CASE DIGEST
reinstatement > Sonza does not apply in
1. FUJI v ESPIRITU
FACTS: (2005) Arlene Espiritu worked as news
correspondent/producer for Fuji in its Manila
bureau. Her employment contract was initially
for one year, but was successively renewed on a
yearly basis with salary adjustments upon every
renewal.
In January 2009, Arlene was diagnosed with
lung cancer. She informed Fuji about her
condition, and the Chief of News Agency of Fuji,
Yoshiki Aoki, informed the former that the
company had a problem with renewing her
contract considering her condition. Arlene
insisted she was still fit to work as certified by
her attending physician.
After a series of verbal and written
communications, Arlene and Fuji signed a
non-renewal contract. In consideration
thereof, Arlene acknowledged the receipt of
the total amount of her salary from March-
May 2009, year-end bonus, mid-year bonus
and separation pay. However, Arlene
executed the non-renewal contract under
protest. (SIGNED WITH INITIALS “UP”
Arlene filed a complaint for illegal dismissal
with the NCR Arbitration Branch of the NLRC,
alleging that she was forced to sign the non-
renewal contract after Fuji came to know of
her illness. She also alleged that Fuji withheld
her salaries and other benefits when she
refused to sign, and that she was left with no
other recourse but to sign the non-renewal
contract to get her salaries.
LA- dismissed CITING SONZA case. > IC
NLRC- reversed> a regular employee with
respect to the activities for which she was
employed since she continuously rendered
services that were deemed necessary and
desirable to Fuji’s business
CA- AFFIRMED NLRC with modification for
order to establish that Arlene was an
independent contractor because she was not
contracted on account of any peculiar ability,
special talent, or skill
HENCE, this petition under RULE 45.
RULING: AN EMPLOYEE
- Art. 280. Regular and casual
employment.
- Art. 160
- In Orozco v. Court of Appeals,
Wilhelmina Orozco was a columnist
for the Philippine Daily Inquirer. This
court ruled that she was an
independent contractor because of
her “talent, skill, experience, and her
unique viewpoint as a feminist
advocate.”
1. Arlene was not an independent
contractor.
Fuji alleged that Arlene was an independent
contractor citing the Sonza case. She was
hired because of her skills. Her salary was
higher than the normal rate. She had the
power to bargain with her employer. Her
contract was for a fixed term. It also stated
that Arlene was not forced to sign the non-
renewal agreement, considering that she
sent an email with another version of her
non-renewal agreement.
Arlene argued (1) that she was a regular
employee because Fuji had control and
supervision over her work; (2) that she based
her work on instructions from Fuji; (3) that
the successive renewal of her contracts for
four years indicated that her work was
necessary and desirable; (4) that the
payment of separation pay indicated that she
was a regular employee; (5) that the Sonza
case is not applicable because she was a plain II. Independent Contractor
reporter for Fuji; (6) that her illness was not a
One who carries on a distinct and
ground for her dismissal; (7) that she signed
independent business and undertakes to
the non-renewal agreement because she was
perform the job, work, or service on its own
not in a position to reject the same.
account and under one’s own responsibility
Distinctions among fixed-term employees, according to one’s own manner and method,
independent contractors, and regular free from the control and direction of the
employees principal in all matters connected with the
performance of the work except as to the
I. Fixed Term Employment
results thereof.
1) The fixed period of employment was
No employer-employee relationship exists
knowingly and voluntarily agreed upon by the
between the independent contractors and
parties without any force, duress, or
their principals.
improper pressure being brought to bear
upon the employee and absent any other Art. 106. Contractor or subcontractor.
circumstances vitiating his consent; or Whenever an employer enters into a contract
with another person for the performance of
2) It satisfactorily appears that the employer
the former’s work, the employees of the
and the employee dealt with each other on
contractor and of the latter’s subcontractor,
more or less equal terms with no moral
if any, shall be paid in accordance with the
dominance exercised by the former or the
provisions of this Code.
latter.
The Secretary of Labor and Employment may,
These indications, which must be read
by appropriate regulations, restrict or
together, make the Brent doctrine applicable
prohibit the contracting-out of labor to
only in a few special cases wherein the
protect the rights of workers established
employer and employee are on more or less
under this Code. In so prohibiting or
in equal footing in entering into the contract.
restricting, he may make appropriate
The reason for this is evident: when a
distinctions between labor-only contracting
prospective employee, on account of special
and job contracting as well as differentiations
skills or market forces, is in a position to make
within these types of contracting and
demands upon the prospective employer,
determine who among the parties involved
such prospective employee needs less
shall be considered the employer for
protection than the ordinary worker. Lesser
purposes of this Code, to prevent any
limitations on the parties’ freedom of
violation or circumvention of any provision of
contract are thus required for the protection
this Code.
of the employee. (Citations omitted)
There is “labor-only” contracting where the
For as long as the guidelines laid down in
person supplying workers to an employer
Brent are satisfied, this court will recognize
does not have substantial capital or
the validity of the fixed-term contract. (GMA
investment in the form of tools, equipment,
Network, Inc. vs. Pabriga)
machineries, work premises, among others,
and the workers recruited and placed by such
person are performing activities which are
directly related to the principal business of and talents that set them apart from ordinary
such employer. In such cases, the person or employees.
intermediary shall be considered merely as
Since no employer-employee relationship
an agent of the employer who shall be
exists between independent contractors and
responsible to the workers in the same
their principals, their contracts are governed
manner and extent as if the latter were
by the Civil Code provisions on contracts and
directly employed by him.
other applicable laws.
Department Order No. 18-A, Series of 2011,
III. Regular Employees
Section 3
Contracts of employment are different and
© . . . an arrangement whereby a principal
have a higher level of regulation because
agrees to put out or farm out with a
they are impressed with public interest.
contractor the performance or completion of
Article 13, Section 3 of the 1987 Constitution
a specific job, work or service within a
provides full protection to labor.
definite or predetermined period, regardless
of whether such job, work or service is to be Apart from the Constitutional guarantee,
performed or completed within or outside Article 1700 of the Civil Code states that: The
the premises of the principal. relations between capital and labor are not
merely contractual. They are so impressed
This department order also states that there
with public interest that labor contracts must
is a trilateral relationship in legitimate job
yield to the common good. Therefore, such
contracting and subcontracting
contracts are subject to the special laws on
arrangements among the principal,
labor unions, collective bargaining, strikes
contractor, and employees of the contractor.
and lockouts, closed shop, wages, working
There is no employer-employee relationship
conditions, hours of labor and similar
between the contractor and principal who
subjects.
engages the contractor’s services, but there
is an employer-employee relationship The level of protection to labor should vary
between the contractor and workers hired to from case to case. When a prospective
accomplish the work for the principal. employee, on account of special skills or
market forces, is in a position to make
Jurisprudence has recognized another kind
demands upon the prospective employer,
of independent contractor: individuals with
such prospective employee needs less
unique skills and talents that set them apart
protection than the ordinary worker.
from ordinary employees. There is no
trilateral relationship in this case because the The level of protection to labor must be
independent contractor himself or herself determined on the basis of the nature of the
performs the work for the principal. In other work, qualifications of the employee, and
words, the relationship is bilateral. other relevant circumstances such as but not
limited to educational attainment and other
XXX
special qualifications.
There are different kinds of independent
Fuji’s argument that Arlene was an
contractors: those engaged in legitimate job
independent contractor under a fixed-term
contracting and those who have unique skills
contract is contradictory. Employees under
fixed-term contracts cannot be independent
contractors because in fixed-term contracts,
an employer-employee relationship exists.
The test in this kind of contract is not the
necessity and desirability of the employee’s
activities, “but the day certain agreed upon
by the parties for the commencement and
termination of the employment
relationship.” For regular employees, the
necessity and desirability of their work in the
usual course of the employer’s business are
the determining factors. On the other hand,
independent contractors do not have
employer-employee relationships with their
principals.
To determine the status of employment, the
existence of employer-employee relationship
must first be settled with the use of the four-
fold test, especially the qualifications for the
power to control.
The distinction is in this guise:
Rules that merely serve as guidelines towards
the achievement of a mutually desired result
without dictating the means or methods to
be employed creates no employer-employee
relationship; whereas those that control or
fix the methodology and bind or restrict the
party hired to the use of such means creates
the relationship.
In application, Arlene was hired by Fuji as a
news producer, but there was no evidence
that she was hired for her unique skills that
would distinguish her from ordinary
employees. Her monthly salary appeared to
be a substantial sum. Fuji had the power to
dismiss Arlene, as provided for in her
employment contract. The contract also
indicated that Fuji had control over her work
as she was required to report for 8 hours
from Monday to Friday. Fuji gave her
instructions on what to report and even her
mode of transportation in carrying out her
functions was controlled.
Therefore, Arlene could not be an
independent contractor.
2. Arlene was a regular employee with a
fixed-term contract.
In determining whether an employment
should be considered regular or non-regular,
the applicable test is the reasonable
connection between the particular activity
performed by the employee in relation to the
usual business or trade of the employer. The
standard, supplied by the law itself, is
whether the work undertaken is necessary or
desirable in the usual business or trade of the
employer, a fact that can be assessed by
looking into the nature of the services
rendered and its relation to the general
scheme under which the business or trade is
pursued in the usual course.
However, there may be a situation where an
employee’s work is necessary but is not
always desirable in the usual course of
business of the employer. In this situation,
there is no regular employment.
Fuji’s Manila Bureau Office is a small unit213
and has a few employees. Arlene had to do
all activities related to news gathering.
The successive renewals of her contract
indicated the necessity and desirability of her
work in the usual course of Fuji’s business.
Because of this, Arlene had become a regular
employee with the right to security of tenure.
Arlene’s contract indicating a fixed term did
not automatically mean that she could never
be a regular employee. For as long as it was
the employee who requested, or bargained,
that the contract have a “definite date of
termination,” or that the fixed-term contract
be freely entered into by the employer and
the employee, then the validity of the fixed-
term contract will be upheld.
3. Arlene was illegally dismissed.
As a regular employee, Arlene was entitled to
security of tenure under Article 279 of the
Labor Code and could be dismissed only for
just or authorized causes and after
observance of due process.
The expiration of the contract does not
negate the finding of illegal dismissal. The
manner by which Fuji informed Arlene of
non-renewal through email a month after
she informed Fuji of her illness is tantamount
to constructive dismissal. Further, Arlene was
asked to sign a letter of resignation prepared
by Fuji. The existence of a fixed-term contract
should not mean that there can be no illegal
dismissal. Due process must still be observed.
Moreoever, disease as a ground for
termination under Article 284 of the Labor
Code and Book VI, Rule 1, Section 8 of the
Omnibus Rules Implementing the Labor Code
require two requirements to be complied
with: (1) the employee’s disease cannot be
cured within six months and his continued
employment is prohibited by law or
prejudicial to his health as well as to the
health of his co-employees; and (2)
certification issued by a competent public
health authority that even with proper
medical treatment, the disease cannot be
cured within six months. The burden of
proving compliance with these requisites is
on the employer. Non-compliance leads to
illegal dismissal.
Arlene was not accorded due process. After
informing her employer of her lung cancer,
she was not given the chance to present
medical certificates. Fuji immediately
concluded that Arlene could no longer
perform her duties because of
chemotherapy. Neither did it suggest for her
to take a leave. It did not present any
certificate from a competent public health
authority.
2. IMASEN v ALCON
Facts: Oct. 5, 2002: Respondents ALCON and
PAPA were discovered to have sexual
intercourse in the TOOL AND DIE section.
They were separately served with a
memoranda and claimed that they were
merely sleeping in the area and the alleged
act was impossible.
- FORMAL HEARING
- December 2002, IMASEN terminated
their services: the respondents guilty
of the act charged which it
considered as "gross misconduct
contrary to the existing policies, rules
and regulations of the company."
Respondents then filed before LA for ILLEGAL
DISMISSAL.
LA- DISMISSED for lack of merit
NLRC- AFFIRMED LA
CA- Nullified NLRC’s ruling> the penalty of
dismissal is not commensurate to the
respondents’ act, considering especially that
the respondents had not committed any
infraction in the past.
- The penalty of dismissal is not
commensurate to the respondents’
act, considering especially that the
respondents had not committed any
infraction in the past.
ISSUE: WHETHER the respondents’
infraction – engaging in sexual
intercourse inside company premises
during work hours – amounts to serious
misconduct within the terms of Article
 282 (now Article 296) of the Labor Code
justifying their dismissal.
RULING: YES. The respondents’ infraction
amounts to serious misconduct within the
terms of Article 282 (now Article296) of the
Labor Code justifying their dismissal
For misconduct or improper behavior to be a
just cause for dismissal, the following
elements must concur: (a) the misconduct
must be serious; (b) it must relate to the
performance of the employee’s duties
showing that the employee has become unfit
to continue working for the employer; and (c)
it must have been performed with wrongful
intent.
Indisputably, the respondents engaged in
sexual intercourse inside company premises
and during work hours. These circumstances,
by themselves, are already punishable
misconduct. Added to these considerations,
however, is the implication that the
respondents did not only disregard company
rules but flaunted their disregard in a manner
that could reflect adversely on the status of
ethics and morality in the company.
Additionally, the respondents engaged in
sexual intercourse in an area where co-
employees or other company personnel have
ready and available access. The respondents
likewise committed their act at a time when
the employees were expected to be and had,
in fact, been at their respective posts, and
when they themselves were supposed to be,
as all other employees had in fact been,
working.
The Court also considered the respondents’
misconduct to be of grave
and aggravated character so that the
company was justified in imposing the
highest penalty available ― dismissal.
Their infraction transgressed the bounds of
socially and morally accepted human public
behavior, and at the same time showed
brazen disregard for the respect that their
employer expected of them as employees. By
their misconduct, the respondents, in effect,
issued an open invitation for others to
commit the same infraction, with like
disregard for their employer’s rules, for the
respect owed to their employer, and for their
co-employees’ sensitivities.
3. FEATI v BAUTISTA
FACTS:
January 14, 1963, the President of Feati
University Faculty Club (PAFLU) wrote a letter to
Mrs. Victoria L. Araneta, President of Feati
University informing her that it registered as a
labor union. PAFLU sent another letter with 26
demands in relation to their employment and
requesting an answer within 10 days
from receipt thereof. Araneta answered the
letters, requesting that she be given at least 30
days to study thoroughly the different phases of
the demands. Meanwhile counsel for Feati,
wrote a letter to the President of PAFLU
demanding proof of its majority status and
designation as a bargaining representative. The
President of PAFLU rejected the extension of
time and filed a notice of strike with the Bureau
of Labor due to Feati’s refusal to bargain
collectively.
Parties were called to the Conciliation Division
of the Bureau of Labor but efforts to conciliate
them failed. On February 18, 1963, PAFLU
declared a strike and established picket lines in
the premises of Feati resulting in the disruption
of classes in the University.
The President of the Philippines certified to the
Court of Industrial Relations (CIR)
the dispute between Feati and PAFLU pursuant
to the provisions of Section 10 of Republic Act
No. 875.
3 cases were filed with the CIR
41-IPA – PAFLU’s petition to declare in contempt
of court since Feati refused to accept them back
to work in violation of the return-to-work order
of March 30, 1963 and has employed other
professors and/or instructors to take their
places. Also includes the motion to dismiss filed
by Feati contending that the CIR has no
jurisdiction over the case.
1183-MC – PAFLU’s petition for certification
election praying that it be certified as the sole
and exclusive bargaining representative. This
case was later withdrawn since the Case 41-IPA
had already been certified by the President to
the CIR and has absorbed the issues herein.
V-30 – PAFLU’s complaint for indirect contempt
of court filed against the administrative officials
of the Feati reiterating Case 41-IPA.
May 10, 1963: Feati filed before the SC a petition
for certiorari and prohibition with writ of
preliminary injunction which was issued upon
the Feati's filing a bond of P50,000 (increased
from P1,000), ordering CIR Judge Jose S. Bautista
to desist and refrain from further proceeding. On
the strength of the presidential certification,
Judge Bautista set the case for hearing. Feati,
thru counsel filed a motion to dismiss the case
upon the ground that the CIR has no jurisdiction
over the case, because:
1. the Industrial Peace Act is NOT applicable to
the University, it being an educational
institution, nor to the members of the Faculty
Club, they being independent contractors
2. the presidential certification is violative of
Section 10 of the Industrial Peace Act, as the
University is not an industrial establishment and
there was no industrial dispute which could be
certified to the CIR
Judge Bautista denied the motion to dismiss and
ordered the strikers to return immediately to
work and the University to take them back under
the last terms and conditions existing before
the dispute arose.
Without the motion for reconsideration having
been acted upon by the CIR en banc, Judge
Bautista set the case for hearing on the merits
but was cancelled upon Feati’s petition for
certiorari alleging that Judge Jose S. Bautista
acted without, or in excess of, jurisdiction, or
with grave abuse of discretion, in taking
cognizance of, and in issuing the questioned
orders in, CIR Cases Nos. 41-IPA 1183-MC and V-
30.
Feati claims that it is not an employer within the
contemplation of R.A. 875, because it is not an
industrial establishment. It also claims that it is
only a lessee of the services of
its professors and/or instructors pursuant to a
contract of services entered into between them
because the University does not exercise control
over their work
ISSUES: WHETHER Feati can be considered an
employer and PAFLU as an employee to be
covered by R.A. 875 and have right to unionize.
RULING:
YES.
1. FEATI is an employer based on RA 875
Section 2(c): An employer includes any
person acting in the interest of an
employer, directly or indirectly.
- "Employer" encompasses all employers
except those specifically excluded by the
Act.
 - The Angat River Irrigation System, et al.
vs. Angat River Workers' Union (PLUM),
defined the term employer as follows:
An employer is one who employs the services of
others; one for whom employees work and who
pays their wages or salaries
2. But for the purposes of the Industrial
Peace Act the University is an industrial
establishment because it is operated for
profit and it employs persons who work
to earn a living. The term "industry", for
the purposes of the application of our
labor laws should be given a broad
meaning so as to cover all enterprises
which are operated for profit and which
engage the services of persons who work
to earn a living.
- University of San Agustin, the University
of Santo Tomas, and La Consolacion
College: all involve charges of unfair labor
practice under Republic Act No. 875, and
the uniform rulings of this Court are that
the Court of Industrial Relations has no
jurisdiction over the charges because
said Act does not apply to educational
institutions that are not operated or
maintained for profit and do not declare
dividends.
- Far Eastern University v. CIR: this Court
had thereby ratified the ruling of the
Court of Industrial Relations which
applied the Industrial Peace Act to
educational institutions that are
organized, operated and maintained for
profit.
- Republic Act No. 875 defines a labor
dispute as follows:
"labor dispute" includes any
controversy concerning terms,
tenure or conditions of
employment, or concerning the
association or representation of
persons in negotiating, fixing,
maintaining, changing, or
seeking to arrange terms or
conditions of employment
regardless of whether the
disputants stand in proximate
relation of employer and
employees.
3. ON THE ISSUE THAT THEY ARE IC: This
Court in the Far Eastern University case:
the university has control over their
work; and professors are, therefore,
employees and not independent
contractors.
4. AS TO THE LEGALITY OF THE RETURN-TO-
WORK ORDER: When a case is certified to
the CIR by the President of the
Philippines pursuant to Section 10 of
Republic Act No. 875, the CIR is granted
authority to find a solution to the
industrial dispute; and the solution which
the CIR has found under the authority of
the presidential certification and
conformable thereto cannot be
questioned
- The return-to-work order cannot be
considered as an impairment of the
contract entered into with the
replacements. Besides, labor contracts
must yield to the common good and such
contracts are subject to the special laws
on labor unions, collective bargaining,
strikes and similar subjects.
4. PLUM v COMPANIA MARITIMA
Facts: MARITIMA is a local corporation engaged
in the shipping business. Teves is its branch
manager in the port of Iligan City. And AFWU is a
duly registered legitimate labor organization with
225 members.
On August 11, 1952, MARITIMA, through Teves,
entered into a CONTRACT 4 with AFWU to do and
perform all the work of stevedoring and arrastre
services of all its vessels or boats calling in the collectively arises only between the "employer"
port of Iligan City, beginning August 12, 1952. and its "employees". Where neither party is an
''employer" nor an "employee" of the other, no
During the first month of the existence of the
such duty would exist. Needless to add, where
CONTRACT, AFWU rendered satisfactory service.
there is no duty to bargain collectively the refusal
So, MARITIMA, through Teves, verbally renewed
to bargain violates no right.
the same. This harmonious relations between
MARITIMA and AFWU lasted up to the latter part The court a quo held that under the CONTRACT,
of 1953 when the former complained to the latter AFWU was an independent contractor of
of unsatisfactory and inefficient service by the MARITIMA.
laborers doing the arrastre and stevedoring work.
Neither is there any direct employment
This deteriorating situation was admitted as a
relationship between MARITIMA and the
fact by AFWU's president. To remedy the
laborers. The latter have no separate individual
situationsince MARITIMA's business was being
contracts with MARITIMA. In fact, the court a quo
adversely affected -Teves was forced to hire extra
found that it was AFWU that hired them. Their
laborers from among "stand-by" workers not
only possible connection with MARITIMA is
affiliated to any union to help in the stevedoring
through AFWU which contracted with the latter.
and arrastre work. The wages of these extra
Hence, they could not possibly be in a better class
laborers were paid by MARITIMA through
than AFWU which dealt with MARITIMA.
separate vouchers and not by AFWU. Moreover,
said wages were not charged to the consignees
or owners of the cargoes. On July 23, 1954, AFWU
presented to MARITIMA a written proposal5 for a
collective bargaining agreement. This demand
embodied certain terms and conditions of
employment different from the provisions of the
CONTRACT. No reply was made by MARITIMA.
AFWU sued MARITIMA for unfair labor practice
saying that MARITIMA refused to bargain
collectively. CIR dismissed the case on the ground
that it has no jurisdiction over the case.

Issue:
Whether or not CIR has jurisdiction over the
case?

Whether or not MARITIMA can be considered an

employer of the members of AFWU?

Held: No to both.

It is true that MARITIMA admits that it did not

answer AFWU's proposal for a collective
bargaining agreement. From this it does not
necessarily follow that it is guilty of unfair labor
practice. Under the law the duty to bargain