Labor Law Prelims Reviewer Article 13 of the Labor Code
 Any member of the labor force, whether employed or unemployed is a
Employer-Employee Relationship Employment Status
Book Notes
Articles 1-2
Labor Legislation – consists of statutes, regulations and jurisprudence governing the
relations between capital and labor framework for negotiating, adjusting and
administering these standards and other incidents of employment.
Labor Legislation is divided into labor standards and labor relations
Labor Standards
 refer to terms and conditions of employment that employers must comply
with and to which employees are entitled as a matter of legal right
 defined more specifically by jurisprudence
 the material or the substance to be processed
Labor Relations Law
 Defines the status, rights and duties, and the institutional mechanism that
govern the individuals and collective interactions of employers, employees
or their representatives.
 Issued on employment tenure and termination
 Mechanism that processes the substance
Labor Management Relations
 Refers to a broad spectrum of activities which concern relationship of
employees to employers both union and non-union
Labor Relations vs Industrial Relations
Labor Relations
 Refer to situations involving unionized companies
 Refer to matters internal to the labor sector
Industrial Relations
 For non-unionized ones
 Management-labor interactions
worker
Employee
 Is a salaried person working for another who controls or supervises the
means, manner or method of doing the work
Labor Law vs. Social Legisation
Social Legislation
 Those laws that provide particular kinds of protection or benefits to
society or segments thereof in furtherance of social justice
 E.g. labor laws, agrarian reform law, law for social security system
 Governs effects of employment
 Broader concept
Labor Laws
 Directly affect employment
 Narrower concept
Labor laws are social legislation but not all social legislations are labor laws
 Calalang vs Williams:
Social justice means the promotion of the welfare of all the
people the adoption by the government of measures calculated to
insure economic stability of all the component elements or
society through the maintenance of proper economic and social
equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures
legally justifiable, or extra-constitutionally, through the exercise
of police power underlying the existence of all governments, on
the time-honored principle of salus populi est suprema lex
Social Justice as a Juridical Principle
- It prescribes equality of the people, rich or poor, before the law
Social as a Societal Goal
 - It means the attainment of decent quality of life of the masses through
humane productive efforts.
Article 3
Police Power as the Basis
- is a statement of policy
Social Justice is the raison d’etre of labor laws, their basis on foundation is the
police of the state Goals of the National Economy

Labor Laws before the Code 1. Equitable distribution of opportunities, income, and wealth
2. A sustained increase in the amount of goods and service processed by the
1. Act No. 1874 – Employer’s Liability Act nation for the benefit of the people
2. Act No. 2549 – prohibited payment of wages in non-cash form 3. An expanding productivity as the way to revising the quality of life for all,
3. Act No. 2071 – prohibiting slavery or involuntary servitude especially the underprivileged
4. R.A. No. 1054 – requiring emergency medical treatment for employees
5. C.A. No. 449 or the Eight-Hour Labor Law Non-discrimination

C.A. No. 103 – created the Court of Industrial Relations (CIR) and the present Article 3 requires the State not just to promote full employment but to assure as well
NLRC equal work opportunities regardless of sex, race, or creed.

 Industrial Peace Act R.A. No. 875 was the law governing labor- Anti-age discrimination Act R.A. No. 10911
management relations. Hailed as the Magna Carta of Labor aka Taft-
Hartley Act
 Blue Sunday Law R.A. No. 946 used to forbid commercial, industrial or Article 4
agricultural enterprises to open on any Sunday, Christmas Day, New
Year’s Day, Holy Thursday, and Good Friday. Labor Code Sunday on Interpretation and Construction
ordinary working day.
A. Laborer’s Welfare
 Termination Paw Law R.A. No. 1052 enumerated the “just cause” for
- The working means welfare should be the primordial and permanent
terminating an employment without a definite period and allowed
consideration
employers to separate are employee by simply serving a 15-day notice per
- The Supreme Court adopts the literal approach which favors the
year of service or instead of notice, by paying an equivalent separation
exercise of labor rights
pay.
B. Concern for lowly worker
Labor Code - Law protects the lowly worker
C. Greater Protection to Employees
 Is a set of substantive and procedural laws that prescribe the principal - In employment bargaining
rights and responsibilities of the industrial participants, so as to institute - The law must protect labor to the extent of raising him to equal
social justice footing in bargaining relations
 Has to protect the interests of both employees and employers, for it does
not, it would be unconstitutional 1987 Constitution Article II, Section 18, the constitution specifies the guaranteed
 Speaks of myriad concepts such as : 1.) employment, 2.) relationship, 3. toxic rights of workers:
Collective bargaining, 4.) employment termination affecting both
1. To organize themselves
employers and employees
2. To conduct collective bargaining or negotiation with management
 Embodies on industrial law and deals with the concerns of the three
industrial actors: 1.) employers 2.) employees 3.) government agencies
 3. To engage in peaceful concerted activities, including to strike in -limitations are provided by
accordance with law 1. Law
4. To enjoy security of tenure 2. Contract, whether individual or collective
5. To work under humane conditions 3. General principles or fair play and justice
6. To receive a living wage
7. To participate in policy and decision-making processer affecting their -management prerogative
rights and benefits as may be provided by law
Article 82
The state is mandated to regulate the relations between workers and employers
1. Two-tier test involving [Angelina Francisco vs NLRC]:
The Labor is entitled to a just share in the fruits of production, the enterprise has on a. The putative employer’s power to control the employee with
equally important right not only to reasonable returns on investments but also to respect to the means and methods by which the work is to be
expansion of growth accomplished; and
b. The underlying economic realities of the activity of relationship
Justice
Economic dependence is whether the worker is dependent on alleged employer for
- Article cannot be taken to have superseded Article 10 of the Civil his continued employment in that line of business.
Code R.A. No. 386
2. Control Test
Interdependence constitutional balancing of rights -where the person for whom the services are performed,
preserves a right to control not only the end to be achieved but
- Basic policy does not favour later to prejudice capital also the means to be used in reaching such end
- Labor and capital need each other they are interdependent
-inclusion in the payrolls, determines existence f employer-
Management Rights, Broadly
employee relationship
- It should not be supposed that labor dispute will automatically be
divided in favour labor -calls severely for the existence of the right to control the
- Also has its own rights manner of doing the wor, not the actual exercise of right
- The secretary of labor is duly mandated to equally protect and respect
3. Economic Reality Test
not only the labourer or worker’s side but also the management
and/or employer’s side -when worker possesses an attribute of an employee
and others of an independent contractors, which make him fall
A. Right to return of investments within an intermediate area, he may be classified under the
-Profit/surplus creates jobs and improves the worker’s life category of an employee when the economic facts of the relation
B. Right to Prescribe Rules where…
-company policies and regulation, generally binding and valid
on the parties
C. Right to Select Employees
D. Right to Transfer or Discharge employees Four-fold test:
-an employer has the right to transfer, reduce or lay off
1. Power to hire
personnel in order to minimize expenses and to insure the
2. The payment of wages
stability of the business and even to close the business
3. The power to dismiss
E. Restriction to management rights
 4. The power to control

Lecture Notes Legal Frameworks for Labor Code

Labor Law is that branch of law that governs and regulates relationship between 1. Labor Code
employers and employees. It includes laws exacted to promote employment and 2. Civil Code
those contended for the protection and welfare of employees. 3. Revised Penal Code
4. TESDA [ tesda law, 13th month pay law, GSIS law, SSS law]
Welfare/Social Legislation are primarily intended for protection and promotion of 5. Constitutional Provisions
general welfare of the worker.
Basic Policy

 Just share in the fruits of production

Employee-Employer Relationship  Reasonable return of investment for employers
 Regulate the relations between workers and employers:
-voluntary modes of settling dispute
*Control Test Training and
-participate in policy and decision-making process affecting their
*Economic Reality Employment of Special
rights and welfare
Test Workers
*Two-tiered Test Business operations, per se
1. Apprentices
2. Learners
 Purely a management prerogative
3. Differently
 No participation in policy and decision making to _____ corporate
Abled
Workers
programme and policies

Rights, Duties, Welfare of Employees

 Level of participation should be in discussion

Working
conditions Protection to Labor
and rest
periods
 Burden of proof on Employer
-Employee need to prove the fact of termination
Type of Dismissal or termination:
1.) Constructive
-wages Exempted 2.) Actual
-working Employees
conditions Art. 82 Doubts resolved in favour of labor (Art. 4)
for special
groups Non-discrimination of benefits (Art. 100)
-medical,
Liability of Indirect Employer (Art 106-109)
dental and
occupational
safety

Employee’s Compensation
State Insurance Fund
Visitorial/Enforcement Power (art. 128/129)

Double Indemnity Law (RA 8188)

Workers’ Preference in Bankruptcy (Art.110)
Reinstatement Pending Appeal/Bond (Art.223)
-appeal does not interrupt reinstatement
Compassionate Justice
Rule 65- Certiorari base on grave abuse of discretion amounting to lack or excess of
jurisdiction.
Absence of substantial evidence tantamount to grave abuse.
Rule 45 – Certiorari Review for error in judgement
Employer-Employee Relationship

The test for determining the existence of the Employer-employee relationship is the
Management Prerogatives fur-fold test or economic reality test, not Article 280 on regular and casual
employment.
-except as limited by special laws, an employer is free to regulate
according to his own discretion 1. Regular
2. Seasonal
Rights and obligation of employer:
3. Project
1.) Just compensation 4. Casual
2.) Humane working conditions
The difficulty lies in distinguishing “what” and how it is to be done. Suppression is
3.) Management prerogatives
usually an indicative factor or whether there is control.
Rights of employees:
Economic Reality Test
1.) Adequate work
a. Permanency and duration of the relationship between the worker and the
2.) Due diligence
employer
3.) Good conduct
b. The degree of economic dependency of the worker upon the employer for
4.) Security of tenure
his continued employment in that line of business.

Labor Arbiter
C A S E D I G E S T

Appealable AFP Mutual Benefit Association, Inc. vs. NLRC

NLRC Final and executory Key words: Illegal dismissal, money claims, proper forum

Review before SC Rule. 65 Facts: Petitioner, AFP Mutual Benefit Association, dismissed private respondent for
misrepresentation and for selling insurance for another life insurance company.
Court of Appeals Upon dismissal, private respondent, Eutiguio Bustamante, was entitled to accrued
commissions equivalent to twenty-four months. Total commission receivable
amounts to PHP438, 835.00, of which only PHP78, 039.89 had been paid to him. On
Rule 45 Feb. 26, 1990, private respondent filed his complaint with the Department of Labor

Supreme Court
Claiming: 1.) Commission for 2 years equivalent to 30% premiums remitted during
employment, 2.) PHP354,796.00 as commission generated since 1983, 3.)
100,000.00 as moral damages and 4.) 100,000.00 as exemplary damages.
Filing:
I. Office of the Insurance Commissioner – advised private respondent that it
was the Department of Labor and Employment who has jurisdiction over
his complaint.
II. Department of Labor – Labor Arbiter ruled that the dismissal of private
respondent is just and valid, therefor his claim to separation pay is denied.
With regard to his money claim, the respondent was ordered to pay
complainant with 319,796.00 plus attorney’s fees
III. On appeal the NLRC affirmed the decision of the Labor Arbiter
IV. Supreme Court – granted the petition and set aside the assailed resolution
Issue: Whether or not there existed an employer-employee relationship between
petitioner and private respondent.
Ruling:
The fact that private respondent was required to solicit business
exclusively for petitioner could hardly be considered as control in labor
jurisprudence. Insurance commissioner issued Memo Circulars No. 2-18 and 2-85
which states that insurance agents are barred from serving more than one insurance
company. The exclusivity restriction sprung from a regulation issued by the
Insurance Commission and from the petitioner in order to establish control over
private respondent. The fact that private respondent was bound by company policies,
memo/circulars, rules and regulations is not indicative of control. Territorial
assignments cannot be held as indicative of exercise of control. The significant
factor in determining the relationship of the parties is the presence or absence of
supervisory authority to control the method and details of performance. The
presence of such power to control is indicative of an employment relationship, while
absence thereof is indicative of independent contractorship. Private respondent was
free to sell insurance at any time as he was not subject to definite hours or conditions
of work and in turn was compensated according to the result of his efforts. Hence,
the Court rules that no employment relationship existed between the parties.
Furthermore, due to the non-existent employment relationship between
parties, the Labor Arbiter and the Commission can never acquire jurisdiction over a
dispute. It becomes unnecessary to consider the merits of private respondent’s claim
for unpaid commission. This ruling is without prejudice to private respondent’s
claim for unpaid commission against petitioner with the proper forum and within the
proper period. Civil Action.
North Davao Mining Corporation vs NLRC
Key Words: Separation pay
Facts: Petitioner, North Davao Mining Corporation was incorporated in 1974 as a
100% privately-owned company. PNB became part owner and on June 30, 1986,
transferred all its loans to and equity in North Davao in favour of the national
government which later turned them over to petitioner Asset Privatization Trust
(APT). On May 31, 1992 petitioner completely ceased operations. As of December
31, 1991 its total liabilities had exceeded its assets by 20.392 billion pesos. When it
ceased operations, remaining employees were separated and given the equivalent of
12.5 days’ pay for every year of service.
Filing:
I. Labor Arbiter – for additional separation pay of 17.5 days for every year
of service, back wages equivalent to 2 days a month, transportation
allowance, hazard pay, housing allowance, food allowance, post-
employment medical clearance.
- Ordered petitioner to pay complainants additional separation pay of
17.5 days for every year of service, back wages equivalent to 2 days a
month but not to exceed 3 years, transportation allowance at 80.00 a
month time the number of years of service but not to exceed 3 years.
- Awarded benefits amounting to PHP10,240,517.75 and attorney’s
fees equivalent to 10%
II. On appeal the NLRC affirmed the decision of the Labor Arbiter in toto.
MR of petitioner was denied.
III. Supreme Court – deleted the award for additional separation pay of 17.5
days for every year of service and affirming all other aspects.
Issue: 1.) Whether or not an employer whose business operations ceased due to
serious business losses or financial reverses is obliged to pay separation pay to
its employees separated by reason of such closure.
2.) Whether or not time spent collecting wages in a place other than the place of
employment is compensable notwithstanding that the same is done during
official time.
3.) Whether or not private respondents are entitled to transportation expenses
in absence of evidence that these expenses were incurred.
Ruling:
First Issue:
Article 283 of the Labor Code governs the grant of separation benefits in
case of closures or cessation of operation of business establishments “not due to
serious business losses or financial reverses.” Where, however, the closure was due
to business losses amounting to over 20 billion the Labor Code does not impose any
obligation upon the employer to pay separation benefits. Respondents tenaciously
insists on the award of separation pay contending that by denying the same
separation benefits preciously given to former employers, petitioner discriminated
against them. However, the company’s practice of giving one month’s pay for every
year of service could no longer be continued precisely because the company could
not afford it anymore. Therefore, the fact that less separation benefits were granted
when the company finally met its business death cannot be characterizes as
discrimination. Article 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to losses. The fact that petitioner at the
point of its forced closure voluntarily paid any separation benefits at all should have
elicited admiration instead of condemnation.
Second Issue:
The award of back wages and transportation allowance, the issued raised
in connection therewith are factual, the determination of which is best left to the
respondent NLRC. It is well settled that this Court is bound by the finding of fact of
the NLRC, so long as said finding are supported by substantial evidence.
“The law in protecting the rights of the labourer, authorizes neither oppression nor
self-destruction of the employer.”
Tabas vs California Manufacturing Co., INC.
Key Words: Employer-employee relationship, labor only, illegal dismissal.
Facts: On July 21, 23 and 28 a996, the petitioners, Bazuela, Flores, Miralles,
Raneses, Sy, Taquio and Associates, petitioned the NLRC for reinstatement and
payment of various benefits, including minimum wage, overtime pay, holiday pay,
13th month pay and an emergency cost of living allowance pay against California
Manufacturing Company. California denied the existence of an employer-employee
relationship. It appears that the petitioner were, prior to their stint with California,
employees of Livi Manpower services. Inc. which assigned them as promotional
merchandisers for California pursuant to a manpower supply agreement. Livi is an
independent contractor. The petitioners were then made to sign employment
contracts with durations of 6 months. Petitioners allege that they have become
regular California employees and demand benefits that came with being a regular
thereof. They likewise claim that California informed them that they will not be
rehired and later amended complaint charging California with illegal dismissal.
Filing:
I. NLRC – Labor Arbiter ruled on the existence of employer-employee
relationship between petitioners and California and at the same time
absolved Livi of any obligations.
II. Abovementioned decision was affirmed upon appeal.
III. Court – reversed the decisions. Granted the petition. Ordered California to
reinstate petitioners and ordered both California and Livi to pay jointly
and severally back wages and all other further benefits
Issue: Whether or not petitioners are employees of California or Livi
Ruling:
Livi performs manpower services, the petitioners had been charged with
merchandizing promotion or sale of the products of California in the different sales
outlet in Metro Manila. It is not as if Livi had served as California’s promotion or
sales arm or agent. Livi had simply supplied it with the manpower necessary to carry
out its merchandizing activities. Neither Livi nor California can therefore escape
liability, assuming there is one. Livi supplied California with personnel as if such
personnel had been directly related to the general business of manufacturing.
The fact that the manpower supply agreement between Livi and California
had specifically designated the former as petitioner’s employer and had absolved the
latter any liability as an employer ill not erase either party’s obligations as an
employer, if an employer-employee relation otherwise exists between the worker’s
cannot be made to suffer from its adverse consequences.
The fact that petitioners have been hired on a “temporary or seasonal”
basis merely is no argument either. A temporary or casual employee, under Article
280 of the Labor Code, becomes regular after service of one year, unless he has been
contracted for a specific project. And we cannot say that merchandising is a specific
project for the obvious reason that it is an activity related to the day-to-day
operations of California.

Philippines Airlines, INC. vs PALEA, et al.
Key Words: Reinstatement, Seniority rights and privileges, Illegal dismissal.
Facts: On May 4, 1950, PAL dismissed Messrs. Fortunato Biangco, Hernando
Guevarra, Bernardino Abarrientos and Onofre Griño, who are members of PALEA
and that on July 13, 1954, the CIR en banc passed a resolution in case No. 465-V
thereof, directing the reinstatement of said employees. On January 14, 1959, said
employees were reinstated, their back wages were paid. The employees objected to
the deduction the CIR sustained them. On November 10, 1960, the PALEA moved
for the execution of the CIR resolution of July 13, 1954 as regards the other rights
and privileges referring to : 1.) Christmas bonus from 1950 to 1958; 2.) accumulated
sick leave; 3.) transportation allowance during the lay-off period and 4.)
accumulated free trip passes , both domestic and international. CIR granted the
motion except as regards the sick leave of Onofre and Bernardin o and the
transportation allowance. Upon Appeal, PAL still erred the CIR in acting as it did.
Wherefore, except as to the free trip passes the reinstated employees were held to be
entitled to Christmas bonus, sick leave and other privileges.
Aurora Land Projects Corp. vs NLRC
Key Words: Illegal dismissal, regular employee, employer-employee relationship
Facts: Private respondent Honorio Dagui was hired by Doña Aurora Suntay
Tajangco in 1953 to take charge of the maintenance and repair of the Tajangco
apartments and residential buildings. Upon the death of Doña Aurora, her daughter
Teresita Tajangco Quazon took over the administration of all the Tajangco
properties. On June 8, 1991, Dagui was told by Teresita that he doesn’t have a job
anymore on the alleged ground that his work was unsatisfactory. On August 19,
1991, Dagui, 62 years of age, filed a complaint for illegal dismissal with the Labor
Arbiter.
Filing:
I. Labor Arbiter – ordered Aurora Plaza and/or Teresita to pay the
complainant PHP 195,624.00 as separation pay and 10% attorney’s fees
within 10 days from receipt.
II. Appeal to NLRC – affirmed the Labor Arbiter’s decision but instead,
separation pay is modified to PHP88,920.00 and attorney’s fees is deleted.
III. Court – granted the petition and awarded the separation pay to Dagui
Issue: 1.) Whether or not Dagui was an employee of petitioners
2.) Whether or not he was illegally dismissed.
Ruling on the First Issue:
Dagui is an employee of the petitioners. He was hired and employed as a
stay-in worker. Dagui’s work had to be performed within the premises of the
petitioners. Dagui reports to work from 7am-4pm and since the job of a maintenance
crew is necessarily done within company premises, it can be inferred that both Doña
Aurora and her daughter could easily exercise control on private respondents. Dagui
earns a measly sum of PHP180.00 a day. No proof was adduced by the petitioners to
show that Dagui was merely a job contractor and it is absurd to expect that private
respondent with such humble resources, would have substantial capital or
investment in the form of tools, equipment, and machineries, with which to conduct
the business of supplying Aurora Plaza with manpower and services for the
exclusive purpose of maintaining the apartment houses owned by the petitioners
herein. The allegation that Dagui was a project employee, petitioners would have
submitted a report of termination to the nearest public employment office every time
his employment is terminated due to completion of each project, failure of the
petitioners to comply with this simple, but nonetheless compulsory requirement is
proof that Dagui was not a project employee.
Ruling of the Second Issue:
Dagui qualifies as regular employee under Article 280 of the Labor Code.
The jobs assigned to Dagui were directly related to the business of petitioners,
moreover, the jobs assigned to Dagui were directly related to the business of
petitioners as lessors of residential and apartment buildings. The much continuing
need for his services is sufficient evidence of the necessity and indispensability of
his services. He rendered services to the petitioners for more than 1 year and shall
therefore be considered a regular employee. The law requires that the employer must
furnish the worker two notices before termination: 1.) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought and 2.)
the subsequent notice which informs the employee of the employer’s decision to
dismiss him. These are absent in the case at bar hence, Dagui has been illegally
dismissed by petitioner and is entitled to a separation pay as well as full back wages.
Tiu vs National Labor Relations Commission
Key Words: Illegal dismissal, labor only, delegated power of control
Facts: Petitioner, as operator of the D’Rough Riders Transportation, is engaged in
the transportation of passengers from Cebu City to the northern towns of Cebu.
Private respondent worked as a dispatcher and was paid a regular daily pay of
PHP20.00. Petitioner denied that private respondent is an employee, he alleges that
he did not have the power of selection and dismissal nor the power of control over
private respondent.
Filing:
I. Labor Arbiter – found that private respondent is an employee of petitioner
and that he was illegally dismissed.
II. On appeal to the NLRC – the Labor Arbiter’s decision was affirmed.
III. Court – Hermes dela Cruz, the private respondent, is an employee of the
petitioner.
Issue: Whether or not private respondent is an employee of the petitioner and
was illegally dismissed.
Ruling:
Petitioner failed to refute the evidence presented by the private respondent.
He points to his Chief Dispatcher, Regino dela Cruz, as the one who exercised the
powers of an employer over the dispatchers. In determining whether there is an
employer-employee relationship between the parties the following questions must be
considered: a.) who has the power of selection and engagement of the employee; b.)
who pays the wages of employee; c.) who has the power of dismissal; and d.) who
has the power to control the employees conduct? Petitioner admits that Regino dela
Cruz was merely assigned to dispatch work. While Regino took charge of the hiring
and paying of wages, he only did as he was told by petitioner. He was himself only
an employee of the petitioner. The control test only requires the existence of the
right to control the manner of doing work in a person, not necessarily the actual
exercise of the power by him. In the case at bar, the power is exercised by Regino
dela Cruz but it is a power which is only delegated to him so that in truth the power
inherently and primarily is possessed by petitioner.
Labor only contract is where the person is acting as contractor is
considered merely an agent or intermediary of the employer who is responsible to
the workers in the same manner and to the same extent as if they had been directly
employed by him. The labor only contractor is a mere agent of the employer who is
responsible to the employees of the labor-only contractor as if such employees has
been employed by him directly. In such a case, the statute establishes an employer-
employee relationship between the employer and the labor-only employee to prevent
violation or circumvention of the provisions of the Labor Code. Therefore, Regino
dela Cruz can be considered a labor-only contractor and Hermes dela Cruz is
actually the employee of petitioner.
Great Pacific Life Assurance vs Judico
Key Words: Illegal dismissal, money claims
Facts: Private respondent, Judico, entered into an agreement of agency with
petitioner Grepalife to become a debit agent attached to the industrial life agency in
Cebu City. Complainant was initially paid Php200.00 as allowance for 13 weeks
regardless of production and later a certain percentage denominated as sales reserve
of his total collection but not lesser than Php200.00. He was promoted as Zona
Supervisor and was then reverted back to his former position as debit agent but for
unknown reasons not paid so-called weekly sales reserve of at least Php200.00.
Finally, he was dismissed by way of termination of his agency contract.
Filing:
I. Labor Arbiter – dismissed the complaint on the ground that no employer-
employee relationship existed and ordered Grepalife to pay complainant
the sum of Php1, 000.00 by reason of Christian Charity.
II. Appeal on NLRC – ruled that complainant is a regular employee as
defined under Article 281 of the Labor Code and declared the appeal of
Grepalife as moot and academic.
III. Court – ruled that private respondent is a regular employee
Issue: Whether or not there is employer-employee relationship and Judico was
illegally dismissed.
Ruling:
An insurance company has two classes of agents, 1.) Salaried employees
who keep definite hours and work under the control and supervision of the company
and 2.) Registered representatives who work on commission basis. Private
respondent was an agent of the petitioner. The test therefore is whether the employer
controls or has reserved the right to control the employee not only as to the result of
the work but as to the means and methods by which the same is to be accomplished.
The record shows that Judico received a definite minimum amount per week as his
wage known as sales reserves wherein the failure to maintain the same would bring
him back to a beginner’s employment with fixed weekly wage of Php200.00 for
thirteen weeks regardless of production. He was assigned a definite place in the
office to work on when he is not in the field. He was burdened with the job
collection in both cases he was required to make regular report to the company
regarding these duties and for which an anemic performance would mean a
dismissal. The undisputed facts show that he was controlled by petitioner insurance
company not only as to the kind of work, the amount of results, and the kind of
performance but also the power of dismissal. Undoubtedly, Judico, by nature of his
position and work, has been a regular employee.
Cosmopolitan Funeral Home, Inc. vs Maalat
Key Words: Employer-employee relationship, independent contractor, illegal
dismissal, non-payment of commission
Facts: Petitioner Cosmopolitan Funeral Home, Inc. engaged the services of private
respondent Noli Maalat as a supervisor to handle solicitation of mortuary
arrangements, sales and collections. The private respondent was paid in commission
basis of 3.5% of the amounts actually collected and remitted. Maalat was dismissed
for 1.) understatement of reported contract price against the actual contract price
charged to and baid by the customer, 2.) misappropriation of funds or collections by
non-remittance of collections and non-issuance of official receipt, 3.) charging
customers additional amount and pocketing the same, 4.) non-reporting of some
embalming and re-embalming charges and pocketing the same and non-issuance of
official receipt and e.) engaging in tomb making and inclusion of the price of the
tomb in the package price without prior knowledge of the customers and the
company.
Filing:
I. Labor Arbiter – rendered a decision declaring Maalat’s dismissal illegal
and ordering the petitioner to pay separation pay, commission, interests
and attorney’s fee in the toal amount of Php205,571.52
II. Appeal to the NLRC – reversed the Labor Arbiter’s action and ruled that
the dismissal of Maalat is justified and with lawful cause\
III. Court – affirmed the decision of the NLRC except for the award of
separation pay.
Issue: 1.) Whether or not there is an employer-employee relationship
2.) Whether or not there was equitable basis for the award of ½ month
separation pay for every year of service.
Ruling on the First Issue:
The fact that the petitioner imposed and applied its rule prohibiting
superiors from engaging in other funeral business which it considered inimical to
company interests proves that it had the right to control and actually exercised its
control over the private respondent, in other words, Maalat worked exclusively for
the petitioner. The private respondent was prohibited from engaging in pat-rime
embalming business outside of the company and a violation thereof was cause for
dismissal. Incurring absences without leave was likewise subject to disciplinary
action: a reprimand for the first offense, one week suspension for the second offense
and dismissal for the third offense. The petitioner failed to prove that the contract
with private respondent was but a mere agency which indicates that a supervisor is
free to accomplish his work on his own terms and may engage in other means of
livelihood. The finding by the public respondent that the petitioner has reported
private respondent to the Social Security System as a covered employee adds
strength to the conclusion that Maalat is an employee. However, payment of
compensation by way of commission does not militate against the conclusion that
private respondent was an employee and the non-observance of regular working
hours does not indicate that Maalat is an independent salesman.
Rule on the Second Issue:
The fact that complainant Maalat has served respondent company for the
last 24 years, it is but proper to afford him some equitable relief consistent with the
recent rulings of the Supreme Court due to his past services with no known previous
record and the ends of compassionate justice will thus be served if he is to be paid a
portion of his separation pay equivalent to ½ month of every year of his service to
said company. We are not inclined to grant complainant his full month termination
pay for every year of his service because unlike in Soco case, the misconduct of the
employee merely involves infraction of company rules while the Firestone case
involves the misconduct of a rank-and-file employee, although similarly involving
act of dishonesty. Maalat was dishonest in the discharge of his functions.
Conformably with the cited ruling in PLDT, this court pronounces that the grant of
separation pay to private respondent Maalat who was validly terminated for
dishonesty, is not justified.
Sara vs Agarrado
Key Words: Verbal agreement, independent contractor, unpaid commission
Facts: Private respondent Celia Agarrado was an attendant in the clinic of petitioner
Dr. Renato Sara. She quit her job in 1973, Dr. Sara and Romeo Araña, being owners
of a rice moll and having begun to engage in the buy and sell of palay and rice,
entered into a verbal agreement with private respondent Agarrado whereby it was
agreed that the latter would be paid Php2.00 commission per sack of milled rice sold
as well as a commission of 10% per kilo of play purchased. It was further agreed
that private respondent would spend her own money for the undertaking, but to
enable her to carry out the agreement more effectively, she was authorized to borrow
money from other persons, a in fact she did, the subject to reimbursement by
petitioners.
Filing:
I. NLRC – for unpaid commission and reimbursement, the Labor Arbitered
rendered a decision in favour of private respondent ordering petitioners to
pay all the claims amounting to Php26,397.80.
II. Appeal to the NLRC – affirmed the decision of the Labor Arbiter and
dismissed the appeal.
III. Court – granted the petition and dismissed the decision of the NLRC for
lack of jurisdiction.
Issue: Whether or not an employer-employee relationship exists between
petitioners and private respondent as to warrant cognizance by the Labor
Arbiter.
Ruling:
There was selection and engagement of private respondent, the verbal
agreement between parties negated the existence of the other requisites. The verbal
agreement as to the payment of wages agreed upon by the parties was explicitly on a
commission basis dependent on the volume of sale or purchase, Private respondent
was not guaranteed any minimum compensation nor was she allowed any drawing
account or advance of any kind against unearned commission. Her right to
compensation depended upon and was measured by the tangible results she
produced, the quality of rice sold and the quantity of palay. The power to terminate
the relationship was mutually vested upon the parties. Either may terminate the
business arrangement at will, with or without cause. The private respondent was
never given capital by his supposed employer but relied on her own resources and if
insufficient, she borrowed money from others. She worked for petitioners at her own
pleasure and was not subject to definite hours or conditions of work. She could even
delegate the task f buying and selling to others, if she so desired, or simultaneously
engage in other means of livelihood while selling and purchasing palay. Private
respondent was an independent contractor, who exercising independent
employment, contracted to do a piece of work according to her own method and
without being subject to the control of her employer except as to the result of her
work. She was paid for the result of her labor, unlike an employee who is paid for
the labor he performs. The verbal agreement devoid as it was of any stipulations
indicative of control leaves no doubt that private respondent was not an employee of
petitioner but was rather an independent contractor. The Labor Tribunal’s
jurisdiction being primarily predicated upon the existence of an employer-employee
relationship between the parties, the absence of such element, as in the case at bar,
removes the controversy from the scope of its limited jurisdiction.
LVN Pictures, INC. vs Philippines Musicians Guild
Sevilla vs Court of Appeals
Iloilo Chinese Commercial School vs Fabrigar
Filamer Christian Institute vs Intermediate Appellate Court
Colgate Palmolive Philippines, INC. vs Ople
Gelmart Industries Phils., INC. vs NLRC
Lagatic vs NLRC
China Banking Corporation vs Borromeo
Book Notes
Article 280. Regular and Casual Employment
The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, that any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
Classification of employemt:
1.) Regular Employment
2.) Non-regular employment i.e., project employee or seasonal employment
3.) Casual employment
As to whether or not an employment is regular is determined neither by employment
contract nor by the nomenclature given to it by the employer, but by the nature of
the job. If the job is usually necessary or desirable to the main business of the
employer then the employment is, as general rule, regular.
Non-regular employment
1.) Project employment
2.) Seasonal employment
In these types of non-regular employment, the activities performed by the employee
are usually necessary or desirable in the usual business or trade of the employer,,
but the law does not consider the as regular employment because the engagement of
the employee in only for a limited period, i.e. for the duration of the project or
season.
Project Employment is a job where the employee was engaged for a specific
undertaking, the completion or termination of which has been determined at the time
of the engagement, regardless of the number years that it would take to furnish the
undertaking.
An employee who has rendered at least one year of services xxx shall be
considered a regular employee applies only to casual employment and not to the
project employment.
Specific Project or undertaking contemplates at least 2 distinguishable types of
activities, to wit:
A. An activity which is done on a daily basis.
Here, the particular job or undertaking is within the regular or
usual business of the employer, but distinct, separate and identifiable as
such, from the other undertakings of the company. The job or undertaking
begins and ends at determined or determinable times.
B. An activity which is not commonly or habitually performed.
Here, the particular job or undertaking is not within the regular
or usual business of the employer, hence, separate, distinct and identifiable
from the ordinary or regular business operations of the employer. The job
or undertaking begins and ends at determined or determinable times.
Tenure of project employment:
 Duration of employment is co-terminous with the work to which the
employee was assigned.
 Project employees whose employment is terminated by reason of
completion of project or phase thereof, are not entitled to separation pay.
Seasonal Employment is a job where the employee was engaged to work during a
particular season.
Tenure
 The employment of seasonal employees is co-terminous with the duration
of the season
 If the same employees are repeatedly engaged every season, they become
regular seasonal employees, therefore, they cannot be terminated without
just cause
 During off season, their employment is not severed but merely suspended
Fixed-term Employment
The labor code does not prohibit an employer from engaging an employee
for a definite period. The validity of such arrangement is recognized by the civil
code. Fixed-term employment contracts are valid and not in circumvention of
security of tenure:
1. If they were knowingly and voluntarily agreed upon by the parties without
any force, duress or improper pressure upon the employee; or
2. It is satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever
being exercised by the former on the latter.
Tenure
 Determined by the period agreed upon by the parties.
 Upon expiration employment is automatically terminated without necessity
of notice.
Casual Employment is a job where the activities performed by the employee are
not usually necessary or desirable in the usual business or trade of the employer.
Casual Employment on Regular States
 A casual employee who has rendered at least 1 year of service, whether
which service is continuous or broken, is considered a regular employee
with respect to the activity in which he is employed.
  Regular status attaches the day after the end of the first year of service  A work pool may be composed of regular or project employees. The
principle of no work no pay applied when those in the work pool who
Lecture Notes have to work
Probationary Employment Seasonal Employment
 Period refers not to time but to the opportunity to observe the qualification  Season employees are considered regular by nature of their job
of the probationer  Season should be customary or recognized in trade or business
 Failure to meet standards is just cause to terminated employment  During off-season, they are temporarily laid off, and the employment
 Limited security of tenure relationship is merely suspended, not severed.
 Default period is 6 months  The principle of no work no pay applied
 May be more or less than 6 months
o Nature of job/employer policy Casual Employment
o Standards to be achieved
 Successive or double probation is prohibited  Her work is not germane to the work of the company
 Period may be extended upon request of employee for good cause  Job/work is merely incidental to the business of the employer
 Becomes regular if allowed to work beyond probationary period  Regular, only with respect to the activity in which he is employed and
 Last day of probation [180 days from date of engagement, anniversary continues while activity exists (not sure, handwriting too bad, doesn’t
date of sixth month] make sense at all)
 During actual employment, employee enjoys security of tenure
Fixed Term
Part Time Employment
 Period is not meant to circumvent the right to security of tenure
 Period is knowingly and voluntarily agreed upon without force, duress or  Single, regular or voluntary form of employment with hours of work
pressure substantially shorter than those considered as normal in the establishment
 Nature of job, length of contract and personal qualifications of employee  Common types
are factors to be considered o 4 hours
o 2 days (weekend work)
 Successive re-hiring and batch movements are badges of circumvention
 Benefits
Project Employment o Basically the same as regular employees

 Decisive determinant is not the nature of work but the definite period of
employment made known to the worker
 Length of employment or number of engagements does not convert project
employment to regular
 Project work may either be the principal business of employer or one
undertaken by the employer for a specific purpose
 Best evidence is the employment contract, the repost of project
termination to the DOLE, the freedom of the employee to leave from such
employment elsewhere
 Project employees are not entitled to separation pay upon completion of
project or phase of work thereof