CASES:

Introduction:

Art. 219- Definition of Employee

Concept of employer-employee relationship and liability

Medical negligence cases (Doctor-Consultants)

1. Ramos v. C.A. Dec. 29, 1999

FACTS: Plaintiff Erlinda Ramos was experiencing occasional pains allegedly caused by
stones in her gall bladder. She was told to undergo an operation and after some tests and
exams, she was indicated fit for surgery.

Dr. Orlino Hozaka, defendant, decided that Erlinda should undergo a “cholecystectomy”
operation. Rogelio, husband of Erlinda, asked Dr. Hosaka to look for a good
anesthesiologist.

Around 7:30 AM of June 17, 1985, Herminda (sister-in-law of Erlinda) accompanied

Erlinda to the operating room and saw Dr. Gutierrez, the other defendant, who was to
administer anesthesia. Dr. Hosaka only arrived around 12:15 PM, three hours late.
Nonetheless, the operation continued and Herminda then saw Dr. Gutierrez intubating
the patient and heard her saying “and hirap ma-intubate nito, mali yata ang
pagkakapasok”. Thereafter, bluish discoloration of the nailbeds appeared on the patient.
Hence, Dr. Hosaka issued an order for someone to call Dr. Calderon, another
anesthesiologist. The patient was placed in a trendelenburg position for decrease of blood
supply in her brain. At 3:00 PM, the patient was taken to the ICU.

Four months after, the patient was released from the hospital. However, the patient has
been in a comatose condition.

Hence, the petition filed a civil case for damages against herein private respondents
alleging negligence in the management and care of Erlinda Ramos.

Petitioners contended that the faulty management of her airway caused the lack of
oxygen in the patient’s brain. On the respondent’s part, they contended that the brain
damage was Erlinda's allergic reaction to the anesthetic agent.
ISSUES: (1) Will the doctrine of res ipsa loquitur apply in this case? and (2) Did the
negligence of the respondents cause the unfortunate comatose condition of petitioner
Erlinda Ramos?

RULING: (1) Yes. The Court finds the doctrine of res ipsa loquitur appropriate in the case
at bar.

The doctrine of res ipsa loquitur is where the thing which caused the injury complained of
is shown to be under the management of the defendant or his servants and the accident
is such as in ordinary course of things does not happen if those who have its management
or control use proper care, it affords reasonable evidence, in the absence of explanation
by the defendant, that the accident arose from or was caused by the defendant's want of
care.

In cases where the res ipsa loquitur is applicable, the court is permitted to find a physician
negligent upon proper proof of injury to the patient, without the aid of expert testimony,
where the court from its fund of common knowledge can determine the proper standard
of care.

Erlinda submitted herself soundly and fit for surgery. However, during the administration
of anesthesia and prior to the performance of cholecystectomy she suffered irreparable
damage to her brain. Thus, without undergoing surgery, she went out of the operating
room already decerebrate and totally incapacitated. Obviously, brain damage, which
Erlinda sustained, is an injury which does not normally occur in the process of a gall
bladder operation.

Considering that a sound and unaffected member of the body (the brain) is injured or
destroyed while the patient is unconscious and under the immediate and exclusive control
of the physicians, we hold that a practical administration of justice dictates the application
of res ipsa loquitur.

(2a) With regard to Dra. Gutierrez, the court find her negligent during the anesthesia
phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the
patient which she admitted.

During intubation, such distention indicates that air has entered the gastrointestinal tract
through the esophagus instead of the lungs through the trachea. Entry into the esophagus
would certainly cause some delay in oxygen delivery into the lungs as the tube which
carries oxygen is in the wrong place.
Even granting that the tube was successfully inserted during the second attempt, it was
obviously too late.

An experienced anesthesiologist, adequately alerted by a thorough pre-operative

evaluation, would have had little difficulty going around the short neck and protruding
teeth.

Hence, she was negligent.

(2b) For Dr. Orlino Hosaka, as the head of the surgical team and as the so-called captain
of the ship, it is the surgeons responsibility to see to it that those under him perform their
task in the proper manner

Respondent Dr. Hosakas negligence can be found in his failure to exercise the proper
authority (as the captain of the operative team) in not determining if his anesthesiologist
observed proper anesthesia protocols. In fact, no evidence on record exists to show that
respondent Dr. Hosaka verified if respondent Dra. Gutierrez properly intubated the
patient. Furthermore, it does not escape the court that respondent Dr. Hosaka had
scheduled another procedure in a different hospital at the same time as Erlinda's
operation, and was in fact over three hours late for the latter's operation. Because of this,
he had little or no time to confer with his anesthesiologist regarding the anesthesia
delivery. This indicates that he was remiss in his professional duties towards his patient.

Thus, he shares equal responsibility for the events which resulted in Erlindas condition.

(2c) As for the hospital (employer) itself, the Court ruled that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee relationship in effect
exists between hospitals and their attending and visiting physicians.

In the instant case, respondent hospital, apart from a general denial of its responsibility
over respondent physicians, failed to adduce evidence showing that it exercised the
diligence of a good father of a family in the hiring and supervision of the latter. It failed to
adduce evidence with regard to the degree of supervision which it exercised over its
physicians. In neglecting to offer such proof, or proof of a similar nature, respondent
hospital thereby failed to discharge its burden under the last paragraph of Article 2180.

Having failed to do this, respondent hospital is consequently solidarily responsible with

its physicians for Erlindas condition.
 2. Prof. Services Inc. v Agana Jan. 31, 2007
FACTS

Natividad Agana was rushed to Medical City because of difficulty of bowel movement and
bloody anal discharge. Dr. Ampil diagnosed her to be suffering from cancer of the sigmoid.
Dr. Ampil performed an anterior resection surgery on her, and finding that the malignancy
spread on her left ovary, he obtained the consent of her husband, Enrique, to permit Dr.
Fuentes to perform hysterectomy on her. After the hysterectomy, Dr. Fuentes showed his
work to Dr. Ampil, who examined it and found it in order, so he allowed Dr. Fuentes to
leave the operating room. Dr. Ampil was about to complete the procedure when the
attending nurses made some remarks on the Record of Operation: “sponge count lacking
2; announced to surgeon search done but to no avail continue for closure” (two pieces of
gauze were missing). A “diligent search” was conducted but they could not be found. Dr.
Ampil then directed that the incision be closed.
A couple of days after, she complained of pain in her anal region, but the doctors
told her that it was just a natural consequence of the surgery. Dr. Ampil recommended
that she consult an oncologist to examine the cancerous nodes which were not removed
during the operation. After months of consultations and examinations in the US, she was
told that she was free of cancer. Weeks after coming back, her daughter found a piece of
gauze (1.5 in) protruding from her vagina, so Dr. Ampil manually extracted this, assuring
Natividad that the pains will go away. However, the pain worsened, so she sought
treatment at a hospital, where another 1.5 in piece of gauze was found in her vagina. She
underwent another surgery.
Sps. Agana filed a complaint for damages against PSI (owner of Medical City), Dr.
Ampil, and Dr. Fuentes, alleging that the latter are liable for negligence for leaving 2
pieces of gauze in Natividad’s body, and malpractice for concealing their acts of
negligence. Enrique Agana also filed an administrative complaint for gross negligence
and malpractice against the two doctors with the PRC (although only the case against Dr.
Fuentes was heard since Dr. Ampil was abroad). Pending the outcome of the cases,
Natividad died (now substituted by her children). RTC found PSI and the two doctors
liable for negligence and malpractice. PRC dismissed the case against Dr. Fuentes. CA
dismissed only the case against Fuentes.
ISSUE AND HOLDING
1. WON CA erred in holding Dr. Ampil liable for negligence and malpractice.
NO; DR. AMPIL IS GUILTY
2. WON CA erred in absolving Dr. Fuentes of any liability. NO
3. WON PSI may be held solidarily liable for Dr. Ampil’s negligence. YES

RATIO
DR. AMPIL IS LIABLE FOR NEGLIGENCE AND MALPRACTICE
His arguments are without basis [did not prove that the American doctors were the ones
who put / left the gauzes; did not submit evidence to rebut the correctness of the operation
record (re: number of gauzes used); re: Dr. Fuentes’ alleged negligence, Dr. Ampil
examined his work and found it in order].
Leaving foreign substances in the wound after incision has been closed is at least
prima facie negligence by the operating surgeon. Even if it has been shown that a surgeon
was required to leave a sponge in his patient’s abdomen because of the dangers
attendant upon delay, still, it is his legal duty to inform his patient within a reasonable time
by advising her of what he had been compelled to do, so she can seek relief from the
effects of the foreign object left in her body as her condition might permit. What’s worse
in this case is that he misled her by saying that the pain was an ordinary consequence of
her operation.

Medical negligence; standard of diligence

To successfully pursue this case of medical negligence, a patient must only prove that a
health care provider either failed to do something [or did something] which a reasonably
prudent health care provider would have done [or wouldn’t have done], and that the failure
or action caused injury to the patient.
● Duty – to remove all foreign objects from the body before closure of the
incision; if he fails to do so, it was his duty to inform the patient about it
● Breach – failed to remove foreign objects; failed to inform patient
● Injury – suffered pain that necessitated examination and another surgery
 ● Proximate Causation – breach caused this injury; could be traced from his act
of closing the incision despite information given by the attendant nurses that 2
pieces of gauze were still missing; what established causal link: gauze pieces
later extracted from patient’s vagina

DR. FUENTES NOT LIABLE

The res ipsa loquitur [thing speaks for itself] argument of the Aganas’ does not convince
the court. Mere invocation and application of this doctrine does not dispense with the
requirement of proof of negligence.

Requisites for the applicability of res ipsa loquitur

1. Occurrence of injury
2. Thing which caused injury was under the control and management of the
defendant [DR. FUENTES] — LACKING SINCE CTRL+MGT WAS WITH
DR. AMPIL
3. Occurrence was such that in the ordinary course of things, would not have
happened if those who had control or management used proper care
4. Absence of explanation by defendant

Under the Captain of the Ship rule, the operating surgeon is the person in complete
charge of the surgery room and all personnel connected with the operation. That Dr. Ampil
discharged such role is evident from the following:
● He called Dr. Fuentes to perform a hysterectomy
● He examined Dr. Fuentes’ work and found it in order
● He granted Dr. Fuentes permission to leave
● He ordered the closure of the incision

HOSPITAL OWNER PSI SOLIDARILY LIABLE WITH DR. AMPIL [NCC 2180], AND
DIRECTLY LIABLE TO SPS. AGANAS [NCC 2176]
Previously, employers cannot be held liable for the fault or negligence of its professionals.
However, this doctrine has weakened since courts came to realize that modern hospitals
are taking a more active role in supplying and regulating medical care to its patients, by
employing staff of physicians, among others. Hence, there is no reason to exempt
hospitals from the universal rule of respondeat superior. Here are the Court’s bases for
sustaining PSI’s liability:
3. Ramos v. CA doctrine on E-E relationship
a. For purposes of apportioning responsibility in medical negligence cases,
an employer-employee relationship in effect exists between hospitals and
their attending and visiting physicians. [LABOR LESSON: power to hire,
fire, power of control]
4. Agency principle of apparent authority / agency by estoppel
a. Imposes liability because of the actions of a principal or employer in
somehow misleading the public into believing that the relationship or the
authority exists [see NCC 1869]
b. PSI publicly displays in the Medical City lobby the names and
specializations of their physicians. Hence, PSI is now estopped from
passing all the blame to the physicians whose names it proudly paraded in
the public directory, leading the public to believe that it vouched for their
skill and competence.
i. If doctors do well, hospital profits financially, so when negligence
mars the quality of its services, the hospital should not be allowed
to escape liability for its agents’ acts.
5. Doctrine of corporate negligence / corporate responsibility
a. This is the judicial answer to the problem of allocating hospital’s liability for
the negligent acts of health practitioners, absent facts to support the
application of respondeat superior.
b. This provides for the duties expected [from hospitals]. In this case, PSI
failed to perform the duty of exercising reasonable care to protect from
harm all patients admitted into its facility for medical treatment. PSI failed
to conduct an investigation of the matter reported in the note of the count
nurse, and this established PSI’s part in the dark conspiracy of silence and
concealment about the gauzes.
 i. PSI has actual / constructive knowledge of the matter, through the
report of the attending nurses + the fact that the operation was
carried on with the assistance of various hospital staff
c. It also breached its duties to oversee or supervise all persons who
practice medicine within its walls and take an active step in fixing the
negligence committed
6. PSI also liable under NCC 2180
a. It failed to adduce evidence to show that it exercised the diligence of a
good father of the family in the accreditation and supervision of Dr. Ampil
7. Prof. Services Inc. v. Agana Feb. 2, 2010 (denial of 2nd M.R.)

SUBJECT MATTER: No employer-employee relationship between doctor and hospital,

but in this circumstance where a doctor advertises himself such that he tends to appear
as the agent of the hospital and by this reason petitioner chose the doctor, the hospital is
liable because of the principle of ostensible agency.

Facts: PSI seeks the modification of the decision in the first case which held them
vicariously and directly liable for the damages to respondents Enrique Agana and the
heirs of Natividad Agana. A bunch of other institutions intervened, saying their cause of
action is the common ground that unless modified, the assailed decision and resolution
will jeopardize the financial viability of private hospitals and jack up the costs of health
care. In a decision dated March 17, 1993, the RTC held PSI solidarily liable with Dr. Ampil
and Dr. Fuentes for damages. On appeal, the Court of Appeals (CA), absolved Dr.
Fuentes but affirmed the liability of Dr. Ampil and PSI, subject to the right of PSI to claim
reimbursement from Dr. Ampil
The premise of holding PSI liable with the Dr. Ampil is that there existed and employer-
employee relationship that for the purposes of allocating responsibility in medical
negligence cases, an employer-employee relationship exists between hospitals and their
consultants. (Ramos v. Court of Appeals). Although the Court in Ramos later issued a
Resolution dated April 11, 2002 reversing its earlier finding on the existence of an
employment relationship between hospital and doctor, a similar reversal was not
warranted in the present case because the defense raised by PSI consisted of a mere
general denial of control or responsibility over the actions of Dr. Ampil

Second, by accrediting Dr. Ampil and advertising his qualifications, PSI created the public
impression that he was its agent.
Finally, as owner and operator of Medical City General Hospital, PSI was bound by its
duty to provide comprehensive medical services to Natividad Agana, to exercise
reasonable care to protect her from harm, to oversee or supervise all persons who
practiced medicine within its walls, and to take active steps in fixing any form of
negligence committed within its premises. PSI committed a serious breach of its corporate
duty when it failed to conduct an immediate investigation into the reported missing
gauzes.

Issue: Whether a hospital may be held liable for the negligence of physicians-consultants
allowed to practice in its premises.

Held: After gathering its thoughts on the issues, this Court holds that PSI is liable to the
Aganas, not under the principle of respondeat superior for lack of evidence of an
employment relationship with Dr. Ampil but under the principle of ostensible agency for
the negligence of Dr. Ampil and, pro hac vice, under the principle of corporate negligence
for its failure to perform its duties as a hospital. Moreover, regardless of its relationship
with the doctor, the hospital may be held directly liable to the patient for its own negligence
or failure to follow established standard of conduct to which it should conform as a
corporation.

The decision in this case was not meant to set a precedent. Due to the unique
circumstance of Dr. Ampil making it appear as though he was the agent of the hospital, a
conduct without which this case would not have arose, PSI was held liable and made to
pay 15M in damages.

8. Locsin v. PLDT Oct. 2, 2009- security guard (who is the employer?)

Facts: On November 1, 1990, respondent Philippine Long Distance Telephone Company

(PLDT) and the Security and Safety Corporation of the Philippines (SSCP) entered into a
Security Services Agreement (Agreement) whereby SSCP would provide armed security
guards to PLDT to be assigned to its various offices. Pursuant to such agreement,
petitioners Raul Locsin and Eddie Tomaquin, among other security guards, were posted
at a PLDT office. On August 30, 2001, respondent issued a Letter dated August 30, 2001
terminating the Agreement effective October 1, 2001. Despite the termination of the
Agreement, however, petitioners continued to secure the premises of their assigned
office. They were allegedly directed to remain at their post by representatives of
respondent. In support of their contention, petitioners provided the Labor Arbiter with
copies of petitioner Locsin’s pay slips for the period of January to September 2002. Then,
on September 30, 2002, petitioners’ services were terminated. Thus, petitioners filed a
complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such
as overtime pay, holiday pay, premium pay for holiday and rest day, service incentive
leave pay, Emergency Cost of Living Allowance, and moral and exemplary damages
against PLDT. The Labor Arbiter rendered a Decision finding PLDT liable for illegal
dismissal. It was explained in the Decision that petitioners were found to be employees
of PLDT and not of SSCP. Such conclusion was arrived at with the factual finding that
petitioners continued to serve as guards of PLDT’s offices. As such employees,
petitioners were entitled to substantive and procedural due process before termination of
employment.

Issue: Is there employer-employee relationship?

Ruling: Yes. From the foregoing circumstances, reason dictates that we conclude that
petitioners remained at their post under the instructions of respondent. We can further
conclude that respondent dictated upon petitioners that the latter perform their regular
duties to secure the premises during operating hours. This, to our mind and under the
circumstances, is sufficient to establish the existence of an employer-employee
relationship. To reiterate, while respondent and SSCP no longer had any legal
relationship with the termination of the Agreement, petitioners remained at their post
securing the premises of respondent while receiving their salaries, allegedly from SSCP.
Clearly, such a situation makes no sense, and the denials proffered by respondent do not
shed any light to the situation. It is but reasonable to conclude that, with the behest and,
presumably, directive of respondent, petitioners continued with their services. Evidently,
such are indicia of control that respondent exercised over petitioners. Evidently,
respondent having the power of control over petitioners must be considered as
petitioners’ employer––from the termination of the Agreement onwards––as this was the
only time that any evidence of control was exhibited by respondent over petitioners and
in light of our ruling in Abella. Thus, as aptly declared by the NLRC, petitioners were
entitled to the rights and benefits of employees of respondent, including due process
requirements in the termination of their services. Both the Labor Arbiter and NLRC found
that respondent did not observe such due process requirements. Having failed to do so,
respondent is guilty of illegal dismissal.

9. Aquinas v. Inton – Jan. 26, 2011

Cathechist conducted by nun of a religious order. Is the school the employer or

congregation?

FACTS: Respondent Jose Luis Inton was a grade 3 student at Aquinas School while
Respondent Yamyamin was a religion teacher at said school. Yamyamin caught Luis
misbehaving in class twice, going over to his classmate instead of copying what was
written on the blackboard. She allegedly kicked him in the legs and shoved his head on
the classmate's seat.

The parents of Luis filed an action for damages on behalf of their son against Yamyamin
and Aquinas school.

With regard to the action for damages, the Intons sought to recover actual, moral, and
exemplary damages, as well as attorneys fees, for the hurt that Jose Luis and his mother
Victoria suffered. The RTC dismissed Victorias personal claims but ruled in Jose Luis
favor, holding Yamyamin liable to him for moral damages of P25,000.00, exemplary
damages of P25,000.00, and attorneys fees of P10,000.00 plus the costs of suit.

Not satisfied, the Intons elevated the case to the Court of Appeals and they asked it to
increase the award of damages and to hold Aquinas solidarily liable with Yamyamin.
Finding that an employer-employee relation existed between Aquinas and Yamyamin, the
CA found them solidarily liable to Jose Luis.

ISSUE: Whether or not Aquinas is solidarily liable with Yamyamin for the damages
awarded to Jose Luis Inton.

HELD:

No. In this case, the school directress testified that Aquinas had an agreement with a
congregation of sisters under which, in order to fulfill its ministry, the congregation would
send religion teachers to Aquinas to provide catechesis to its students. Aquinas insists
that it was not the school but Yamyamins religious congregation that chose her for the
task of catechizing the schools grade three students, much like the way bishops designate
the catechists who would teach religion in public schools. Under the circumstances, it was
quite evident that Aquinas did not have control over Yamyamins teaching methods.
Consequently, it was error for the CA to hold Aquinas solidarily liable with Yamyamin.

Of course, Aquinas still had the responsibility of taking steps to ensure that only qualified
outside catechists are allowed to teach its young students. In this regard, it cannot be
said that Aquinas took no steps to avoid the occurrence of improper conduct towards the
students by their religion teacher.
First, Yamyamins transcript of records, certificates, and diplomas showed that she was
qualified to teach religion.

Second, there is no question that Aquinas ascertained that Yamyamin came from a
legitimate religious congregation of sisters and that, given her Christian training, the
school had reason to assume that she would behave properly towards the students.

Third, the school gave Yamyamin a copy of the schools Administrative Faculty Staff
Manual that set the standards for handling students. It also required her to attend a
teaching orientation before she was allowed to teach beginning that June of 1998.

Fourth, the school pre-approved the content of the course she was to teach to ensure
that she was really catechizing the students.

And fifth, the school had a program for subjecting Yamyamin to classroom evaluation.
Unfortunately, since she was new and it was just the start of the school year, Aquinas did
not have sufficient opportunity to observe her methods. At any rate, it acted promptly to
relieve her of her assignment as soon as the school learned of the incident. It cannot be
said that Aquinas was guilty of outright neglect.

10. Republic v. Asia Pro -- Nov. 23, 2007 Can Cooperative be employers?
Facts:
Asiapro, as a cooperative, is composed of owners-members. Under its by-laws, owners-
members are of two categories, (1) regular member, who is entitled to all the rights and
privileges of membership ; and (2) associate member, who has no right to vote and be
voted upon and shall be entitled only to such rights and privileges provided in its by-laws.
Its primary objectives are to provide savings and credit facilities and to develop other
livelihood services for its owners-members. In the discharge of the aforesaid primary
objectives, respondent cooperative entered into several Service Contracts with Stanfilco
– a division of DOLE Philippines, Inc. and a company based in Bukidnon.

The owners-members do not receive compensation or wages from the respondent

cooperative. Instead, they receive a share in the service surplus which Asiapro earns from
different areas of trade it engages in, such as the income derived from the said Service
Contracts with Stanfilco.

In order to enjoy the benefits under the Social Security Law of 1997, the owners-members
of Asiapro assigned to Stanfilco requested the services of the latter to register them with
SSS as self-employed and to remit their contributions as such.

On September 26, 2002, petitioner SSS sent a letter to respondent cooperative informing
the latter that based on the Service Contracts it executed with Stanfilco, Asiapro is actually
manpower contractor supplying employees to Stanfilco and so, it is an employer of its
owners-members working with Stanfilco. Thus, Asiapro should register itself with
petitioner SSS as an employer and make the corresponding report and remittance of
premium contributions. Despite letters received, respondent cooperative continuously
ignored the demand of petitioner SSS.

Accordingly, SSS filed a petition on June 12, 2003 before SSC against Asiapro and
Stanfilco praying that either of them be directed to register as an employer and to report
Asiapro‘s owners-members as covered employees under the compulsory coverage of
SSS and to remit the necessary contributions. Respondent cooperative filed its answer
with Motion to Dismiss alleging that no employer-employee relationship exists between it
and its owners-members, thus, petitioner SSC has no jurisdiction over the respondent
cooperative.

Issues:

1 Whether or not there exists an employer-employee relationship between Asiapro

Cooperative and its owners-members.

2. Whether or not petitioner has jurisdiction over the petition-complaint filed before it by
SSS against the respondent cooperative.

SC Ruling:

1. In determining the existence of an employer-employee relationship, the following

elements are considered: (1) the selection and engagement of the workers; (2) the
payment of wages by whatever means; (3) the power of dismissal; and (4) the power to
control the worker‘s conduct, with the latter assuming primacy in the overall consideration.
The most important element is the employer‘s control. All the aforesaid elements are
present in this case.

The existence of an employer-employee relationship cannot be negated by expressly

repudiating it in a contract, when the terms and surrounding circumstances show
otherwise. The employment status of a person is defined and prescribed by law and not
by what the parties say it should be.
A cooperative acquires juridical personality upon its registration with the Cooperative
Development Authority. It has its Board of Directors, which directs and supervises its
business; meaning its Board of Directors is the one in charge in the conduct and
management of its affairs. With that, a cooperative can be likened to a corporation with a
personality separate and distinct from its owners-members. Consequently, an owner-
member of a cooperative can be an employee of the latter and the employer-employee
relationship can exist between them.

2. Petitioner SSC‘s jurisdiction is clearly stated in Section 5 of R.A. No. 8282 as well as
in Section 1, Rule III of the 1997 SSS Revised Rules of Procedure.

Sec. 5 of R.A. 8282 provides:

―Sec. 5 Settlement of Disputes – (a) Any dispute arising under this Act with respect to
coverage, benefits, contributions and penalties thereon or any other matter related
thereto, shall be cognizable by the Commission, xxx‖ (Emphasis Supplied)

Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states:

―Section 1. Jurisdiction – Any dispute arising under the Social Security Act with respect
to coverage, entitlement of benefits, collection and settlement of contributions and
penalties thereon, or any other matter related thereto, shall be cognizable by the
Commission after the SSS through its President, Manager or Officer-in-charge of the
Department/Branch/Representative Office concerned had first taken action thereon in
writing.‖ (Emphasis supplied)

It is clear then from the aforesaid provisions that any issue regarding the compulsory
coverage of the SSS is well within the exclusive domain of the petitioner SSC. It is
important to note that the mandatory coverage under the SSS Law is premised on the
existence of an employer-employee relationship. Consequently, the respondent
cooperative being the employer of its owners-members must register as employer and
report its owners-members as covered members of the SSS and remit the necessary
premium contributions in accordance with the Social Security Law of 1997.

Accordingly, based on the allegations in the petition-complaint filed before the petitioner
SSC, the case clearly falls within its jurisdiction.
 11. Bernalte v PBA Sept. 14, 2011- PBA referees- employee or not?

Facts: Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were
invited to join the PBA as referees. During the leadership of Commissioner Emilio
Bernardino, they were made to sign contracts on a year-to-year basis. During the term of
Commissioner Eala, however, changes were made on the terms of their employment.

Complainant Bernarte, for instance, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was
only during the second conference when he was made to sign a one and a half month
contract for the period July 1 to August 5, 2003.

On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory performance
on and off the court. It was a total shock for Bernarte who was awarded Referee of the
year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order
of Ernie De Leon.

On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool
of referees in February 2001. On March 1, 2001, he signed a contract as trainee.
Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003,
respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over
his questioning on the assignment of referees officiating out-of-town games. Beginning
February 2004, he was no longer made to sign a contract.

Respondents aver, on the other hand, that complainants entered into two contracts of
retainer with the PBA in the year 2003. The first contract was for the period January 1,
2003 to July 15, 2003; and the second was for September 1 to December 2003. After the
lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not employees of the PBA.
Their respective contracts of retainer were simply not renewed. PBA had the prerogative
of whether or not to renew their contracts, which they knew were fixed.

In her 31 March 2005 Decision, the Labor Arbiter declared petitioner an employee whose
dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the
reinstatement of petitioner and the payment of backwages, moral and exemplary
damages and attorney’s fees. The NLRC affirmed the Labor Arbiter's judgment.
Respondents filed a petition for certiorari with the Court of Appeals, which overturned the
decisions of the NLRC and Labor Arbiter.
ISSUE: Whether petitioner is an employee of respondents, which in turn determines
whether petitioner was illegally dismissed

HELD: NO, Petitioner is not an employee of the respondents. The SC DENIED the petition
and AFFIRMED the assailed decision of the Court of Appeals.

To determine the existence of an employer-employee relationship, case law has

consistently applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s
power to control the employee on the means and methods by which the work is
accomplished. The so-called “control test” is the most important indicator of the presence
or absence of an employer-employee relationship.

In this case, PBA admits repeatedly engaging petitioner’s services, as shown in the
retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances,
as stipulated in the retainer contract. PBA can terminate the retainer contract for
petitioner’s violation of its terms and conditions.

However, respondents argue that the all-important element of control is lacking in this
case, making petitioner an independent contractor and not an employee of
respondents.The contractual stipulations do not pertain to, much less dictate, how and
when petitioner will blow the whistle and make calls. On the contrary, they merely serve
as rules of conduct or guidelines in order to maintain the integrity of the professional
basketball league. As correctly observed by the Court of Appeals, “how could a skilled
referee perform his job without blowing a whistle and making calls? x x x [H]ow can the
PBA control the performance of work of a referee without controlling his acts of blowing
the whistle and making calls?”

We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an infraction was committed, and
the PBA cannot overrule them once the decision is made on the playing court. The
referees are the only, absolute, and final authority on the playing court. Respondents or
any of the PBA officers cannot and do not determine which calls to make or not to make
and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referees. The very nature of petitioner’s job of officiating a
professional basketball game undoubtedly calls for freedom of control by respondents.

Moreover, unlike regular employees who ordinarily report for work eight hours per day for
five days a week, petitioner is required to report for work only when PBA games are
scheduled or three times a week at two hours per game. In addition, there are no
deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which
are the usual deductions from employees’ salaries. These undisputed circumstances
buttress the fact that petitioner is an independent contractor, and not an employee of
respondents.
 12. Orozco v. CA Aug. 13, 2008) - Inquirer's newspaper columnist- employee or
not?
FACTS:
PDI engaged the services of Orozco to write a weekly column for its Lifestyle section.
She religiously submitted her articles except for a 6-month stint when she went to NY
City. Nevertheless, she continued to send her articles through mail. She also received
compensation for every column that was published.

When Orozco’s column appeared in the newspaper for the last time, her editor,
Logarta, told her that the PDI’s editor-in-chief, Magsanoc, wanted to stop publishing her
columns for no reason at all and advised her to talk to the editor-in-chief. When Orozco
talked to Magsanoc, the latter told her that it was the PDI chairperson who wanted to stop
the publication of her column. However, when Orozco talked to Apostol, the latter told her
that Magsanoc informed her that the Lifestyle section had already many columnists.

PDI claims that Magsanoc met with the editor of the Lifestyle section to discuss
how to improve said section. They agreed to cut down the number of columnists by
keeping only those whose columns were well-written, with regular feedback and following.
In their judgment, petitioner’s column failed to improve, continued to be superficially and
poorly written, and failed to meet the high standards of the newspaper. Hence, they
decided to terminate petitioner’s column.

Orozco filed a complaint for illegal dismissal. The LA decided in favor of petitioner. On
appeal, the NLRC dismissed the appeal and affirmed the LA’s decision. The CA on the
other hand, set aside the NLRC’s decision and dismissed Orozco’s complaint.

Issue:

Whether petitioner is an employee of PDI.

Whether petitioner was illegally dismissed.

Decision:

Petition dismissed. Judgment and Resolution affirmed.

Applying the four-fold test, the Court held that PDI lacked control over the
petitioner. Though PDI issued guidelines for the petitioner to follow in the course of writing
her columns, careful examination reveals that the factors enumerated by the petitioner
are inherent conditions in running a newspaper. In other words, the so-called control as
to time, space, and discipline are dictated by the very nature of the newspaper business
itself. Aside from the constraints presented by the space allocation of her column, there
were no restraints on her creativity; petitioner was free to write her column in the manner
and style she was accustomed to and to use whatever research method she deemed
suitable for her purpose. The apparent limitation that she had to write only on subjects
that befitted the Lifestyle section did not translate to control, but was simply a logical
consequence of the fact that her column appeared in that section and therefore had to
cater to the preference of the readers of that section.

Orozco in this case is considered as an independent contractor. As stated in the

case of Sonza vs. ABS-CBN, independent contractors often present themselves to
possess unique skills, expertise or talent to distinguish them from ordinary employees.
Like the petitioner in the cited case, Petitioner was engaged as a columnist for her talent,
skill, experience, and her unique viewpoint as a feminist advocate. How she utilized all
these in writing her column was not subject to dictation by respondent. As in Sonza,
respondent PDI was not involved in the actual performance that produced the finished
product. It only reserved the right to shorten petitioner’s articles based on the newspaper’s
capacity to accommodate the same. This fact was not unique to petitioner’s column. It is
a reality in the newspaper business that space constraints often dictate the length of
articles and columns, even those that regularly appear therein.

Furthermore, respondent PDI did not supply petitioner with the tools and
instrumentalities she needed to perform her work. Petitioner only needed her talent and
skill to come up with a column every week. As such, she had all the tools she needed to
perform her work. Hence, since Orozco is not an employee of PDI, the latter cannot be
held guilty of illegally dismissing the petitioner.

13. Reyes v. Glaucoma Research Foundation June 17, 2015

-economic reality test
-consultants or employees?
Facts: Petitioner Jesus Reyes filed a complaint for illegal dismissal against the
respondents.

Petitioner alleged that on Aug. 1, 2003, he was hired by respondent as administrator of

the latter's Eye Referral Center. He performed his duties as administrator and continously
reeived his monthly salary of P 20,000.00 until the end of January 2005.
Beginning Feb. 2005, respondent withheld petitioner's salary without notice but he still
continued to report for work. He wrote a letter to respondent Manuel Agulto, who is the
Executive Director of respondent corporation regarding his salaries since Feb. as well as
his 14th month pay for 2004. He did not received any response from Agulto. Afterwards,
he was informed by the asst. Executive Director that he is no longer the Administrator of
ERC, his office was padlocked and closed, and he was not allowed by the security guard
to enter the premise of the ERC

The respondents claimed that there is no employer-employee relationship between them

because respondents had no control over the petitioner in terms of working hours as he
reports for work at anytime of the day and leaves as he pleases. Respondents also had
no control as to the manner in which he performs his alleged duties as consultant. With
this, petitioner was not illegally dismissed by the respondent.

Issue: WON employer-employee relationship exists between the petitioner and the
respondents.
Held: No, Before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.Thus, in filing a complaint before the LA for illegal
dismissal, based on the premise that he was an employee of respondents.

Etched in an unending stream of cases are four standards in determining the existence
of an employer-employee relationship, namely: (a) the manner of selection and
engagement of the putative employee; (b) the mode of payment of wages; (c) the
presence or absence of power of dismissal; and, (d) the presence or absence of control
of the putative employee's conduct. Most determinative among these factors is the so-
called "control test."

Indeed, the power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee relationship. This
test is premised on whether the person for whom the services are performed reserves the
right to control both the end achieved and the manner and means used to achieve that
end.

Well settled is the rule that where a person who works for another performs his job more
or less at his own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not the
amount thereof, no employer-employee relationship exists.

What was glaring in the present case is the undisputed fact that petitioner was never
subject to definite working hours. He never denied that he goes to work and leaves
therefrom as he pleases. In fact, on December 1-31, 2004, he went on leave without
seeking approval from the officers of respondent company. On the contrary, his letter
simply informed respondents that he will be away for a month and even advised them
that they have the option of appointing his replacement during his absence. This Court
has held that there is no employer-employee relationship where the supposed employee
is not subject to a set of rules and regulations governing the performance of his duties
under the agreement with the company and is not required to report for work at any time,
nor to devote his time exclusively to working for the company.

Aside from the control test, the Supreme Court has also used the economic reality test in
determining whether an employer-employee relationship exists between the parties.
Under this test, the economic realities prevailing within the activity or between the parties
are examined, taking into consideration the totality of circumstances surrounding the true
nature of the relationship between the parties. This is especially appropriate when, as in
this case, there is no written agreement or contract on which to base the relationship. In
our jurisdiction, the benchmark of economic reality in analyzing possible employment
relationships for purposes of applying the Labor Code ought to be the economic
dependence of the worker on his employer.

14. Reynaldo Geraldo v Bill Sender Corporation ( Oct. 3, 2018) -- bill sender paid
on piece rate - employee or not?
ON JUNE 20, 1997, respondent The Bill Sender Corp., engaged in the business of
delivering bills and other mail matters, employed petitioner Reynaldo S. Geraldo as a
delivery/messenger to deliver the bills of its client, the Philippine Long Distance
Telephone Company (PLDT).

He was paid on a “per-piece basis,” the amount of his salary depending on the number
of bills he delivered.

In a complaint for illegal dismissal filed by petitioner against respondent, the latter invoked
the defense that petitioner was not a full-time employee but only a piece-rate worker, as
he reported to work only as he pleased, and that it was a usual practice for messengers
to transfer from one company to another to similarly deliver bills and mail matters.

As such, he would only be given bills to deliver if he reports to work, otherwise, the bills
would be assigned to other messengers.

Does this defense find merit?

Ruling: No.

In the instant case, it is undisputed that the company was engaged in the business of
delivering bills and other mail matters for and in behalf of their customers, and that
Geraldo was engaged as a delivery/messenger tasked to deliver bills of the company’s
clients.

Clearly, the company cannot deny the fact that Geraldo was performing activities
necessary or desirable in its usual business or trade, for without his services, its
fundamental purpose of delivering bills cannot be accomplished.

On this basis alone, the law deems Geraldo as a regular employee of the company. But
even considering that he was not a full-time employee as the company insisted, the law
still deems his employment as regular due to the fact that he had been performing the
activities for more than one year. In fact, counting the number of years from the time he
was engaged by the company on June 20, 1997 up to the time his services were
terminated on August 7, 2011 reveals that he has been delivering mail matters for the
company for more than 14 years.

Without question, this amount of time that is well beyond a decade sufficiently discharges
the requirement of the law. While length of time may not be the controlling test to
determine if an employee is indeed a regular employee, it is vital in establishing if he was
hired to perform tasks which are necessary and indispensable to the usual business or
trade of the employer.

The Court, moreover, cannot subscribe to the company’s contention that Geraldo is not
a regular employee but merely a piece-rate worker since his salary depends on the
number of bills he is able to deliver.

In Hacienda Leddy/Ricardo Gamboa Jr. v. Villegas, 743 Phil. 530, 539 (2014), the Court
held that the payment on a piece-rate basis does not negate regular employment. The
term “wage” is broadly defined in Article 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed or ascertained on
a time, task, piece or commission basis.

Payment by the piece is just a method of compensation and does not define the essence
of the relations. Thus, the fact that Geraldo is paid on the basis of his productivity does
not render his employment as contractual.
It must be remembered that notwithstanding any agreements to the contrary, what
determines whether a certain employment is regular is not the will and word of the
employer, to which the desperate worker often accedes, much less the procedure of hiring
the employee or the manner of paying his salary. It is the nature of the activities performed
in relation to the particular business or trades considering all circumstances, and in some
cases the length of time of its performance and its continued existence. (Reynaldo S.
Geraldo vs. The Bill Sender Corp./Ms. Lourdes Ner Cando, G.R. No. 222219, October 3,
2018).

(JEEPNEY AND TAXI DRIVER- BOUNDARY SYSTEM?)

15. Martinez v NLRC 339 Phil 176 citing National Labor Union v Dinglasan 98 Phil
649

Facts:
Raul Martinez was an operator of two taxicab units under business name PAMATX and
another two units under business name TIGERTX. Private respondents worked for him
as drivers. When Martinez died, he left behind his mother, Nelly Martinez as his sole heir.

July 1992, the drivers lodged complaint against Raul and Nelly before the labor arbiter for
violation of PD 851 and illegal dismissal. They alleged that they have been regular drivers
of Raul earning 400 a day, not once during their employment that they received 13th
month pay. When Nelly assumed the management of the units, she informed the drivers
that she will sell the units for she can't manage it, but later did not proceed with her plan
and assigned the units to other drivers instead.

Nelly traversed that the 13th month pay was personal to Raul and therefore didn't survive
the death of Raul. Nelly contend too that the drivers were not entitled of the benefits of
PD 851 because paid on purely boundary basis which are not covered by PD 851, the
relationship was not employer-employee but that od lessee-lessor.

On 30 August 1993 the Labor Arbiter dismissed the complaint on the following
grounds: (a) private respondents' claims being personal were extinguished upon the
death of Raul Martinez; (b) petitioner was a mere housewife who did not possess the
required competence to manage the business; and, (c) private respondents were not
entitled to 13th month pay because the existence of employer-employee relationship
was doubtful on account of the boundary system adopted by the parties.

However, respondent National Labor Relations Commission viewed the case

differently. According to NLRC, (a) private respondents were regular drivers because
payment of wages, which is one of the essential requisites for the existence of
employment relation, may either be fixed, on commission, boundary, piece-rate or task
basis; (b) the management of the business passed on to petitioner who even replaced
private respondents with a new set of drivers; and, (c) the claims of private respondents
survived the death of Raul Martinez considering that the business did not cease operation
outright but continued presumably, in the absence of proof of sale, up to the moment.
On 28 January 1994 respondent NLRC thus set aside the appealed decision, and as
alternative to reinstatement, ordered petitioner to grant respondents separation pay
equivalent to one (1) month salary for every year of service a fraction of six (6) months
being considered as one (1) whole year. On 30 September 1994 the motion for
reconsideration was denied. Hence, this recourse of petitioner.

Ruling:
The claim for 13th month pay pertains to the personal obligation of Raul Martinez which
did not survive his death. The rule is settled that unless expressly assumed, labor
contracts are not enforceable against the transferee of an enterprise. In the present case,
petitioner does not only disavow that she continued the operation of the business of her
son but also disputes the existence of labor contracts between her son and private
respondents.

The reason for the rule is that labor contracts are in personam, and that claims for
backwages earned from the former employer cannot be filed against the new owners of
an enterprise. Nor is the new operator of a business liable for claims for retirement pay of
employees. Thus the claim of private respondents should have been filed instead in the
intestate proceedings involving the estate of Raul Martinez in accordance with Sec. 5,
Rule 86, of the Rules of Court.

In National Labor Union v. Dinglasan,[9] this Court 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.

In the present case, however, private respondents simply assumed the continuance of an
employer-employee relationship between them and petitioner, when she took over the
operation of the business after the death of her son Raul Martinez, without any
supporting evidence. Consequently, we cannot sustain for lack of basis the factual finding
of respondent NLRC on the existence of employer-employee relationship between
petitioner and private respondents. Clearly, such finding emanates from grave abuse of
discretion. With this conclusion, consideration of the issue on illegal dismissal becomes
futile and irrelevant.

WHEREFORE, the petition is GRANTED. The Decision of respondent National Labor

Relations Commission dated 28 January 1994 ordering petitioner Nelly Acta Martinez to
grant respondents separation pay as well as its Order of 30 September 1994 denying
reconsideration is SET ASIDE. The Decision of the Labor Arbiter dated 30 August 1993
dismissing the complaint is REINSTATED.
Art. 224 Jurisdiction

16. Halaguena v. PAL Oct. 2, 2009

Compulsory retirement of females; is it labor issue or not? Who has jurisdiction? RTC or
NLRC?

Facts:
Petitioners were employed as flight attendants of respondent on different dates prior to
November 1996. They are members of FASAP union exclusive bargaining organization
of the flightattendants, flight stewards and pursers. On July 2001, respondent and FASAP
entered into a CBA incorporating the terms and conditions of their agreement for the years
2000 to 2005 (compulsory retirement of 55 for female and 60 for males).

In July 2003, petitioner and several female cabin crews, in a letter, manifested that the
provision in CBA on compulsory retirement is discriminatory. On July 2004, petitioners
filed a Special Civil Action for Declaratory Relief with issuanceof TRO with the RTC
Makati. The RTC issued a TRO. After the denial of the respondent on itsmotion for
reconsideration for the TRO, it filed a Petition with the CA. CA granted respondent’s
petition and ordered lower court to dismiss the case. Hence, this petition.

Issue:
Whether or not the regular courts has jurisdiction over the case.

Ruling:
Yes. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable
by the RTC. Being an ordinary civil action, the same is beyond the jurisdiction of labor
tribunals.

Not every controversy or money claim by an employee against the employer or vice-versa
is within the exclusive jurisdiction of the labor arbiter. Actions between employees and
employer where the employer-employee relationship is merely incidental and the cause
of action precedes from a different source of obligation is within the exclusive jurisdiction
of the regular court.

Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.The
said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the
application of the Constitution, labor statutes, law on contracts and the Convention on the
Elimination of All Forms of Discrimination Against Women, and the power to apply and
interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of
general jurisdiction. In GeorgGrotjahn GMBH & Co. v. Isnani, this Court held that not
every dispute between an employer and employee involves matters that only labor
arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial
powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor
Code is limited to dispute arising from an employer-employee relationship which can only
be resolved by reference to the Labor Code other labor statutes, or their collective
bargaining agreement.

17. Portillo v Lietz ( Oct. 10, 2012)- non-compete clause- claim for liquidated
damages- civil courts
Doctrine: The "reasonable causal connection with the employer-employee relationship"
is a requirement not only in employees' money claims against the employer but is,
likewise, a condition when the claimant is the employer.

Facts: Marietta Portillo (Portillo) was promoted to Sales Representative and received a
corresponding increase in basic monthly salary sales and sales quota on her 10th year
with Lietz, Inc. In this regard, Portillo signed another letter agreement containing a
“Goodwill Clause.”
Three years thereafter, Portillo resigned from her employment and demanded from Lietz
Inc. for the payment of her remaining salaries and commissions not paid to her upon such
resignation. Later, within the 3-year prohibitory period, Lietz learned that Portillo was hired
by Ed Keller Philippines, a direct competitor of Lietz, as head of its Pharma Raw Material
Department.
Portillo's demands from Lietz, Inc. for the payment of her remaining salaries and
commissions went unheeded. Lietz, Inc. gave Portillo the run around, on the pretext that
her salaries and commissions were still being computed. She filed a complaint with the
NLRC for non-payment of 1½ months’ salary, 2 months’ commission, 13th month pay,
plus moral, exemplary and actual damages and attorney’s fees.
In its position paper, Lietz admitted liability for Portillo’s money claims. However, Lietz
raised the defense of legal compensation, stating that Portillo’s money claims should be
offset against her liability to Lietz for liquidated damages for Portillo’s breach of the
“Goodwill Clause” in the employment contract when she became employed with Ed
Keller.

Issue: Should Portillo’s money claims for unpaid salaries be offset against Lietz’ claim for
liquidated damages?

Ruling: No. There is no causal connection between the petitioner employees' claim for
unpaid wages and the respondent employers' claim for damages for the alleged "Goodwill
Clause" violation. Portillo's claim for unpaid salaries did not have anything to do with her
alleged violation of the employment contract as, in fact, her separation from employment
is not "rooted" in the alleged contractual violation. She resigned from her employment.
She was not dismissed. Portillo's entitlement to the unpaid salaries is not even contested.
Indeed, Lietz, Inc.'s argument about legal compensation necessarily admits that it owes
the money claimed by Portillo. The alleged contractual violation did not arise during the
existence of the employer-employee relationship. It was a post-employment matter, a
post-employment violation.

18. Milan v NLRC Feb. 4, 2015 - employer may hold separation pay pending
return of property (ejectment from company premises)

-jurisdiction of claims by employer for damages

FACTS: Petitioners are Solid Mills, Inc.’s employees. They are represented by the
National Federation of Labor Unions (NAFLU), their collective bargaining agent.
Petitioners and their families were allowed to occupy SMI Village, a property owned by
Solid Mills out of liberality and for the convenience of its employees . . . [and] on the
condition that the employees . . . would vacate the premises anytime the Company deems
fit.” Petitioners were informed that effective October 10, 2003, Solid Mills would cease its
operations due to serious business losses. NAFLU recognized Solid Mills’ closure due to
serious business losses in the memorandum of agreement. The memorandum of
agreement provided for Solid Mills’ grant of separation pay less accountabilities, accrued
sick leave benefits, vacation leave benefits, and 13th month pay to the employees. Later,
Solid Mills, sent to petitioners individual notices to vacate SMI Village. They were required
to sign a memorandum of agreement with release and quitclaim before their pay would
be released. Petitioners refused to sign the documents and demanded to be paid their
benefits and separation pay. Hence, petitioners filed complaints before the Labor Arbiter
for alleged non-payment. They argued that their accrued benefits and separation pay
should not be withheld because their payment is based on company policy and practice.
Moreover, the 13th month pay is based on law. Their possession of Solid Mills property
is not an accountability that is subject to clearance procedures. Petitioners argue that
respondent Solid Mills and NAFLU’s memorandum of agreement has no provision stating
that benefits shall be paid only upon return of the possession of respondent Solid Mills’
property. It only provides that the benefits shall be “less accountabilities,” which should
not be interpreted to include such possession.

ISSUE: WON PAYMENT OF THE MONETARY CLAIMS OF PETITIONERS SHOULD

BE HELD IN ABEYANCE PENDING COMPLIANCE OF THEIR ACCOUNTABILITIES TO
RESPONDENT SOLID MILLS BY TURNING OVER THE SUBJECT LOTS THEY
RESPECTIVELY OCCUPY AT SMI VILLAGE, SUCAT, MUNTINLUPA CITY.
HELD: YES. Requiring clearance before the release of last payments to the employee is
a standard procedure among employers, whether public or private. Clearance procedures
are instituted to ensure that the properties, real or personal, belonging to the employer
but are in the possession of the separated employee, are returned to the employer before
the employee’s departure. As a general rule, employers are prohibited from withholding
wages from employees. The Labor Code provides:
Art. 116. Withholding of wages and kickbacks prohibited.
Art. 100. Prohibition against elimination or diminution of benefits. Art. 113. Wage
deduction. No employer, in his own behalf or in behalf of any person, shall make
any deduction from the wages of his employees, except: In cases where the
employer is authorized by law or regulations issued by the Secretary of Labor and
Employment. The Civil Code provides that the employer is authorized to withhold
wages for debts due:

Article 1706. Withholding of the wages, except for a debt due, shall not be made
by the employer.

“Debt” in this case refers to any obligation due from the employee to the employer.
It includes any accountability that the employee may have to the employer. There
is no reason to limit its scope to uniforms and equipment, as petitioners would
argue.

“Accountability,” in its ordinary sense, means obligation or debt. As long as the

debt or obligation was incurred by virtue of the employer-employee relationship,
generally, it shall be included in the employee’s accountabilities that are subject to
clearance procedures.

In this case, respondent Solid Mills claims that its properties are in petitioners’
possession by virtue of their status as its employees. Respondent Solid Mills
allowed petitioners to use its property as an act of liberality. Put in other words, it
would not have allowed petitioners to use its property had they not been its
employees. It may be true that not all employees enjoyed the privilege of staying
in respondent Solid Mills’ property. However, this alone does not imply that this
privilege when enjoyed was not a result of the employer-employee relationship.
Petitioners’ possession should, therefore, be included in the term “accountability.”
The return of the property’s possession became an obligation or liability on the part
of the employees when the employeremployee relationship ceased. Thus,
respondent Solid Mills has the right to withhold petitioners’ wages and benefits
because of this existing debt or liability. The law does not sanction a situation
 where employees who do not even assert any claim over the employer’s property
are allowed to take all the benefits out of their employment while they
simultaneously withhold possession of their employer’s property for no rightful
reason. Withholding of payment by the employer does not mean that the employer
may renege on its obligation to pay employees their wages, termination payments,
and due benefits. The employees’ benefits are also not being reduced. It is only
subjected to the condition that the employees return properties properly belonging
to the employer. This is only consistent with the equitable principle that “no one
shall be unjustly enriched or benefited at the expense of another.”

19. Locson v. Mekeni ( Dec. 9, 2013)- car installment refund of car plan

Doctrine: Article 2142 of the Civil Code clarifies that there are certain lawful, voluntary
and unilateral acts which give rise to the juridical relation of quasi-contract, to the end that
no one shall be unjustly enriched or benefited at the expense of another. In the absence
of specific terms and conditions governing the car plan arrangement between the
petitioner and Mekeni, a quasi-contractual relation was created between them.
Facts: Respondent Mekeni is the employer of petitioner Locsin. When the latter was hired
he was offered a car plan, under which ½ of the cost of the vehicle is to be paid by the
company and the other ½ to be deducted from petitioner’s salary. Petitioner began
working on March 17, 2004, the car furnished to him is a used Honda Civic valued at
P280,000. Petitioner paid for his 50% share through salary deductions of P5,000 each
month.

Subsequently, petitioner resigned effective February 25, 2006. By then, a total of

P112,500 had been deducted from his monthly salary and applied as part of the
employee’s share in the car plan. In his resignation letter, petitioner made an offer to
purchase his service vehicle by paying the outstanding balance thereon. However, the
parties could not agree on the terms of the proposed purchase. Petitioner thus returned
the vehicle to Mekeni on May 2, 2006.
Petitioner made personal and written follow-ups but to no avail. Mekeni even replied that
the company car plan benefit applied only to employees who have been with the company
for five years. On May 3, 2007, petitioner filed against Mekeni a complaint for recovery of
monetary claims and recovery of monthly salary deductions which were earmarked for
his cost-sharing in the car plan with the NLRC.

Labor Arbiter: Judgment is rendered directing Mekeni to turn-over to

petitioner the vehicle upon his payment of the sum of P100,435.84.
 On appeal; NLRC: LA reversed and set aside and ordering Mekeni to pay
petitioner monetary claims and REIMBURSEMENT of petitioner’s payment under the car
plan agreement in the amount of P112,500 and the equivalent share of the company as
part of the petitioner’s benefit under the car plan 50/50 sharing amounting to P112,500.
It ruled that petitioner’s amortization payments on his service vehicle should be
reimbursed; if not, UNJUST ENRICHMENT would result, as the vehicle remained in the
possession and ownership of Mekeni. In addition, Mekeni’s share in the monthly car plan
should likewise be awarded to petitioner because it forms part of the latter’s benefits under
the car plan.

CA; Petition for Certiorari: GRANTED. Resolution of NLRC, modified.

Reimbursement of petitioner’s payment under the car plan and payment to him to
Mekeni’s 50% share are DELETED. The CA applied the ruling in Elisco Tool
Manufacturing Corporation v. CA wherein it held that there should be no reimbursement
because there are stipulations in the car plan agreements to the effect that “should the
employment of the employee concerned be terminated before all installments are fully
paid, the vehicle will be taken by the employer and all installments paid shall be
considered rentals per agreement”. So in the absence of stipulation in the car plan
agreement between Mekeni and petitioner, the CA treated petitioner’s monthly
contributions as rentals for the use of his service vehicle for the duration of his
employment. Moreover, it ruled that petitioner cannot recover Mekeni’s share in the
purchase price as this would constitute UNJUST ENRICHMENT on the part of petitioner
at Mekeni’s expense.

Issue: WON the petitioner is entitled to refund of all amounts applied to the cost of the
service vehicle under the car plan.
Held: YES, but only to his monthly contributions in the car plan agreement.

From the evidence on record, it is seen that the Mekeni car plan offered to petitioner was
subject to no other term or condition than that Mekeni shall cover one-half of its value,
and petitioner shall in turn pay the other half through deductions from his monthly salary.
Mekeni has not shown, by documentary evidence or otherwise, that there are other terms
and conditions governing its car plan agreement with petitioner. There is no evidence to
suggest that if petitioner failed to completely cover one-half of the cost of the vehicle, then
all the deductions from his salary going to the cost of the vehicle will be treated as rentals
for his use thereof while working with Mekeni, and shall not be refunded. Indeed, there is
no such stipulation or arrangement between them. Thus, the CA’s reliance on Elisco Tool
is without basis, and its conclusions arrived at in the questioned decision are manifestly
mistaken. It was a patent error for the appellate court to assume that, even in the absence
of express stipulation, petitioner’s payments on the car plan may be considered as rentals
which need not be returned.
Indeed, the Court cannot allow that payments made on the car plan should be forfeited
by Mekeni and treated simply as rentals for petitioner’s use of the company service
vehicle. Nor may they be retained by it as purported loan payments, as it would have this
Court believe. In the first place, there is precisely no stipulation to such effect in their
agreement. Secondly, it may not be said that the car plan arrangement between the
parties was a benefit that the petitioner enjoyed; on the contrary, it was an absolute
necessity in Mekeni’s business operations, which benefited it to the fullest extent.

In light of the foregoing, it is unfair to deny petitioner a refund of all his contributions to
the car plan. Under Article 22 of the Civil Code, “every person who through an act of
performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same
to him.” Article 2142 of the same Code likewise clarifies that there are certain lawful,
voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to
the end that no one shall be unjustly enriched or benefited at the expense of another. In
the absence of specific terms and conditions governing the car plan arrangement
between the petitioner and Mekeni, a quasi-contractual relation was created between
them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its
vehicle which is otherwise absolutely necessary to the full and effective promotion of its
business. It may not, under the claim that petitioner’s payments constitute rents for the
use of the company vehicle, refuse to refund what petitioner had paid, for the reasons
that the car plan did not carry such a condition; the subject vehicle is an old car that is
substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni for the
most part; and any personal benefit obtained by petitioner from using the vehicle was
merely incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni’s counterpart

contribution to the cost of the vehicle; that is not property or money that belongs to him,
nor was it intended to be given to him in lieu of the car plan.

20. Real v.Sangu ( Jan. 19, 2011) - corporate dispute or not?

Facts:
Renato Real was the Manager of respondent corporation Sangu Philippines, Inc. which
is engaged in the business of providing manpower for general services. He filed a
complaint for illegal dismissal against the respondents stating that he was neither notified
of the Board meeting during which his removal was discussed nor was he formally
charged with any infraction.

Respondents, on the other hand, said that Real committed gross acts of misconduct
detrimental to the company since 2000. The LA declared petitioner as having been
illegally dismissed. Sangu appealed to NLRC and established petitioner’s status as a
stockholder and as a corporate officer and hence, his action against respondent
corporation is an intra-corporate controversy over which the Labor Arbiter has no
jurisdiction. NLRC modified the LA’s decision. On appeal, the CA affirmed the decision of
NLRC.
Hence, this petition.

Issue:
Whether or not petitioner’s complaint for illegal dismissal constitutes an intra-corporate
controversy.

Ruling:
To determine whether a case involves an intra-corporate controversy, and is to be heard
and decided by the branches of the RTC specifically designated by the Court to try and
decide such cases, two elements must concur: (a) the status or relationship of the parties,
and (2) the nature of the question that is the subject of their controversy.

The first element requires that the controversy must arise out of intra-corporate or
partnership relations between any or all of the parties and the corporation x x . The second
element requires that the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the controversy involves matters that are
purely civil in character, necessarily, the case does not involve an intra-corporate
controversy.

Guided by this recent jurisprudence, we thus find no merit in respondents’ contention that
the fact alone that petitioner is a stockholder and director of respondent corporation
automatically classifies this case as an intra-corporate controversy. To reiterate, not all
conflicts between the stockholders and the corporation are classified as intra-corporate.
There are other factors to consider in determining whether the dispute involves corporate
matters as to consider them as intra-corporate controversies.