventive suspension was sufficient punishment for the violation under the
circumstance and that complainant-appellees dismissal unwarranted.

From this decision, GELMART interposed an appeal with the NLRC. In its decision dated October 21,
1988, the NLRC affirmed with modification the ruling of Labor Arbiter Diosana.

WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit. The, restraining order
issued by this Court on January 18, 1989 enjoining the enforcement of the questioned decision of the
National Labor Relations Commission is hereby lifted. No pronouncement as to costs. SO ORDERED.

Decision:

Narvasa, Cruz, Gri;o-Aquino and-in Medialdea, JJ., concur.

DE LA FUENTE, J.:

4. Pampanga Bus Company, INC., vs. PAMBUSCO Employees' Union, Inc.

G.R. No. 46739
September 23, 1939
EN BANC: MORAN, J.:

Facts:

Facts:
On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner herein,
Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco Employees' Union, Inc., new
employees or laborers it may need to replace members of the union who may be dismissed from the
service of the company, with the proviso that, if the union fails to provide employees possessing the
necessary qualifications, the company may employ any other persons it may desire. This order, in
substance and in effect, compels the company, against its will, to employ preferentially, in its service, the
members of the union.
Issue:
Whether or not the said order issued by the CIR valid and not violative of the right of the employer to select
employees.

Petitioner Commercial Bank and Trust Company Employees' Union (CBTC) lodged a complaint with the
Department of Labor, against private respondent bank (Comtrust) for non-payment of the holiday pay
benefits provided for under Article 95 (now Article 94) of the Labor Code. Failing to arrive at an amicable
settlement at conciliation level, the parties opted to submit their dispute for voluntary arbitration.
On 22 April 1976, the Arbitrator handed down an award on the dispute in favor of petitioner union. The
next day, 23 April 1976, the Department of Labor released Policy Instructions No. 9, a policy regarding the
implementation of the ten (10) paid legal holidays.
Said bank interposed an appeal to the National Labor Relations Commission (NLRC), contending that the
Arbitrator demonstrated gross incompetence and/or grave abuse of discretion when he failed to apply
Policy Instructions No. 9. This appeal was dismissed on 16 August 1976.
Private respondent then appealed to the Secretary of Labor. On 30 June 1977, the Acting Secretary of
Labor reversed the NLRC decision. On the principal issue of holiday pay, the Acting Secretary, guided by
Policy Instructions No. 9, applied the same retrospectively, among other things.

Held:
Issue:
We hold that the court has no authority to issue such compulsory order.
The general right to make a contract in relation to one's business is an essential part of the liberty of the
citizens protected by the due-process clause of the Constitution. The right of the laborer to sell his labor to
such person as he may choose is, in its essence, the same as the right of an employer to purchase labor
from any person whom it chooses. The employer and the employee have thus an equality of right
guaranteed by the Constitution.
Section of Commonwealth Act No. 213 confers upon labor organizations the right "to collective bargaining
with employers for the purpose of seeking better working and living conditions, fair wages, and shorter
working hours for laborers, and, in general, to promote the material, social and moral well-being of their
members." This provision in granting to labor unions merely the right of collective bargaining, impliedly
recognizes the employer's liberty to enter or not into collective agreements with them. Indeed, we know of
no provision of the law compelling such agreements. Such a fundamental curtailment of freedom, if ever
intended by law upon grounds of public policy, should be effected in a manner that is beyond all possibility
of doubt. The supreme mandates of the Constitution should not be loosely brushed aside. As held by the
Supreme Court of the United States in Hitchman Coal & Co. vs. Mitchell (245 U. S., 229; 62 Law. ed., 260,
276):
Decision:
Thus considered, the order appealed from is hereby reversed, with costs against the respondent
Pambusco Employees' Union, Inc.
5. CBTC Employees Union v. Clave
G.R. No. 49582
January 7, 1986

Whether or not the monthly pay of the covered employees already includes what Article 94 of the Labor
Code requires as regular holiday pay benefit in the amount of his regular daily wage.
Ruling:
In excluding the union members the benefits of the holiday pay law, public respondent predicated his ruling
on Section 2, Rule IV, Book III of the Rules to implement Article 94 of the Labor Code promulgated by the
then Secretary of Labor and Policy Instructions No. 9.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, this Court's Second Division,
speaking through former Justice Makasiar, expressed the view and declared that the section and
interpretative bulletin are null and void, having been promulgated by the then Secretary of Labor in excess
of his rule-making authority.
The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction
No. 9 add another excluded group, namely, 'employees who are uniformly paid by the month'. While the
additional exclusion is only in the form of a presumption that all monthly paid employees have already
been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be
valid. An administrative interpretation which diminishes the benefits of labor more than what the statute
delimits or withholds is obviously ultra vires.
Ruled in favor of the petitioners. Presidential Executive Assistant and the Acting Secretary of labor are set
aside, and the award of the Arbitrator reinstated.

6. National Service Corp. v. NLRC

G.R. No. L-69870
November 29, 1988
PADILLA, J.
The civil service does not include Government owned or controlled corporations (GOCC) which are
organized
as
subsidiaries
of
GOCC
under
the
general
corporation
law.
FACTS:
Eugenio Credo was an employee of the National Service Corporation. She claims she was illegally
dismissed. NLRC ruled ordering her reinstatement. NASECO argues that NLRC has no jurisdiction to
order her reinstatement. NASECO as a government corporation by virtue of its being a subsidiary of the
NIDC, which is wholly owned by the Phil. National Bank which is in turn a GOCC, the terms and conditions
of employment of its employees are governed by the Civil Service Law citing National Housing v Juco.

No. The Constitution provides guarantee among workers with the right to organize and conduct peaceful
concerted activities. On the other hand, EO 180 provides that the Civil Service law and rules governing
concerted activities in government service shall be observed subject to any legislation that may be enacted
by Congress. Referring to Memo Circular No.6, s. 1987 of the CSC which states that prior to the
enactment by Congress of applicable laws concerning strike by government employees, enjoins under
pain of administrative sanctions, all government officials and employees from staging a strike,
demonstrations, mass leaves, walk-outs and other forms of mass action which will result in temporary
stoppage or disruption of public service, the court ruled that in the absence of any legislation allowing
government employees to strike, they are therefore prohibited from doing so.
8. People vs. Panis
G.R. Nos. L-58674-77 July 11, 1990
CRUZ, J:

ISSUE:

Facts:

W/N employees of NASECO, a GOCC without original charter, are governed by the Civil Service Law.

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo
City alleging that SerapioAbug, private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and there
wilfully, unlawfully and criminally operate a private fee-charging employment agency by charging fees and
expenses (from) and promising employment in Saudi Arabia" to four separate individuals named therein, in
violation of Article 16 in relation to Article 39 of the Labor Code.

HELD:
NO. The holding in NHC v Juco should not be given retroactive effect, that is to cases that arose before
its promulgation of Jan 17, 1985. To do otherwise would be oppressive to Credo and other employees
similarly situated because under the 1973 Consti but prior to the ruling in NHC v Juco, this court
recognized the applicability of the Labor jurisdiction over disputes involving terms and conditions of
employment
in
GOCC's,
among
them
NASECO.
In the matter of coverage by the civil service of GOCC, the 1987 Consti starkly differs from the 1973 consti
where NHC v Juco was based. It provides that the "civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government owned or controlled corporation
with original charter." Therefore by clear implication, the civil service does not include GOCC which are
organized as subsidiaries of GOCC under the general corporation law.
7. SSS EMPLOYEES ASSOCIATION vs. CA
G.R. No. 85279
July 28, 1989
CORTES, J:

Abug filed a motion to quash on the ground that the informations did not charge an offense because he
was accused of illegally recruiting only one person in each of the four informations. Under the proviso in
Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any
manner promised or offered any employment for a fee."
The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation
to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first two cited
articles penalize acts of recruitment and placement without proper authority, which is the charge embodied
in the informations, application of the definition of recruitment and placement in Article 13(b) is
unavoidable.
Issue:

FACTS:

Whether or not the petitioner is guilty of violating Article 13(b) of P. D. 442, otherwise known as the Labor
Code.

Petitioners went on strike after their employer SSS failed to act upon the union's demands concerning the
implementation of their CBA. SSS filed an injunction contending that the petitioners are covered by Civil
Service laws which prohibits employees of the government from staging a strike. SSSEA on the other
hand, argued that the NLRC has the jurisdiction of the case by virtue of the provisions of the Labor Code.

Held:

ISSUE:
Do employees covered by the Civil Service have the right to strike?
HELD:

Article 13(b) of P. D. 442, otherwise known as the Labor Code, states that, "(b) 'Recruitment and
placement' refers to any act of canvassing, 'enlisting, contracting, transporting, hiring, or procuring
workers, and includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed engaged in recruitment and
placement."

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an
exception thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."

facilitated by them, the complainants asked her to introduce them to said spouses. Allegedly out of the
goodness of her heart, she complied with their request.
Issue:
Whether or not appellant Agustin actions in relation with the Goce couple constitute illegal recruitment.

At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign
land, and investing hard-earned savings or even borrowed funds in pursuit of their dream, only to be
awakened to the reality of a cynical deception at the hands of their own countrymen.
9. People vs Goce
GR No 113161
August 29, 1995
Regalado, J.
Facts:
On January 12, 1988, an information for illegal recruitment committed by a syndicate and in large scale,
punishable under Articles 38 and 39 of the Labor Code as amended by Section 1(b) of Presidential Decree
No. 2018, was filed against spouses Dan and Loma Goce and herein accused-appellant Nelly Agustin in
the Regional Trial Court of Manila, Branch 5.
On January 21, 1987, a warrant of arrest was issued against the three accused but not one of them was
arrested. Hence, on February 2, 1989, the trial court ordered the case archived but it issued a standing
warrant of arrest against the accused.Thereafter, on learning of the whereabouts of the accused, at around
midday of February 26, 1993, Nelly Agustin was apprehended by the Paraaque police.
On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a principal in
the crime of illegal recruitment in large scale, and sentencing her to serve the penalty of life imprisonment,
as well as to pay a fine of P100,000.00.
In her appeal, appellant Agustin raises the following arguments:

Held:
Appellant is accused of violating Articles 38 and 39 of the Labor Code. Article 38 of the Labor Code, as
amended by Presidential Decree No. 2018, provides that any recruitment activity, including the prohibited
practices enumerated in Article 34 of said Code, undertaken by non-licensees or non-holders of authority
shall be deemed illegal and punishable under Article 39 thereof. The same article further provides that
illegal recruitment shall be considered an offense involving economic sabotage if any of these qualifying
circumstances exist, namely,
(a) when illegal recruitment is committed by a syndicate,i.e., if it is carried out by a group of three or more
persons conspiring and/or confederating with one another; or
(b) when illegal recruitment is committed in large scale, i.e., if it is committed against three or more
persons individually or as a group.
Recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not; provided, that any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement. On the other hand, referral is the act of passing along or forwarding of an
applicant for employment after an initial interview of a selected applicant for employment to a selected
employer, placement officer or bureau.
There is illegal recruitment when one gives the impression of having the ability to send a worker abroad." It
is undisputed that appellant gave complainants the distinct impression that she had the power or ability to
send people abroad for work such that the latter were convinced to give her the money she demanded in
order to be so employed.

(1) her act of introducing complainants to the Goce couple does not fall within the meaning of illegal
recruitment and placement under Article 13(b) in relation to Article 34 of the Labor Code;

Decision:

(2) there is no proof of conspiracy to commit illegal recruitment among appellant and the Goce spouses;
and

WHEREFORE, the appealed judgment of the court a quo is hereby AFFIRMED in toto, with costs against
accused-appellant Nelly D. Agustin.

(3) there is no proof that appellant offered or promised overseas employment to the complainants.
Appellant counsel agreed to stipulate that she was neither licensed nor authorized to recruit applicants for
overseas employment. Appellant, however, denies that she was in any way guilty of illegal recruitment.

It is appellant's defensive theory that all she did was to introduce complainants to the Goce spouses. Being
a neighbor of said couple, and owing to the fact that her son's overseas job application was processed and

10. DARVIN VS CA
G.R. No. 125044
July 13, 1998

ROMERO, J.:
FACTS:
Imelda Darvin was convicted of simple illegal recruitment under the Labor Code by the RTC. It stemmed
from a complaint of one Macaria Toledo who was convinced by the petitioner that she has the authority to
recruit workers for abroad and can facilitate the necessary papers in connection thereof. In view of this
promise, Macaria gave her P150,000 supposedly intended for US Visa and air fare.

and other deductions. Petitioner pushed through with her foreign employment and worked for six months.
Two years upon her return, Petitioner filed a complaint of underpayment of wages.
Issue:
Whether or not the side agreement entered into by the petitioner superseded the employment
contract previously entered into?

On appeal, the CA affirmed the decision of the trial court in toto, hence this petition.

Held:

ISSUE:
WON appellant is guilty beyond reasonable doubt of illegal recruitment.

No. It was expressly stated in the employment contract that any changes or alterations made to
any part of said contract without prior approval from the POEA shall be null and void notwithstanding the
fact the employee had agreed to said contract.

HELD:
Art. 38 of the Labor Code provides:
a.)Any recruitment activities, including the prohibited practices enumerated under Article 43 of the Labor
Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 of the Labor Code.
Applied to the present case, to uphold the conviction of accused-appellant, two elements need to be
shown: (1) the person charged with the crime must have undertaken recruitment activities: and (2) the said
person does not have a license or authority to do so.
In the case, the Court found no sufficient evidence to prove that accused-appellant offered a job to private
respondent. It is not clear that accused gave the impression that she was capable of providing the private
respondent work abroad. What is established, however, is that the private respondent gave accusedappellant P150,000.By themselves, procuring a passport, airline tickets and foreign visa for another
individual, without more, can hardly qualify as recruitment activities. Aside from the testimony of private
respondent, there is nothing to show that appellant engaged in recruitment activities.
At best, the evidence proffered by the prosecution only goes so far as to create a suspicion that appellant
probably perpetrated the crime charged. But suspicion alone is insufficient, the required quantum of
evidence being proof beyond reasonable doubt. When the Peoples evidence fail to indubitably prove the
accuseds authorship of the crime of which he stand accused, then it is the Courts duty, and the accuseds
right, to proclaim his innocence.

11. CHAVEZ VS. BONTO-PEREZ, RAYALA et al.

G.R. No. 109808
March 1, 1995
PUNO, J.:
Facts:
Petitioner entered into a standard employment contract for overseas employment as an
entertainer in Japan. The contract, as approved by POEA, had a duration of two to six months and the
stipulated monthly compensation was $1500. However, a side agreement was entered into by Petitioner
with the foreign employer through her local manager. Such agreement stipulated a lesser compensation

The SC ruled that the managerial commission agreement executed by Chavez to authorize her Japanese
Employer to deduct her salary is void because it is against our existing laws, morals and public policy. It
cannot supersede the standard employment contract approved by the POEA with the following stipulation
appended thereto:
It is understood that the terms and conditions stated in this Employment Contract are in conformance with
the Standard Employment Contract for Entertainers prescribed by the POEA under Memorandum Circular
No. 2, Series of 1986. Any alterations or changes made in any part of this contract without prior approval
by the POEA shall be null and void;
The side agreement which reduced Chavezs basic wage is null and void for violating the POEAs
minimum employment standards, and for not having been approved by the POEA. Here, both Centrum
Placement and Jaz Talents are solidarily liable.
Laches does not apply in the case at bar. In this case, Chavez filed her claim well within the three-year
prescriptive period for the filing of money claims set forth in Article 291 of the Labor Code. For this reason,
laches is not applicable.

12. JMM Promotions & Management, Inc. vs. National Labor Relations Commission and Ulpiano L.
De Los Santos
G.R. No. 109835
November 22, 1993
CRUZ, J.:
Facts:
1.
Following Secs. 4 and 17, Rule II, Book II of the POEA Rules, the petitioner, a recruiting agency,
made the following:
a.
Paid the license fee (Sec. 4)
b.
Posted a cash bond of 100k and surety bond of 50k(Sec. 4)
c.
Placed money in escrow worth 200k (Sec. 17)
2.
The petitioner wanted to appeal a decision of the Philippine Overseas Employment
Administration (POEA) to the respondent NLRC, but the latter dismissed the appeal because of failure of

the petitioner to post an appeal bond required by Sec. 6, Rule V, Book VII of the POEA Rules. The
decision being appealed involved a monetary award.

G.R. No. 77279 April 15, 1988

Ponente: Cortes. J.

3.
The petitioner contended that its payment of a license fee, posting of cash bond and surety bond,
and placement of money in escrow are enough; posting an appeal bond is unnecessary. According to Sec.
4, the bonds are posted to answer for all valid and legal claims arising from violations of the conditions for
the grant and use of the license, and/or accreditation and contracts of employment. On the other hand,
according to Sec. 17, the escrow shall answer for valid and legal claims of recruited workers as a result of
recruitment violations or money claims.
4.
Sec. 6 reads:
In case the decision of the Administration involves a monetary award, an appeal by the employer shall be
perfected only upon the posting of a cash or surety bond The bonds required here are different
from the bonds required in Sec. 4.

FACTS:
Petitioner Catan, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group, a Saudi
Arabian firm recruited private respondent Francisco D. Reyes to work in Saudi Arabia. The term of contract
is for one (1) year, however, the contract provided for automatic renewal.
Said contract was automatically renewed when private respondent was not repatriated by hi Saudi
employer but instead was assigned to work as a crusher plant operator.
On March 30, 1983 while he was working as a crusher plant operator, his ankle was crushed under the
machine he was operating.

Issue:
Was the petitioner still required to post an appeal bond despite the fact that it has posted bonds
of 150k and placed 200k in escrow before?

On May 15, 1983 after expiration of renewed term, private respondent returned to the Philippines. His
ankle was operated on at the Sta. Mesa Heights Medical Center for which he incurred expenses.

Held:

On September 9, 1983, he returned to Saudi and resume to his work and on May 15, 1984, he was
repatriated. And upon his return, he had ankle treated for which he incurred further expenses.

Yes. It is possible for the monetary reward in favor of the employee to exceed the amount of
350,000 because of the stringent requirements posed upon recruiters. The reason for such is that
overseas employees are subjected to greater risks and hence, the money will be used to insure more care
on the part of the local recruiter in its choice of foreign principal to whom the worker will be sent.
Doctrine: Construction:
It is a principle of legal hermeneutics that in interpreting a statute (or a set of rules as in this
case), care should be taken that every part thereof be given effect, on the theory that it was enacted as an
integrated measure and not as a hodge-podge of conflicting provisions. Ut res magis valeat quam
pereat. That the thing may rather have effect than be destroyed.
The rule is that a construction that would render a provision inoperative should be avoided;
instead, apparently inconsistent provisions should be reconciled whenever possible as parts of a
coordinated and harmonious whole. With regard to the present case, the doctrine can be applied when the
Court found that Sec. 6 complements Sec. 4 and Sec. 17.
In the POEA Rules, the bonds required in Sec. 4 Rule 2, Book 2 and the escrow required in Sec. 17
Rule 2, Book 2 have different purposes from the appeal bond required in Sec. 6, Rule 5 Book 7.

Private respondent filed a claim against Catan placement agency on the basis of the provision in the
employment contract that the employer shall compensate the employee if he is injured or permanently
disabled in the course of employment.
POEA rendered judgment in favor of the complainant. Ordering the respondent placement agency to pay
SEVEN THOUSAND NINE HUNDRED EIGHTY FIVE and 60/100 (P7, 985.60), TWENTY FIVE
THOUSAND NINTY SIX 20/100 (P29, 096.20) and 10% for attorneys fees.
On appeal, respondent NLRC affirmed the decision of the POEA.
ISSUE:
Whether or not the Placement Agency is liable for disability benefits to private respondent, since the time
he was injured his original contract had already expired?
HELD:
Yes, Catan Placement Agency is liable for disability benefits to private respondent.

The bonds in Sec. 4 are made to answer for all claims against the employer, which is not limited
to monetary awards to employees whose contracts of employment have been violated. The
escrow agreement in Sec. 17 is used only as a last resort in claiming against the employer.
On the other hand, Sec. 6 requires an appeal bond in an amount equivalent to the monetary
award. Indeed, this appeal bond is intended to further insure the payment of the monetary award. Also, it
is possible that the monetary award may exceed the bonds posted previously and the money placed in
escrow. If such a case happens, where will the excess be sourced? To solve such a dilemma, an appeal
bond equivalent to the amount of the monetary award is required by Sec. 6.

13. Manuela S. Catan/M.S. Catan Placement Agency v. The NLRC and Francisco Reyes

Private respondents contract of employment can not be said to have expired on May 14, 1982 as it was
automatically renewed since no notice of its termination was given by either or both parties at a month
before its termination. As stipulated in their contract.
M. S. Catan Agency was at the time of complainant's accident resulting in his permanent partial disability
was (sic) no longer the accredited agent of its foreign principal, foreign respondent herein, yet its
responsibility over the proper implementation of complainant's employment/service contract and the
welfare of complainant himself in the foreign job site, still existed, the contract of employment in question
not having expired yet. This must be so, because the obligations covenanted in the recruitment agreement
entered into by and between the local agent and its foreign principal are not coterminus with the term of
such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of

such parties towards the contracted employees under the agreement do not at all end, but the same
extends up to and until the expiration of the employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very
purpose for which the law governing the employment of workers for foreign jobs abroad was enacted.

also required to file with the Bureau a formal appointment or agency contract executed by the
foreign-based employer in its favor to recruit and hire personnel for the former, which contained
a provision empowering it to sue and be sued jointly and solidarily with the foreign principal for
any of the violations of the recruitment agreement and the contracts of employment [Section 10
(a) (2), Rule V, Book I of the Rules to Implement the Labor Code (1976)].

14. ROYAL CROWN INTERNATIONALE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSI0N
and VIRGILIO P. NACIONALES, respondents
GR NO. 78085
OCTOBER 16, 1989
CORTES, J.:

Facts:
In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private respondent
for employment with ZAMEL as an architectural draftsman in Saudi Arabia.

II.

The NLRC upheld the POEA finding that petitioner's evidence was insufficient to prove
termination from employment for just and valid cause. And a careful study of the evidence thus
far presented by petitioner reveals to this Court that there is legal basis for public respondent's
conclusion.

The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to lack or
excess of jurisdiction in upholding the POEA's finding of insufficiency of evidence to prove termination for
just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.

On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground that his
performance was below par. For three (3) successive days thereafter, he was detained at his quarters and
was not allowed to report to work until his exit papers were ready. On February 16, 1984, he was made to
board a plane bound for the Philippines.

15. Facilities Management Corporation, J.S Dreyer and J.V. Catuira vs. Leonardo Dela Osa
March 26, 1979 GR L-38649
Makasiar, J:

Private respondent then filed on April 23, 1984 a complaint for illegal termination against petitioner and
ZAMEL.

Facts

Based on a finding that petitioner and ZAMEL failed to establish that private respondent was terminated for
just and valid cause, the Workers' Assistance and Adjudication Office of the POEA issued a decision
ordering the former to pay, jointly and severally, the complainant.

Leonardo De La Osa sought his reinstatement, with full backwages, as well as the recovery of
his overtime compensation, swing shift and graveyard shift differentials. He alleged that he was employed
by Facilities Management as a painter, a houseboy, and a cashier. The respondents filed their letteranswer without substantially denying the material allegations, but interposed that Facilities Management
and J.S. Dreyer are domiciled in Wake Island which is beyond territorial jurisdiction of the Philippine
Government, and that J.V. Catuira, though an employee of Facilities presently stationed in Manila, is
without power and authority of legal representation, and that the employment contract between De La Osa
and the Facilities carries the approval of the Department of Labor of the Philippines.

Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor Relations
Commission (NLRC) which affirmed a decision of the Philippine Overseas Employment Administration
(POEA) holding it liable to pay, jointly and severally with Zamel-Turbag Engineering and Architectural
Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary and vacation pay corresponding to
the unexpired portion of his employment contract with ZAMEL.

Issue

Issue:
I.

Whether or not petitioner as a private employment agency may be held jointly and severally
liable with the foreign-based employer for any claim which may arise in connection with the
implementation of the employment contracts of the employees recruited and deployed abroad;

II.

Whether or not sufficient evidence was presented by petitioner to establish the termination of
private respondent's employment for just and valid cause.

Is the mere act by a non-resident foreign corporation of recruiting Filipino workers for its own use
abroad, in law doing business in the Philippines? And whether or not the respondent can sue the foreign
corporation.

Held

Ruling:
I.

In applying for its license to operate a private employment agency for overseas recruitment and
placement, petitioner was required to submit, among others, a document or verified undertaking
whereby it assumed all responsibilities for the proper use of its license and the implementation of
the contracts of employment with the workers it recruited and deployed for overseas
employment [Section 2(e), Rule V, Book 1, Rules to Implement the Labor Code (1976)]. It was

A foreign corporation not doing business in the Philippines can be sued here for acts done
against persons in the Philippines. If a foreign corporation, not engaged in business in the Philippines, is
not banned from seeking redress from courts in the Philippines, a fortiori, that same corporation cannot
claim exemption from being sued in Philippine courts for acts done against a person or persons in the
Philippines.

16. Patricia Sto Tomas vs. Salac

ABAD, J.:
This case is a consolidation of the following cases: G.R. No. 152642, G.R. No. 152710, G.R. No.
167590, G.R. Nos. 182978-79, and G.R. Nos. 184298-99.
G.R. No. 152642 and G.R. No. 152710
In G.R. No. 152642, in 2002, Rey Salac et al, who are recruiters deploying workers abroad, sought to
enjoin the Secretary of Labor, Patricia Sto. Tomas, the POEA, and TESDA, from regulating the activities of
private recruiters. Salac et al invoked Sections 29 and 30 of the Republic Act 8042 or the Migrant Workers
Act which provides that recruitment agency in the Philippines shall be deregulated one year from the
passage of the said law; that 5 years thereafter, recruitment should be fully deregulated. RA 8042 was
passed in 1995, hence, Salac et al insisted that as early as 2000, the aforementioned government
agencies should have stopped issuing memorandums and circulars regulating the recruitment of workers
abroad.
Sto. Tomas then questioned the validity of Sections 29 and 30.
ISSUE: Whether or not Sections 29 and 30 are valid.
HELD: The issue became moot and academic. It appears that during the pendency of this case in 2007,
RA 9422 (An Act to Strengthen the Regulatory Functions of the POEA) was passed which repealed
Sections 29 and 30 of RA 8042.
G.R. 167590
In this case, the Philippine Association of Service Exporters, Inc. (PASEI) questioned the validity of the
following provisions of RA 8042:
a. Section 6, which defines the term illegal recruitment. PASEI claims that the definition by the law is
vague as it fails to distinguish between licensed and non-licensed recruiters;
b. Section 7, which penalizes violations against RA 8042. PASEI argues that the penalties for simple
violations against RA 8042, i.e., mere failure to render report or obstructing inspection are already
punishable for at least 6 years and 1 day imprisonment an a fine of at least P200k. PASEI argues that
such is unreasonable;
c. Section 9, which allows the victims of illegal recruitment to have the option to either file the criminal case
where he or she resides or at the place where the crime was committed. PASEI argues that this provision
is void for being contrary to the Rules of Court which provides that criminal cases must be prosecuted in
the placed where the crime or any of its essential elements were committed;
d. Section 10, which provides that corporate officers and directors of a company found to be in violation of
RA 8042 shall be themselves be jointly and solidarily liable with the corporation or partnership for the
aforesaid claims and damages. PASEI claims that this automatic liability imposed upon corporate officers
and directors is void for being violative of due process.
RTC Judge Jose Paneda of Quezon City agreed with PASEI and he declraed the said provisions of RA
8042 as void. Secretary Sto. Tomas petitioned for the annulment of the RTC judgment.

hiring, or procuring workers without the appropriate government license or authority are guilty of illegal
recruitment whether or not they commit the wrongful acts enumerated in that section. On the other hand,
recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate
government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts
enumerated in Section 6.
b. Section 7: The penalties are valid. Congress is well within its right to prescribed the said penalties.
Besides, it is not the duty of the courts to inquire into the wisdom behind the law.
c. Section 9: The Rules on Criminal Procedure, particularly Section 15(a) of Rule 110, itself, provides that
the rule on venue when it comes to criminal cases is subject to existing laws. Therefore, there is nothing
arbitrary when Congress provided an alternative venue for violations of a special penal law like RA 8042.
d. Section 10: The liability of corporate officers and directors is not automatic. To make them jointly and
solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of
that company, such as sponsoring or tolerating the conduct of illegal activities.
G.R. 182978-79, and G.R. 184298-99
In this case, Jasmin Cuaresma, a nurse working in Saudi Arabia was found dead. Her parents received
insurance benefits from the OWWA (Overseas Workers Welfare Administration). But when they found out
based on an autopsy conducted in the Philippines that Jasmin was raped and thereafter killed, her parents
(Simplicio and Mila Cuaresma) filed for death and insurance benefits with damages from the recruitment
and placement agency which handled Jasmin (Becmen Service Exporter and Promotion, Inc.).
The case reached the Supreme Court where the Supreme Court ruled that since Becmen was negligent in
investigating the true cause of death of Jasmin (a violation of RA 8042), it shall be liable for damages. The
Supreme Court also ruled that pursuant to Section 10 of RA 8042, the directors and officers of Becmen are
themselves jointly and solidarily liable with Becmen.
Eufrocina Gumabay and the other officers of Becmen filed a motion for leave to intervene. They aver that
Section 10 is invalid.
ISSUE: Whether or not Section is invalid.
HELD: No. As earlier discussed, Section is valid. The liability of Gumabay et al is not automatic. However,
the SC reconsidered its earlier ruling that Gumabay et al are solidarily and jointly liable with Becmen there
being no evidence on record which shows that they were personally involved in their companys particular
actions or omissions in Jasmins case.

17. Salazar vs. Achacoso

G.R. No. 81510
March 14, 1990
SARMIENTO, J.:

ISSUE: Whether or not Sections 6, 7, and 9 of RA 8042 are void.

Facts:
HELD: No, they are valid provisions.
a. Section 6: The law clearly and unambiguously distinguished between licensed and non-licensed
recruiters. By its terms, persons who engage in canvassing, enlisting, contracting, transporting, utilizing,

Rosalie Tesoro of Pasay City in a sworn statement filed with the POEA, charged petitioner with
illegal recruitment. Public respondent Atty. Ferdinand Marquez sent petitioner a telegram directing him to
appear to the POEA regarding the complaint against him. On the same day, after knowing that petitioner

had no license to operate a recruitment agency, public respondent Administrator Tomas Achacoso issued
a Closure and Seizure Order No. 1205 to petitioner. It stated that there will a seizure of the documents and
paraphernalia being used or intended to be used as the means of committing illegal recruitment, it having
verified that petitioner has (1) No valid license or authority from the Department of Labor and
Employment to recruit and deploy workers for overseas employment; (2) Committed/are committing acts
prohibited under Article 34 of the New Labor Code in relation to Article 38 of the same code. A team was
then tasked to implement the said Order. The group, accompanied by media men and Mandaluyong
policemen, went to petitioners residence. They served the order to a certain Mrs. For a Salazar, who let
them in. The team confiscated assorted costumes. Petitioner filed with POEA a letter requesting for the
return of the seized properties, because she was not given prior notice and hearing. The said Order
violated due process. She also alleged that it violated sec 2 of the Bill of Rights, and the properties were
confiscated against her will and were done with unreasonable force and intimidation.

2. It was provided in the agreement that: 1) California would have no control or supervision over
the workers as to how they perform or accomplish their work, 2) Livi is an independent
contractor and that it has the sole responsibility of complying with all the existing as well as
future laws, rules and regulations pertinent to employment of labor, 3) the assignment to
California was seasonal and contractual, and 4) payroll, including COLA and holiday pay
shall be delivered Livi at Californias premises.
3. Petitioners were made to sign 6-month employment contracts which were renewed for the
same period. Unlike regular employees of California, they did not receive fringe benefits and
bonuses and were paid only a daily allowance.
4. Petitioners contend that they have become regular employees of California. Subsequent to
their claim for regularization, California no longer re-hired them. Livi, on the other hand,
claims the workers as its employees and that it is an independent contractor.

Issue:
Whether or Not the Philippine Overseas Employment Administration (or the Secretary of Labor)
can validly issue warrants of search and seizure (or arrest) under Article 38 of the Labor Code

5. Labor Arbiter found that no employer-employee relationship existed. The NLRC affirmed the
ruling.
ISSUE

Held:
Under the new Constitution, . . . no search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be searched and
the persons or things to be seized. Mayors and prosecuting officers cannot issue warrants of seizure or
arrest. The Closure and Seizure Order was based on Article 38 of the Labor Code. The Supreme Court
held, We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest
warrants. Hence, the authorities must go through the judicial process. To that extent, we declare Article 38,
paragraph (c), of the Labor Code, unconstitutional and of no force and effect The power of the President
to order the arrest of aliens for deportation is, obviously, exceptional. It (the power to order arrests) cannot
be made to extend to other cases, like the one at bar. Under the Constitution, it is the sole domain of the
courts. Furthermore, the search and seizure order was in the nature of a general warrant. The court held
that the warrant is null and void, because it must identify specifically the things to be seized.

HELD

YES. The existence of an employer-employee relationship is a question of law and cannot be

made subject to agreement. The stipulations in the manpower supply agreement will not erase
either partys obligations as an employer. Livi is a labor-only contractor, notwithstanding the
provisions in the agreement. The nature of ones business is not determined by self-serving
appellations but by test provided by statute and the prevailing case law.

Californias contention that the workers are not performing activities which are directly related to
its general business of manufacturing is untenable. The promotion or sale of products, including
the task of occasional price tagging, is an integral part of the manufacturing business. Livi as a
placement agency had simply supplied the manpower necessary for California to carry out its
merchandising activities, using the latters premises and equipment. Merchandising is likewise
not a specific project because it is an activity related to the day-to-day operations of California.
Based on Article 106 of the Labor Code, the labor-only contractor is considered merely an agent
of the employer and liability must be shouldered by either one or by both. Petitioners are ordered
reinstated as regular employees.

WHEREFORE, the petition is GRANTED. Article 38, paragraph (c) of the Labor Code is
declared UNCONSTITUTIONAL and null and void. The respondents are ORDERED to return all materials
seized as a result of the implementation of Search and Seizure Order No. 1205.

18. Tabas vs. California Manufacturing Company, Inc.

G.R. No. L-80680
January 26, 1989
SARMIENTO, J.:

Is there an employer-employee relationship between California and the petitioners?

19. COCA-COLA BOTTLERS PHIL., INC. VS. HINGPIT

G.R. No. 127238. August 25, 1998
NARVASA, CJ
FACTS

FACTS
1. Petitioners were the employees of Livi Manpower Services. They were assigned to the
respondent pursuant to a manpower supply agreement as promotional merchandisers.

1. Pioneer Multi-Services Co (PIONEER) and Lipercon Services, Inc (LIPERCON) are manning companies
with which Coca-Cola successively entered into contracts for the supply of manpower needs of its plant in
Tagbilaran.

2. Coca-Colas contract with Pioneer was executed on May 28, 1983 and that with Lipercon, 5 years later,
on December 17, 1988.
3. 11 persons were claiming they were employees of Coca-Cola in its Tagbilaran City Plant. They filed a
complaint against Coca-Cola with the Regional Arbitration Board of the National Labor Relations
Commission in Cebu City.
4. In the decision of the RAB, it was found that the complainants were supplied as workers to Coca-Cola
first by Pioneer and later by Lipercon. When Lipercon entered into the picture, the complainants were
already regular employees of Coca-Cola. This is because while Lipercon was an independent contractor,
its predecessor Pioneer was not.
5. The Commission revered the Labor Arbiters conclusion that Lipercon was an independent labor
contractor. It declared it instead to be a mere labor-only contractor.
ISSUE
Whether or not Lipercon is a labor only contractor.
HELD
The SC held in the negative. The NLRC grounded its decision solely on an earlier case where the court
held Lipercon to be a Labor only contractor because it failed to prove that it has substantial capital,
investment, tools, etc.
It is not so in the present case. Here, there is substantial evidence detailed by the labor arbiter, to establish
Lipercons character as an independent contractor in the real sense of the word. The Labor Arbiters ruling
is therefore more acceptable that that of the Commission because its decision was founded solely on an
inapplicable precedent.
Lipercon proved to be an independent contractor. Aside from hiring its own employees and paying the
workers their salaries, it also exercised supervision and control over them which is the most important
aspect in determining employer-employee relations. That indeed has substantial capital is proven by the
fact that it did not depend upon its billing on respondent regarding payment of workers salaries. And when
complainants were separated from Lipercon, they singed quitclaim and release documents.
20. Sevilla vs. CA
G.R. No. L-41182-3
April 16, 1988
SARMIENTO, J.
FACTS
1. Mrs. Segundina Noguera leased her premises located at Ermita, Manila to Tourist World Service, Inc.
(TWSI), represented by Eliseo Canilao, for the latters use as branch office. In the said contract Mrs. Lina
Sevilla held herself solidarily liable with TWSI for the prompt payment of the monthly rental agreed on.
2. When the branch office was opened, the same was run by petitioner Mrs. Sevilla, who was designated
as branch manager by TWSI. For any fare bought in on the efforts of Mrs. Sevilla,, 4% was to go her and
3% was to be withheld by TWSI

3. In November 1961, TWSI was allegedly informed that Mrs. Sevilla was connected with a rival travel firm.
Since the branch office was losing, TWSI considered closing it down. The firms board of directors issued
two resolutions; the first abolishing the office of manager of the Ermita Branch Office and the second,
authorizing the corporate secretary to receive the property of TWSI in said branch.
4. In January 1962, the lease contract to use the premises as branch office was terminated. In June 1962,
the Corporate Secretary went over to the office to comply with the mandate of the resolutions. Finding the
premises locked and unable to contact Mrs. Sevilla, he padlocked the premises to protect the interests of
TWSI
5. As such, petitioners Spouses Sevilla filed a complaint against respondents TWSI, Canilao and Noguera,
praying for mandatory preliminary injunction. Petitioners claim that Mrs. Sevillas relationship with TWSI
was one of joint business venture and not one of employment.
6. In its answer, TWSI contend that Mrs. Sevilla was its employee and as such was designated manager.
7. The trial court held for the private respondents. It ruled that TWSI, being the true lessee, has the
privilege to terminate the lease and padlock the premises. It also held that Mrs. Sevilla was a mere
employee of TWSI and that she was bound by the act of her employer.
8. The Court of Appeals affirmed said decision, Hence, the instant petition.

ISSUE
Whether or not there is an employer-employee relationship between TWSI and Mrs. Sevilla.
HELD
NO. There is no employer-employee relationship between TWSI and Mrs. Sevilla. There has been no
uniform test to determine the existence of an employer-employee relation. In general, The Court has relied
in the so-called 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.
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 to the means used in connection therewith. In the first
place, under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in
solidum as and for rental payments. A true employee cannot be made to part with his own money in
pursuance of his employers business, or otherwise, assume any liability thereof. In that event, the parties
must be bound by some other relation, but certainly not employment. In the second place, when the
branch office was opened, the same was run by Mrs. Sevilla payable to TWSI. Thus it cannot be said that
she was under the control of TWSI as to the means used. She obviously relied on her own capabilities.
It is further admitted that Mrs. Sevilla was not in the companys payroll. For her efforts, she retained 4% in
commissions from airline bookings, the remaining 3% going to TWSI. Unlike an employee then, who earns
a fixed salary usually, Mrs. Sevilla earned compensation in fluctuating amounts depending on her booking
successes.

The fact that Sevilla had been designated branch manager does not make her, ergo, TWSIs employee.
Employment is determined by the right of control test and certain economic parameters. Titles are weak
indicators.
However, there is no joint venture or partnership between TWSI and Mrs. Sevilla, either. The Court is of
the opinion that the relationship of said parties is one that of a principal and an agent. But unlike simple
grants of a power of attorney, the agency that the Court hereby declares to be compatible with the intent of
the parties cannot be revoked at will. The reason is that it is an agency coupled with an interest. Thus,
TWSI is held liable for damages for its unwarranted revocation of the contract of agency.
21. MANILA GOLF CLUB, INC. VS. INTERMEDIATE APPELLATE COURT
G.R. No. 64948
September 27, 1994
NARVASA, C.J.:

Facts:
This is originally filed with the Social Security Commission (SSC) via petition of 17 persons who styled
themselves as Caddies of Manila Golf and Country Club-PTCCEA for the coverage and availment of
benefits of the Social Security Act as amended, PTCCEA (Philippine Technical, Clerical, Commercial
Employees Association) a labor organization where which they claim for membership. The same time two
other proceedings were filed and pending. These are certification election case filed by PTCCEA on behalf
of the same caddies of Manila Golf and Country club which was in favor of the caddies and compulsory
arbitration case involving PTCCEA and Manila Golf and Country Club which was dismissed and ruled that
there was no employer-employee relationship between the caddies and the club.

Facts:
On August 21, 1992, Pantaleon delos Reyes the private respondent and petitioner entered into
an agency contract wherein the former is authorized to solicit within the Philippines applications for life
insurance and annuities for which he would be paid compensation in the form of commissions. On March
1, 1993, parties entered into another contract wherein private respondent was appointed as Acting Unit
Manager.
As such, the duties and responsibilities of De los Reyes included the recruitment, training,
organization and development within his designated territory of a sufficient number of qualified, competent
and trustworthy underwriters, and to supervise and coordinate the sales efforts of the underwriters in the
active solicitation of new business and in the furtherance of the agency's assigned goals. It was similarly
provided in the management contract that the relation of the acting unit manager and/or the agents of his
unit to the company shall be that of independent contractor.
Private respondent worked concurrently as agent and Acting Unit Manager until he was notified
by petitioner on November 18, 1993 that his services were terminated effective December 18, 1993. He
filed a complaint for illegal dismissal before the labor arbiter which dismissed the same for lack of
jurisdiction, there being no employer-employee relationship. On appeal however, NLRC reversed such
decision, finding that there is an employer-employee relationship.

Issue:

Issue:
Whether or not NLRC has jurisdiction there being an employer-employee relationship.

Whether or not rendering caddying services for members of golf clubs and their guests in said clubs
courses or premises are the employees of such clubs and therefore within the compulsory coverage of the
Social Security System (SSS).

Held:

SC Ruling:
The Court does not agree that the facts logically point to the employer-employee relationship. In the very
nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of
pursuing their occupation within the premises and grounds of whatever club they do work in. They work for
the club to which they attach themselves on sufferance but, on the other hand, also without having to
observe any working hours, free to leave anytime they please, to stay away for as long they like. These
considerations clash frontally with the concept of employment. It can happen that a caddy who has
rendered services to a player on one day may still find sufficient time to work elsewhere. Under such
circumstances, the caddy may leave the premises and to go to such other place of work that he wishes.
These are things beyond the control of the petitioner. The caddy (LLamar) is not an employee of petitioner
Manila Golf and Country Club and the petitioner is under no obligation to report him for compulsory
coverage of SSS.
22. Insular Life Assurance Co., Ltd. vs. NLRC
G.R. No. 119930.
March 12, 1998
BELLOSILLO, J.:

Yes. It has been settled that an insurance agent on commission basis is not an employee of the
insurance company. However, delos Reyes in this case is not simply an agent but was also appointed as
Acting Unit Manager under the Management (Second) Contract. As such, as found out pursuant to the
contract itself, there is an employer-employee relationship applying the four-fold test.
Petitioner contends that private respondent was never required to go through the preemployment procedures and that the probationary employment status was reserved only to employees of
petitioner. However, the provisions of the contract show otherwise. Private respondent was appointed as
Acting Unit Manager only upon the recommendation of the District Manager. This indicates that private
respondent was hired by petitioner because of the favorable endorsement of its duly authorized officer.
The endorsement was based on his performance as an agent. It can be concluded that the agent phase is
a probationary period for the eventual employment as unit manager.

Petitioner also contends that private respondent was compensated on commission basis.
However the contract provides that delos Reyes is entitled to the free portion of Unit Development
Financing which for all intents and purposes comprised the salary regularly paid to him by petitioner.
Petitioner also exercised power of dismissal because the contract provides for grounds thereof and that
the private respondent must exclusively work with the company. It was also found out by NLRC that
petitioner indeed exercise control over the private respondent because he was required to meet certain
manpower and production quotas.

The determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services performed are
an integral part of the employers business; (2) the extent of the workers investment in equipment and
facilities; (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 is whether the worker is dependent on the
alleged employer for his continued employment in that line of business.

23. Angelina Francisco vs. NLRC

G.R. No. 170087
August 31, 2006
YNARES-SANTIAGO, J.:
Facts:
In 1995 Francisco was hired by Kasei Corporation during the latter's incorporation stage. SHe
was designated as accountant and corporate secretary and was assigned to handle all accounting needs
of the company. She was also designated as liaison officer to secure business permits, construction
permits etc. Although designated as Corp Sec, she was not entrusted with the corporate documnets;
neither did she attend any board meeting nor required to do so.
In 1996, she was designated as Acting Manager who was assigned to handle recruitment of all
employees and perform management administration function. Thereafter, she was replaced by Liza
Fuentes as manager. She alleged that she was required to sign a prepared resolution for her placement
but she was assured that she would still be connected with Kasei Corp. However, Kasei Corp reduced her
salary by P2,500/month. She did not receive her midyear bonus and on October 2001, did not receive her
salary. She demanded for the payment thereof but she was informed that she is no longer connected with
the company. Hence she filed an action for constructive dismissal before the labor arbiter (LA).
Petitioner contends that they did not exercise control and supervision over Francisco. She did
not have daily time record and may come and leave the office any time she wanted. And that her
designation as technical consultant depended solely upon the will of the management and hence her
consultancy may be terminated any time. The LA held that there was an illegal dismissal. This was
affirmed by NLRC but was reversed by CA on appeal. Hence this petition.
Issue:
Whether there is an employer-employee relationship.
Held:
The control test to determine presence of employer-employee relationship is sometimes not
enough; it is insufficient to give a complete picture of the relationship between parties, owing to the
complexity of such relationship where several positions have been held by the worker. Economic realities
of the employment relations help provide a comprehensive analysis of the true classification 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 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.

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
Officer, 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 month pay, bonuses and allowances, as well
as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. Petitioners
membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by
the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS
evinces the existence of an employer-employee relationship between petitioner and respondentcorporation.
It is therefore apparent that petitioner is economically dependent on respondent-corporation for
her continued employment in the latters line of business.

24. SUNRIPE COCONUT PRODUCTS CO., INC petitioner, vs.THE COURT OF INDUSTRIAL
RELATIONS and SUNSHINE COCONUT WORKERS' UNION (CLO), respondents.
G.R. No. L-2009
April 30, 1949
PARAS, J.:
This is an appeal from a decision of the Court of Industrial Relation holding that the parers and "shellers" of
the petitioner Sunshine Coconut Products Co., Inc., are its laborers entitled to twelve days sick leave (one
day for each month of service), notwithstanding the fact that they are piece-workers under the pakiao
system. The contention of the petitioner is that said "parer" and "shellers" are independent contractors and
do not fall within the category of employees or laborers.
The Court of Industrial Relation has relied upon the rule laid down in the case of Philadelphia Record
Company, 69 N.L.R.B., 1232 (1946), to the effect that when a worker possesses some attributes of an

employee and others off an independent contractor which make him fall within an intermediate area he
may be classified under the category off an employee when the economic factsof the relation make it more
nearly one of employment than one of independent business enterprise with to the ends sought to be
accomplished. Counsel for the petitioner does not dispute the correctness or applicability of the rule but it
is vigorously contended that in the case at bar the economic facts characteristic of the independent
contractor far outweigh the economic facts indicative of an employee. We are not called upon to rule on
the accuracyof petitioner's contention since the conclusion of the Court of Industrial relation on the matter
is binding this Court. In other word the ruling that the "parers" and "shellers" have the status of employee
or laborers carries the factual verdict that economic facts showing such status outweigh those indicative of
an independent contractor. Some facts expressly invoked by the Court of Industrial Relations are: That the
"parers" and "shellers" work under some degree of control or supervision of the company if not under its
absolute direction; that said " parers" and "shellers" form stable groups composed of matured men and
women who regularly work at shelling and paring nuts that for the most part they depend on their work in
the Sunripe Coconut Products Co., Inc. For their livelihood; that they are admittedly working in the factory
of said company alongside person who are indisputably employed by said company. As already stated
whether these specific facts are outweighed as contended by the petitioner by facts demonstrative of the
status of an independent contractor is a question decided adversely to the petitioner when the Court of
Industrial Relations held that the "parers" and "shellers" are laborers or employees.
It is also pretended for the petitioner for the petitioner that the Court of Industrial Relations departed from
the definition of the word "employee" or "laborer" found in the Workmen's Compensation Law namely: "
'Laborer' is used as a synonym off employee,' and it means every person who has entered the
employment of or works under a service or apprenticeship contract for an employer. . . ." (Section 39 [b],
Workmen's Compensation Law as amended.) The Court of Industrial relation of course adverted to the
following definition; "An employee is any person in the service of another under a contract for hire express
or implied oral or written. " (Section 7, Labor Union by Dangle and Scriber, p. 7, citing McDermott's Case,
283 Mass. 74; Werner vs. Industrial Comm., 212 Wis., 76) In essence however the ruling of the Court of
Industrial Relation does not run counter to the definition given in the Workmen's Compensation Law.
Counsel for the petitioner have stressed the argument that the principal test in determining whether a
worker is an employee or an independent contractor is the employer's right of control over the work and
not merely the right to control the result it being intimated that the "parers" and shellers" are controlled by
the petitioner only to the extent "that the nut are pared whole or that there is not much meat wasted." Even
under the criterion adopted by the petitioner it would not be amiss to state thatthe requirement imposed on
the "parers" and "shellers" to the effect that the nuts are pared whole or that there is not much meat
wasted," in effect limits or that there is not much meat wasted," in effect limits or controls the means or
details by which said workers are to accomplish their services.It is inconceivable that the "parers " and
"shellers" in order to meet the requirement of the petitioners would not follow a uniform standard in the
performance of their work.
Petitioner also insists that the "parers" and "shellers" are piece-workers under the "pakiao" system. In
answer, suffice it to observe that Commonwealth Act No. 103, as amended expressly provides that "A
minimum wage or share shall be determined and fixed for laborers working by the hour day or month or by
piece-work and for tenants sharing in the crop or paid by measurement unit. . . ." (Section 5.) The organic
law of the Court of Industrial Relation therefore even orders that laborers may be paid by piece-work; and
the facts that the "parers" and shellers" are paid a fixed amount for a fixed number of nuts pared or shelled
does not certainly take them out of the purview of Commonwealth Act No. 103.

It is unnecessary to discuss at length the other facts pointed out by the petitioner in support of the
proposition that said "parers" and shellers" are independent contractors, because a ruling on the matter
would necessarily involve a factual inquiry which we are not authorized to makeEven so we would
undertake to advance the general remark that inn cases of this kind wherein laborers are usually
compelled to work under condition and term dictated by the employer a reasonably wide latitude of action
and judgment should be given to the Court of Industrial Relations with a view to settling industrial disputes
conformably to the intents and purposes of its organic law. Without in the least intimating that the relation
between the "parers" and "shellers" on the one hand and the petitioner on the other as planned out by the
latter was conceived knowingly to deprive said workersof the benefits accruing to workers who are
admittedly employees or laborersunder Commonwealth Act No. 103 or the Workmen's Compensation law
it is not difficult to surmise that a contrary decision is likely to set a precedent that may tend to encourage
the adoption of a similar scheme by many other or even all employers.
The appealed decision of the Court of Industrial Relations is therefore affirmed with costs against the
petitioner. So ordered.
25. Domasig vs. NLRC
G.R. No. 118101.
September 16, 1996
PADILLA, J.:
Facts:
Eddie Domasig was employed by respondent Cata Garments Corporation as Salesman since
July 6, 1986. He received a monthly salary of 1500 a month plus commission. In August 29, 1992
respondent company dismissed petitioner based on an allegation that he was being pirated by competitor
company but was declined by the petitioner. Respondent company denied that petitioner was its regular
employee; instead it tried to prove that petitioner was only a commission agent who receives a commission
of 5.00 per article sold and 2.50 on bargain price. To support the claim, company presented the list of
Sales Collections, Computation of Commission due, expenses incurred, cash advances received for the
month of January and March 1992.On the other hand, petitioner presented the company ID issued to him
by respondent company and the cash vouchers to prove that he receives a monthly salary. The labor
arbiter decided in favor of petitioner, but was set aside by NLRC declaring that there was no sufficient
evidence presented to prove the presence of employer-employee relationship, thus Labor Arbiters
decision was not supported by evidence. It ordered that the case be reverted to the arbitration branch of
origin for further proceeding.
Issue:
Whether or not there is an employer-employee relationship between petitioner and respondent.
Held:
In the case at bar respondent NLRC was not convinced that the evidence presented by the
petitioner, consisting of the identification card issued to him by private respondent corporation and the
cash vouchers reflecting his monthly salaries covering the months stated therein, settled the issue of
employer-employee relationship between private respondents and petitioner. It has long been established

that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for
judgment on the existence of employer-employee relationship. No particular form of evidence is required is
required to prove the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted.
Substantial evidence has been defined to be such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion. In a business establishment, an identification card is
usually provided not only as a security measure but mainly to identify the holder thereof as a bonafide
employee of the firm that issues it. Together with the cash vouchers covering petitioner's salaries for the
months stated therein, we agree with the labor arbiter that these matters constitute substantial evidence
adequate to support a conclusion that petitioner was indeed an employee of private respondent. The list of
sales collection including computation of commissions due, expenses incurred and cash advances
received (Exhibits "B" and "B-1") which, according to public respondent, the labor arbiter failed to
appreciate in support of private respondents allegation as regards the nature of petitioner's employment
as a commission agent, cannot overcome the evidence of the ID card and salary vouchers presented
petitioner which private respondents have not denied.
The list presented by private respondents would even support petitioner's allegations that, aside
from a monthly salary of P1, 500.00, he also received commissions for his work as a salesman of private
respondents. Having been in the employ of private respondents continuously for more than one year,
under the law, petitioner is considered a regular employee. Proof beyond reasonable doubt is not required
as a basis for judgment on the legality of an employer's dismissal of an employee, nor even
preponderance of evidence for that matter, substantial evidence being sufficient. Labor Arbiter's decision
on the presence of employer-employee relationship is supported by substantial evidence. On the issue of
dismissal, it was indeed, illegal as it was not supported by any valid basis. Respondent did not deny the
allegation that the sole basis of the dismissal was the allege enticement of other employer to work with
them. Labor Arbiter was reinstated with modifications on the computation of monetary claims.

26. ZAMUDIO VS. NLRC

GR NO. 76723
March 25, 1990
March 25, 1990
Facts:
Petitioners rendered services essential for the cultivation of respondents farm. While the
services were not continuous in the sense that they were not rendered everyday throughout the year, as is
the nature of farm work, petitioners had never stopped working for respondent from year to year from the
time he hired them to the time he dismissed.
Issue:

Are the petitioners considered as employees?

Ruling:
The nature of their employment, i.e. Pakyao basis, does not make petitioner independent
contractors. Pakyao workers are considered employees as long as the employer exercises control over the
means by which such workers are to perform their work inside private respondents farm, the latter
necessarily exercised control over the performed by petitioners.
The seasonal nature of petitioners work does not detract from the conclusion that employer
employee relationship exits. Seasonal workers whose work is not merely for the duration of the season,
but who are rehired every working season are considered regular employees. The circumstances that
petitioners do not apears in respondents payroll does not destroy the employer employee relationship
between them. Omission of petitioners in the payroll was not within their control, they had no hand in the
preparation of the payroll. This circumstance, even if true, cannot be taken against petitioners.

27. Efren P. Paguio v. NLRC, Metromedia Times Corporation, Robina Y. Gokongwei, Liberto Gomez,
Jr., Yolanda E. Aragon, Frederick D. Go, and Alda Iglesia
May 9, 2003 G.R. No. 147816
Vitug, J.:
Facts:
On 22 June, 1992, respondent Metro Media Times Corporation entered into an agreement with
petitioner, Efren P. Paguio, appointing the latter to be an account executive of the firm. The petitioner was
to solicit advertisements for the Manila Times, a newspaper published by the respondent company.
On 15 August, 1992, barely two months after the renewal of his contract, petitioner received a
notice of termination from the respondent firm. There was no given definite cause for the petitioners
termination. Aggrieved, Paguio filed a case before the labor arbiter, asking that his dismissal be declared
unlawful and prayed that respondent company officials be held accountable for acts of unfair labor
practices, P500,000.0 moral damages, and for P20,000.0 exemplary damages.
The Labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered
respondent company and its officers to reinstate Paguio to his former position and to pay him his
commissions and other remunerations. He likewise adjudged that the general manager of the respondent
corporation be held liable to Paguio for moral damages in the amount of P20, 000.
On appeal, NLRC reversed the ruling of the labor arbiter and declared the contractual
relationship between the parties as a fixed-term employment.
Petitioner Paguio appealed the ruling of the NLRC before the Court of Appeals.
Issues:
Whether or not there is an employer-employee relationship, petitioners contract with private
respondent company is for a fixed period and whether or not petitioners dismissal is legal.
Held:
As defined in Article 280 of the Labor Code, a regular employee is one who is engaged to
perform activities which are necessary and desirable in the usual business or trade of the employer as
against those which are undertaken for a specific project or are seasonal. Even in these latter cases,
where such person has rendered at least one year of service, regardless of the nature of the activity
performed or of whether it is continuous or intermittent, the employment is considered regular as long as
the activity exists, it not being indispensable that he be first issued a regular appointment or be formally
declared as such before acquiring a regular status.
The law in defining their contractual relationship, does not necessarily or exclusively upon the
terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been
called upon to perform.

A lawful dismissal must meet both substantive and procedural requirements; in fine, the
dismissal must be for a just or authorized cause and must comply with the rudimentary due process of
notice and hearing. It is not shown that respondent company has fully bothered itself with either of these
requirements in terminating the services of petitioner. The notice of termination recites no valid or just
cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard
in his defense.
28. FEATI UNIVERSITY V. BAUTISTA
G.R. No. L-21278
ZALDIVAR, J.

consequently, the Rules of Court and not Republic Act No. 875 applied to the matter of injunction.
Thereupon the petition under consideration was filed.
Issue:
Whether or not there is an employer-employee relationship existing from a daily rental basis company?
Held:
In the case of Isabelo Doce vs. Workmen's Compensation Commission, et al. (G.R. No. L-9417, December
22, 1958), upon a similar if not an altogether identical set of facts, We held:
"The only features that would make the relationship of lessor and lessee between the respondent, owner
of the jeeps, and the drivers, members of the petitioner union, are the fact that he does not pay them any
fixed wage but their compensation is the excess of the total amount of fares earned or collected by them
over and above the amount of P7.50 which they agreed to pay to the respondent, and the fact that the
gasoline burned by the jeeps is for the account of the drivers. These two features are not, however,
sufficient to withdraw the relationship, between them from that of employer-employee, because the
estimated earnings for fares must be over and above the amount they agreed to pay to the respondent for
a ten-hour shift or ten-hour a day operation of the jeeps. Not having any interest in the business because
they did not invest anything in the acquisition of the jeeps and did not participate in the management
thereof, their service as drivers of the jeeps being their only contribution to the business, the relationship of
lessor and lessee cannot be sustained."

29. CITIZENS' LEAGUE OF FREEWORKERS AND/OR BALBINO EPIS, NICOLAS ROJO, ET AL. vs.
HON. MACAPANTON ABBAS, Judge of the Court of First Instance of Davao and TEOFILO
GERONIMO and EMERITA MENDEZ
G.R. No. L-21212
September 23, 1966
DIZON, J.:

Facts:
On March 11, 1963 the respondents filed a complaint to restrain the Citizens' League of Freeworkers, a
legitimate labor organization (referred to as union) from interfering in with the respondents auto-calesas
business in Davao and to recover damages from committing certain acts complained of in connection
therewith. The union members who were drivers of the said business, alleges that the defendants named
therein used to lease the auto-calesas of the spouses on a daily rental basis and that the same does not
recognize the union as their employees rather the petitioners were treated as lessees and refuses to
bargain with them. The union declared a strike on February 20, 1963, to which paralyzed plaintiffs'
business operations through threats, intimidation and violence. The writ was granted.
On March 18, 1963, petitioners filed a motion to declare the writ of preliminary injunction void on the
ground that the same had expired by virtue of Section 9 (d) of Republic Act 875. In his order of March 21,
1963, however, the respondent judge denied said motion on the ground that there was no employeremployee relationship between respondents-spouses and the individual petitioners herein and that,

30. JARDIN V. NLRC

G.R. No. 119268
February 23, 2000
QUISUMBING, J.
FACTS
1. Petitioners were drivers of respondent Philjama International Inc., a domestic corporation engaged in
the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day
on a 24-hour work schedule under the boundary system.
2. The petitioners earned an average of P400.00 daily from which respondent regularly deducts the
amount of P30.00 supposedly for the washing of the taxi units.
3. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and
interests.
4. Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their
taxicabs when they reported for work on August 6, 1991, and on succeeding days.
5. Petitioners suspected that they were singled out because they were the leaders and active members of
the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private
respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees.
6. The labor arbiter dismissed said complaint for lack of merit.

7. On appeal, the NLRC reversed and set aside the judgment of the labor arbiter. The labor tribunal
declared that petitioners are employees of private respondent, and, as such, their dismissal must be for
just cause and after due process.
8. Private respondent's second motion for reconsideration was granted and said court ruled that it lacks
jurisdiction over the case as petitioners and private respondent have no employer-employee relationship.
Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied.
Hence, the instant petition.
ISSUE
Whether or not employer-employee relationship exists between the petitioners and respondent Philjama
International, Inc.
HELD
YES. In the determination the existence of employer-employee relationship, the Supreme
Court has applied the following four-fold test: '(1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct.' Under
the control test, an employer-employee relationship exists if the 'employer' has reserved the right to control
the 'employee' not only as to the result of the work done but also as to the means and methods by which
the same is to be accomplished. Otherwise, no such relationship exists.
In a number of cases decided by this Court, we ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system is that of
employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses
complete control over the chattel leased although the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators
and jeepney drivers, the former exercise supervision and control over the latter. The management of the
business is in the owner's hands. The owner as holder of the certificate of public convenience must see to
it that the driver follows the route prescribed by the franchising authority and the rules promulgated as
regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess
of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship
between them from that of employer and employee. We have applied by analogy the above-stated
doctrine to the relationships between bus owner/operator and bus conductor, auto-calesa owner/operator
and driver, and recently between taxi owners/operators and taxi drivers. Hence, petitioners are
undoubtedly
31. MAKATI HABERDASHERY, INC. vs. NLRC
G.R. Nos. 83380-81
November 15, 1989
FERNAN, C.J.:
FACTS:
Individual complainants, private respondents herein, have been working for petitioner Makati
Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid
on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In
addition to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report
for work before 9:30 a.m. everyday.
ISSUE:
Whether there exists an employer-employee relationship.

HELD:
The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from
the operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor,
the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the
customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is
actively manifested in all these aspects the manner and quality of cutting, sewing and ironing.
It is evident in the memorandum, that the petitioner has reserved the right to control its employees not only
as to the result but also the means and methods by which the same are to be accomplished. That private
respondents are regular employees is further proven by the fact that they have to report for work regularly
from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for
work before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m.
32. Maraguinot v. NLRC
G.R. No. 120969.
January 22, 1998
DAVIDE, JR., J.:
FACTS:
Petitioner maintains that he was employed by respondents as part of the filming crew. He was
later promoted as an electrician. Petitioners tasks contained of loading movie equipment in the shoothing
area. Petitioners sought the assistance of their supervisor, Cesario, to facilitate their request that
respondents adjust their salary in accordance with the minimum wage law. Mrs. Cesario informed
petitioners that del Rosario would agree to increase their salary only if they signed a blank employment
contract. As petitioner refused to sign, respondents forced Enero (the other petitioner who worked as a
crew member) to go on leave. However, when he reported to work, respondent refused to take him back.
Maraguinot was dropped from the company payroll but when he returned, he was again asked to sign a
blank employment contract, and when he still refused, respondents terminated his services. Petitioners
thus sued for illegal dismissal.
Private respondents assert that they contract persons called producers to produce or make
movies for private respondents and contend that petitioners are project employees of the associate
producers, who act as independent contractors. Thus, there is no ER-EE relationship.
However, petitioners cited that their performance of activities is necessary in the usual trade or
business of respondents and their work in continuous.
ISSUE:
W/N ER-EE relationship exists
HELD:
Yes.
With regards to VIVAs contention that it does not make movies but merely distributes motion pictures,
there is no sufficient proof to prove this contention.
In respect to respondents allegation that petitioners are project employees, it is a settled rule that the
contracting out of labor is allowed only in case of job contracting. However, assuming that the associate
producers are job contactors, they must then be engaged in the business of making motion pictures.

Associate producers must have tools necessary to make motion pictures. However, the associate
producers in this case have none of these. The movie-making equipment are supplied to the producers
and owned by VIVA. Thus, it is clear that the associate producer merely leases the equipment from VIVA.

Customs Patrol Service, a Government agency under the exclusive control of the Commissioner of
Customs and the Secretary of Finance The Manila Terminal Relief and Mutual Aid Association will
hereafter be referred to as the Association.

In addition, the associate producers of VIVA cannot be considered labor-only contractors as they did not
supply, recruit nor hire the workers. It was Cesario, the Shooting Supervisor of VIVA, who recruited crew
members. Thus, the relationship between VIVA and its producers or associate producers seems to be that
of agency.

Judge V. Jimenez Yanson of the CIR in his decision ordered the petitioner to pay to its police force but
regards to overtime service after the watchmen had been integrated into the Manila Harbor Police, the has
no jurisdiction because it affects the Bureau of Customs, an instrumentality of the Government having no
independent personality and which cannot be sued without the consent of the State.

With regards to the issue of illegal dismissal, petitioners assert that they were regular employees who were
illegally dismissed. Petitioners in this case had already attained the status of regular employees in view of
VIVAs conduct. Thus, petitioners are entitled to back wages.

The petitioner filed a motion for reconsideration. The Association also filed a motion for reconsideration in
so far its other demands were dismissed. Both resolutions were denied.

A project employee or a member of a work pool may acquire the status of a regular employee when:
a.
b.

there is a continuous rehiring of project employees even after a cessation of project

the tasks performed by the alleged project employee are vital and necessary to the
business of employer

The public respondent decision was to pay the private respondents their overtime on regular days at the
regular rate and additional amount of 25 percent, overtime on Sundays and legal holidays at the regular
rate only, and watchmen are not entitled to night differential pay for past services. The petitioner has filed a
present petition for certiorari.
ISSUES:
1.) Whether or not the CIR has no jurisdiction to render a money judgment involving obligation in arrears?

The tasks of petitioners in loading movie equipment and returning it to VIVAs warehouse and fixing the
lighting system were vital, necessary and indispensable to the usual business or trade of the employer.

2.) Whether or not the agreement under which its police force were paid certain specific wages for twelvehour shifts, included overtime compensation.

Wherefore, petition is granted.

33. MANILA TERMINAL CO. INC. v. CIR
G.R. No. L-4148 J
uly 16, 1952
Ponente: PARAS, C. J.:

3.) Whether or not the nullity or invalidity of the employment contract precludes any recovery by the
Association.
4.) Whether or not the Commonwealth Act No. 4444 does not authorize recovery of back overtime pay.
HELD:

FACTS:
Manila Terminal Company, Inc. undertook the arrastre service in some of the piers in Manila's Port Area at
the request and under the control of the United States Army. The petitioner hired some thirty men as
watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per day for the
night shift.
The watchmen of the petitioner continued in the service with a number of substitutions and additions, their
salaries having been raised during the month of February to P4 per day for the day shift and P6.25 per day
for the nightshift. The private respondent sent a letter to Department of Labor requesting that the matter of
overtime pay be investigated. But nothing was done by the Dept of Labor.
Later on, the petitioner instituted the system of strict eight-hour shifts.
The private respondent filed an amended petition with the CIR praying, among others, that the petitioner
be ordered to pay its watchmen or police force overtime pay from the commencement of their employment.
By virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President of the
Philippines, the entire police force of the petitioner was consolidated with the Manila Harbor Police of the

he Supreme Court affirmed the appealed decision that the petitioner's watchmen is entitled to extra
compensation only from the dates they respectively entered the service of the petitioner, hereafter to be
duly determined by the Court of Industrial Relations.
1.) The Court of Industrial Relations has no jurisdiction to award a money judgment was already overruled
by this Court on the case of Detective & protective Bureau, Inc. vs. Court of Industrial Relations and United
Employees Welfare Association that under Commonwealth Act No. 103 the Court is empowered to make
the order for the purpose of settling disputes between the employer and employee.
2.) Based on the case of Detective & Protective Bureau, Inc. vs. Court of Industrial Relations and United
Employees Welfare Association, the law gives them the right to extra compensation. And they could not be
held to have impliedly waived such extra compensation, since it can not expressly be waived.
3.) The employee in rendering extra service at the request of his employer has a right to assume that the
latter has complied with the requirement of the law, and therefore has obtained the required permission
from the Department of Labor. This was based on the case of Gotamo Lumber Co. vs. Court of Industrial
Relations, wherein both parties are in pari delicto. Moreover, the Eight-Hour Law, in providing that "any

agreement or contract between the employer and the laborer or employee contrary to the provisions of this
Act shall be null avoid ab initio.

BENGZON, J.:

4.) Based on Fair Labor Standards Act of the United States which provides that "any employer who
violates the provisions of section 206 and section 207 of this title shall be liable to the employee or
employees affected in the amount of their unpaid minimum wages or their unpaid overtime compensation
as the case may be," a provision not incorporated in Commonwealth Act No. 444, our Eight-Hour Labor
Law.

The petitioner, a corporation organized and existing under our laws, complains of a decision, date July 9,
1948, of the respondent Court of Industrial Relations. It alleges:.

We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444 expressly
provides for the payment of extra compensation in cases where overtime services are required, with the
result that the employees or laborers are entitled to collect such extra compensation for past overtime
work. To hold otherwise would be to allow an employer to violate the law by simply, as in this case, failing
to provide for and pay overtime compensation.
34. MERCURY DRUG COMPANY INCORPORATED VS. NARDO DAYAO, ET AL.
G.R. No. L-30452
September 30, 1982
GUTIERREZ, JR., J.:
Facts:
Herein respondent, filed a petition against Mercury Drug Company, Incorporated contenting: 1)
payment of their unpaid back wages for work done on Sundays and legal holidays plus 25% additional
compensation from date of their employment up to June 30, 1962; 2) payment of the extra compensation
on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions
with back salaries; and as against the respondent union, for its disestablishment and the refund of all
monies it had collected from petitioners.
Mercury Drug is hereby ordered to pay the 69 petitioners another additional sum or premium
equivalent to 25% of their respective basic or regular salaries for nighttime services rendered from March
20, 1961 up to June 30, 1962. Hence, this petition.

(1) that the decision is contrary to law because such Court has no power to grant increases of wages
which are above the minimum fixed by it;
(2) that Marino Carillo as not dismissed for his union activities, but for negligence and misconduct;
(3) that the recovery of overtime pay for services rendered without any permit from the Secretary of Labor
is contrary to law; and .
(4) that the ruling of this Court in Montera vs. Court of Industrial Relations, 1 G. R. No. L-1340, has been
violated.
At the outset we may dismiss the second ground, because it involves a question of fact, and we have time
and again announced the proposition that we will not ordinarily revise the factual findings of the
respondent court.
Regarding the first point, it appears that on October 15, 1947, the National Labor Union submitted eight
demands to the management of the Gotamco Lumber Company. On October 20, the same Union filed with
the Court of Industrial Relations the same eight demands, and asserted that the failure of the Gotamco
Lumber Company to reply to their petition gave rise to an industrial dispute between said company and its
laborers, which was likely to cause a strike or lockout requiring the prompt intervention of the industrial
court. The pertinent demands were:

Issue:
Whether or not private respondents are entitled for nighttime work premiums although there is a
waiver of said claims and the total absence of evidence there on?
Held:
Yes. Work done at night should be paid more than work done at daytime, and that if that work is
done beyond the workers regular hours of duty, he should also be paid additional compensation for
overtime work; Ruling of C.I.R awarding additional pay for nighttime work is supported by evidence. No
additional evidence was necessary to prove that the private respondents were entitled to additional
compensation for whether or not they were entitled to the same is a question of law which the respondent
court answered correctly. The waiver rule does not apply in the case at bar. Additional compensation for
nighttime work is founded on public policy; hence the same cannot be waived. Petition is dismissed
35. GOTAMCO LUMBER COMPANY, petitioner, vs.THE COURT OF INDUSTRIAL RELATIONS and
NATIONAL LABOR UNION, respondents.
G.R. No. L-2569
January 13, 1950

1. That the company shall pay a minimum wage of P7 daily to its laborers and a general
increase of 20 per cent in the salaries and wages of those at present receiving more than this
minimum wage;
2. That all overtime work and all work done on Sunday and legal holidays be paid an additional
50 per cent and those who have heretofore rendered overtime work be immediately paid;
3. That all laborers and employees be given an annual vacation leave of 15 days with pay;
4. That in case of accident or illness the employees and laborers concerned be given free
hospitalization and paid their full salaries and wages during the period that they would be unable
to work;
After hearing the parties and their evidence, the Honorable Arsenio Roldan, Presiding Judge, in a carefully
prepared decision, citing facts and circumstances, reached the conclusion that the Gotamco Lumber

Company should be ordered, as it was ordered, to grant to all its laborers and employees the following
increases, effective October 21, 1947:
P5.50 a day as minimum wage for apprentice, extra, new, casual, unskilled or common laborer.
In other words, those receiving less than P5 each a day shall have their wages adjusted to
P5.50 each a day shall have their wages adjusted to P5.50 each a day.
Apprentices should not exceed 20 per cent of the total number of laborers employed. (Secs. 5,
6, Commonwealth Act No. 103, as amended.)
15 per cent increase for those who are receiving from P5 to P7 each a day.
10 per cent increase for these who are receiving above P7 each a day.

As a matter of fact in the last case, we upheld an order of the respondent court directing the transportation
company to grant its several employees, drivers, conductors and laborers an increase in wages at various
rates. We said, "there can be no doubt about the propriety (of the raises) since said court is impliedly
empowered to do so under section 20 of Commonwealth Act No. 103."
The decision now under review grants to all the workers and employees of the company "50 per cent
additional compensation for work performed in excess of eight hours a day including Sundays and legal
holidays effective October 21, 1947." The petitioner maintains that as the overtime work had been
performed without a permit from the Department of Labor, no extra compensation should be authorized.
Several decisions of this Court are invoked. But those decisions were based on the reasoning that "as both
the laborer and employer are duty bound" to secure the permit from the Department of Labor, both were in
pari delicto. However, the present law in effect imposes that duty upon the employer (Commonwealth Act
No. 444). Such employer may not therefore be heard to plead his own neglect as exemption or defense.
The employee, in rendering extra service at the request of his employer has a right to assume that the
latter has complied with the requirement s of the law, and therefore has obtained the required permission
from the Department of Labor.

For the monthly salaried employees:

15 per cent increase for those who are receiving more than P143 to P182 each a month. (P182
equivalent to P7 a day times 26 working days)

The fourth ground invoked by the petitioner is based on the alleged pendency before the Court of Industrial
Relations of another case No. 31-V between the Gotamco Lumber Company and the C.L.O. concerning
the demands of the same laborers involved in this expediente. It appearing that said case No. 31-V had
been stopped or withdrawn as of June 11, 1948, and that the decision of this case was rendered on July
11, 1948, and that the decision of this case was rendered on July 9, 1948, we fail to see any prejudicial
error.

10 per cent increase for these who are receiving above P182 each a month.

Wherefore, the appealed decision is affirmed, with costs. So ordered.

P143 a month, as minimum salary. (Equipment to P5.50 a day times 26 working days)

Explaining its first ground of complaint, the petitioner alleges that the respondent court fixed a minimum
wage, and ordered "a blanket increase of all salaries and wages which are far above the minimum fixed by
it." Petitioner wherefore contends that the respondent court has no power to order the increase of wages
which are above the minimum already prescribed by it. As applied to the decision, petitioner argues, in
effect, that after fixing P5.50 as minimum, the respondent court could not further decree an increase of 15
percent to those receiving from P5 to P7 per day, and an increase of 10 percent to those receiving more
than P7 a day.
It must be noted that the P5.50 minimum wage is given to apprentices, new, unskilled laborers, etc.,
whereas the additional 15 per cent and 10 per cent is awarded to other kinds of laborers (obviously the
skilled ones). In effect the court was fixing another minimum wage for those receiving more than P5 a day
(the skilled workers). So that granting, for the sake of argument that the respondent court may not go
beyond fixing a minimum wage, what it performed in this instance was nothing more than fixing minimum
wages for different kinds of laborers. Anyway we have already held in Caltex (Philippines), Inc., vs.
National Labor Union, L-1412, 81 Phil., 331, that in case there is a dispute as to salaries or wages
between an industrial or commercial establishment and its laborers, the Court of Industrial Relations has,
by law, the power to fix just and reasonable wages, in order to peacefully solve the dispute and avoid the
calamitous effects of a strike. (The Shell Company of the Philippines, Limited vs. National Labor Union, L1309, 81 Phil., 315.) (See also Leyte Land Transportation vs. Leyte Farmers' & Laborers' Union, L-1377,
80 Phil., 840.)

36. SAN MIGUEL BREWERY V. DEMOCRATIC LABOR ORGANIZATION

G.R. No. L-18353
July 31, 1963
BAUTISTA, J.
FACTS
1. The Democratic Labor Association filed a complaint against the San Miguel Brewery, Inc., embodying
12 demands for the betterment of the conditions of employment of its members.
2. The company filed its answer to the complaint specifically denying its material averments and answering
the demands point by point. The company asked for the dismissal of the complaint.
3. During the hearing, the union manifested its desire to confine its claim to its demands for overtime,
night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service
rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation
leave compensation.

4. After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was
commissioned to receive the evidence, rendered decision expressing his disposition with regard to the
points embodied in the complaint on which evidence was presented.
5. The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment
of accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation
pay, were either dismissed, denied, or set aside.

Facts:

On October 30, 1984 Wage Order No. 6 mandated an increased in the cost-of-living allowance of
non-agricultural workers in the private sector for P3.00. The order was complied by the petitioner
Corporation by multiplying the same by 22 days, equivalent to the number of working days in the company.

6. Its motion for reconsideration having been denied by the industrial court en bane, which affirmed the
decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present
petition for review.

Respondent union alleges that instead of multiplying the COLA by 22 it should be multiplied by 30
representing the number of days in a month, as what the corporation's normal practice prior to the said
Wage Order. Thus the union filed a complaint against the Corporation for for illegal deduction,
underpayment, unpaid allowances, and violation of Wage Order No. 6.

ISSUE

Issue:

Whether or not outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law.

Whether or not COLA under Wage Order No. 6 should be multiplied by 22 or 30 representing the number
of working days in a month.

HELD

Held:

NO. After the morning roll call, the employees leave the plant of the company to go on their respective
sales routes and they do not have a daily time record but the sales routes are so planned that they can be
completed within 8 hours at most, and they receive monthly salaries and sales commission in variable
amounts, so that they are made to work beyond the required eight hours similar to piecework, "pakiao", or
commission basis regardless of the time employed, and the employees' participation depends on their
industry, it is held that the Eight-Hour Labor Law has no application to said outside or field sales personnel
and that they are not entitled to overtime pay.

Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that
since the individual petitioners acted in their corporate capacity they should not have been impleaded; and
that the monthly COLA should be computed on the basis of twenty two (22) days, since the evidence
showed that there are only 22 paid days in a month for monthly-paid employees in the company. His
reasoning, inter alia, was as follows:

The Court is in the opinion that the Eight-Hour Labor Law only has application where an employee or
laborer is paid in a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he
is made to work beyond the requisite period of 8 hours, he should be paid the additional compensation
prescribed by law. This law has no application when the employee or laborer is paid on a piece-work,
"pakiao", or commission basis, regardless of the time employed. The philosophy behind this exemption is
that his earnings are in the form of commission based on the gross receipts of the day. His participation
depends upon his industry so that the more hours he employs in the work the greater are his gross returns
and the higher his commission There are no restrictions respecting the time he shall work and he can earn
as much or as little, within the range of his ability, as his ambition dictates.
In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his
employer's place of business, is not subject to the personal supervision of his employer, and his employer
has no way of knowing the number of hours he works per day.
37. GLOBE MACKAY CABLE AND RADIO CORPORATION VS. NLRC, FFW- GLOBE MACKAY
EMPLOYEES UNION
G.R. NO. 74156.
JUNE 29, 1988.
MELENCIO- HERRERA, J.

To compel the respondent company to use 30 days in a month to compute the allowance and
retain 22 days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably
unjust. If 30 days is used as divisor, then it must be used for the computation of all benefits, not just the
allowance. But this is not fair to complainants, not to mention that it will contravene the provision of the
parties' CBA.
Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:
Section 5. Allowance for Unworked Days.
All covered employees shall be entitled to their daily living allowance during the days that they are paid
their basic wage, even if unworked. (Emphasis supplied)
It is evident that the intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we
have the principle of 'No Pay, No ECOLA.
38. Manila Water Co., vs Pena
G.R. 158255
July 8, 2004

YNARES-SANTIAGO, J.:
FACTS:
Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the
Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the
East Zone of Metro Manila. Under the Concession Agreement, petitioner undertook to absorb former
employees of the MWSS whose names and positions were in the list furnished by the latter, while the
employment of those not in the list was terminated. Private respondents, being contractual collectors of the
MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged their
services without written contract for three months. Before the end of the three-month contract, the 121
collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by petitioner
to collect charges for the Balara Branch. Subsequently, most of the 121 collectors were asked by the
petitioner to transfer to the First Classic Courier Services, a newly registered corporation. Only private
respondents remained with ACGI. Private respondents filed a complaint for illegal dismissal and money
claims against petitioner, contending that they were petitioners employees as all the methods and
procedures of their collections were controlled by the latter.
Petitioner on the other hand asserts that private respondents were employees of ACGI, an independent
contractor. It maintained that it had no control and supervision over private respondents manner of
performing their work except as to the results. Thus, petitioner did not have an employer-employee
relationship with the private respondents, but only a service contractor-client relationship with ACGI.

methods and distribution of books to the collectors; it required private respondents to report daily and to
remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine
Islands; it monitored strictly their attendance as when a collector cannot perform his daily collection, he
must notify petitioner or the branch office in the morning of the day that he will be absent; and although it
was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated by
petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private
respondents. These are indications that ACGI was not left alone in the supervision and control of its
alleged employees. Consequently, it can be concluded that ACGI was not an independent contractor
since it did not carry a distinct business free from the control and supervision of petitioner.
Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such,
is considered merely an agent of the petitioner. In labor-only contracting, the statute creates an employeremployee relationship for a comprehensive purpose: to prevent a 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. Since ACGI is only a labor-only contractor, the workers it supplied should be considered as
employees of the petitioner.
39. Neri vs NLRC
G.R. Nos. 97008-09
July 23, 1993
BELLOSILLO, J.:

ISSUE: Whether or not ACGI is an independent contractor;

HELD: ACGI is an independent contractor but a labor- only contractor.
First, ACGI does not have substantial capitalization or investment in the form of tools, equipment,
machineries, work premises, and other materials, to qualify as an independent contractor. While it has an
authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered
substantial capitalization. The 121 collectors subscribed to four shares each and paid only the amount of
P625.00 in order to comply with the incorporation requirements. Further, private respondents reported
daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the
corporate address of ACGI was the residence of its president, Mr. Herminio D. Pea. Moreover, in dealing
with the consumers, private respondents used the receipts and identification cards issued by petitioner.
Second, the work of the private respondents was directly related to the principal business or operation of
the petitioner. Being in the business of providing water to the consumers in the East Zone, the collection
of the charges therefore by private respondents for the petitioner can only be categorized as clearly related
to, and in the pursuit of the latters business. Lastly, ACGI did not carry on an independent business or
undertake the performance of its service contract according to its own manner and method, free from the
control and supervision of its principal, petitioner. Prior to private respondents alleged employment with
ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner
and method of performing their tasks. This form of control and supervision never changed although they
were already under the seeming employ of ACGI. Petitioner issued memoranda regarding the billing

FACTS:
Petitioners instituted complaints against FAR EAST BANK & TRUST COMPANY (FEBTC) and BUILDING
CARE CORPORATION (BCC) to compel the bank to accept them as regular employees and for it to pay
the differential between the wages being paid them by BCC and those received by FEBTC employees with
similar length of service. They contended that BCC in engaged in labor-only contracting because it failed to
adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work
premises and other materials which are necessary in the conduct of its business. Moreover, petitioners
argue that they perform duties which are directly related to the principal business or operation of FEBTC.
ISSUE:
Whether or not BCC was engaged in labor-only contracting.
HELD:
It is well-settled that there is labor-only contracting where: (a) the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others; and, (b) the workers recruited and placed by such person are performing
activities which are directly related to the principal business of the employer.
BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises,
among others, because it has established that it has sufficient capitalization. This fact was both determined

by the Labor Arbiter and the NLRC as BCC had a capital stock of P1 million fully subscribed and paid for.
BCC is therefore a highly capitalized venture and cannot be deemed engaged in labor-only contracting.