14. ROSARIO BROTHERS VS.
OPLE by private respondents, violations of which, in extreme cases,
FACTS: Private respondents are tailors, pressers, stitchers and similar
workers hired by the petitioner in its tailoring department (Modes
Suburbia). Some had worked there since 1969 until their separation on
January 2, 1978. For their services, they were paid weekly wages on
piecework basis, minus the withholding tax per Bureau of Internal Revenue
(BIR) rules. Further, they were registered with the Social Security System
(SSS) as employees of petitioner and premiums were deducted from their
wages; they were also members of the Avenida-Cubao Manila COD
Department Store Labor Union which has a Collective Bargaining
Agreement with the company; and, they were required to report for work
from Monday through Saturday and to stay in the tailoring shop for no less
than eight (8) hours a day, unless no job order was given them after waiting
for two to three hours, in which case, they may leave and may come back in
the afternoon. Their attendance was recorded through a bundy clock just
like the other employees of petitioner. A master cutter distributes job
orders equally, supervises the work and sees to it that they were finished as
soon as possible.
On September 7, 1977, the private respondents filed with the Regional
Office of the Department of Labor a complaint for violation of Presidential
Decree 851 (13th month pay) and Presidential Decree 525, as amended by
Presidential Decree 1123 (Emergency Living Allowance) against herein
petitioner.
After petitioner had filed its answer, the case was certified for compulsory
arbitration to the Labor Arbiter who, after due hearing, rendered a decision
on December 29, 1977 dismissing "private respondents' claims for unpaid
emergency living allowance and 13th month pay, for lack of merit, upon
finding that the complainants (herein private respondents) are not
employees of the respondent (herein petitioner) within the meaning of
Article 267(b) of the Labor Code. As a consequence, the private
respondents were dismissed on January 2, 1978 and this prompted them to
file a complaint for illegal dismissal with the Ministry of Labor. Meanwhile,
the National Labor Relations Commission (NLRC) affirmed the decision of
the Labor Arbiter and dismissed private respondents' appeal for lack of
merit. Upon appeal to the Minister of Labor, the latter reversed the
resolution of the NLRC.
ISSUE: Whether an employer-employee relationship exists between the
petitioner and the private respondents
HELD: the existence of employer-employee relationship is determined by
the following elements, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control employees' conduct although the latter is the most
important element. On the other hand, an independent contractor is one
who exercises independent employment and contracts to do a piece of
work according to his own methods and without being subjected to control
of his employer except as to the result of his work.
1. In the case at bar, as found by the public respondent, the
selection and hiring of private respondents were done by the
petitioner, through the master cutter of its tailoring
department who was a regular employee.
2. Private respondents received their weekly wages from
petitioner on piece-work basis which is within the scope and
meaning of the term "wage" as defined under Article 97(f) of
the New Labor Code
3. Petitioner had the power to dismiss private respondents, as
shown by the various memoranda issued for strict compliance
respondent Jaime Sahot was not an industrial partner but an employee of
are grounds for outright dismissal.
4. Private respondents' conduct in the performance of their work
was controlled by petitioner, such as: (1) they were required to
work from Monday through Saturday; (2) they worked on job
orders without waiting for the deadline; (3) they were to
observe cleanliness in their place of work and were not
allowed to bring out tailoring shop patterns; and (4) they were
subject to quality control by petitioner.
5. Private respondents were allowed to register with the Social
Security System (SSS) as employees of petitioner and
premiums were deducted from their wages just like its other
employees. And, withholding taxes were also deducted from
their wages for transmittal to the Bureau of Internal Revenue
(BIR).
15. SY VS CA
FACTS: Sometime in 1958, private respondent Jaime Sahot[5] started
working as a truck helper for petitioners’ family-owned trucking business
named Vicente Sy Trucking. In 1965, he became a truck driver of the same
family business, renamed T. Paulino Trucking Service, later 6B’s Trucking
Corporation in 1985, and thereafter known as SBT Trucking Corporation
since 1994. Throughout all these changes in names and for 36 years, private
respondent continuously served the trucking business of petitioners. When
Sahot was 59 years old, he incurred several absences due to various
ailments. Particularly causing him pain was his left thigh, which greatly
affected the performance of his task as a driver. He inquired about his
medical and retirement benefits with the Social Security System (SSS) on
April 25, 1994, but discovered that his premium payments had not been
remitted by his employer.Sahot filed a week-long leave to get medical
attention. He was treated for EOR, presleyopia, hypertensive retinopathy G
II and heart enlargement. Because of such, Belen Paulino of the SBT
Trucking Service management told him to file a formal request for
extension of his leave. When Sahot applied for an extended leave, he was
threatened of termination of employment should he refuse to go back to
work. Eventually, Sahot was dismissed from employment which prompted
the latter to file an illegal dismissal case with the NLRC. For their part,
petitioners admitted they had a trucking business in the 1950s but denied
employing helpers and drivers. They contend that private respondent was
not illegally dismissed as a driver because he was in fact petitioner’s
industrial partner. They add that it was not until the year 1994, when SBT
Trucking Corporation was established, and only then did respondent Sahot
become an employee of the company, with a monthly salary that reached
P4,160.00 at the time of his separation. The NLRC and the CA ruled that
Sahot was an employee of the petitioner.
ISSUE: Whether Sahot is an industrial partner
RULING: No. Article 1767 of the Civil Code states that in a contract of
partnership two or more persons bind themselves to contribute money,
property or industry to a common fund, with the intention of dividing the
profits among themselves. Not one of these circumstances is present in this
case. No written agreement exists to prove the partnership between the
parties. Private respondent did not contribute money, property or industry
for the purpose of engaging in the supposed business. There is no proof
that he was receiving a share in the profits as a matter of course, during the
period when the trucking business was under operation. Neither is there
any proof that he had actively participated in the management,
administration and adoption of policies of the business. Thus, the NLRC and
the CA did not err in reversing the finding of the Labor Arbiter that private
respondent was an industrial partner from 1958 to 1994. On this point, the
Court affirmed the findings of the appellate court and the NLRC. Private
petitioners from 1958 to 1994. The existence of an employer-employee
relationship is ultimately a question of fact and the findings thereon by the
NLRC, as affirmed by the Court of Appeals, deserve not only respect but
finality when supported by substantial evidence. Substantial evidence is
such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.
16. MANILA GOLF & COUNTRY CLUB v. IAC and Fermin Llamar
FACTS: Respondent Fermin Llamar and his fellow caddies filed with the
Social Security Commission for coverage and availment of benefits under
the Social Security Act. Subsequently, all but 2 of the original 17 petitioners
withdrew their claim for social security coverage. The case continued and
was adjudicated by the SSC only as regards the 2 holdouts dismissing their
petition and stating that the caddies were never employees of petitioner.
An appeal was taken to the IAC but the other caddy’s appeal was dismissed
at his instance, leaving respondent Llamar the lone appellant. The IAC
found for Llamar finding employer-employee relationship between him and
petitioner.
ISSUE: Whether or not respondent Llamar is an employee of petitioner.
RULING: NO. The various matters of conduct, dress, language, etc. covered
by the petitioner’s regulations, does not, in the mind of the Court, so
circumscribe the actions or judgment of the caddies concerned as to leave
them little or no freedom of choice whatsoever in the manner of carrying
out their services. The Court agrees with petitioner that the group rotation
system so-called, is less a measure of employer control than an assurance
that the work is fairly distributed, a caddy who is absent when his turn
number is called simply losing his turn to serve and being assigned instead
the last number for the day.
In the final analysis, petitioner has no way of compelling the presence of
the caddies as they are not required to render a definite number of hours
of work on a single day. Even the group rotation of caddies is not absolute
because a player is at liberty to choose a caddy of his preference regardless
of the caddy’s order in the rotation. It can happen that a caddy who has
rendered services to a player on one day may still find sufficient time to
work elsewhere. Under such circumstances, he may then leave the
premises of petitioner and go to such other place of work that he wishes.
Or a caddy who is on call for a particular day may deliberately absent
himself if he has more profitable caddying, or another, engagement in
some other place. These are things beyond petitioner’s control and for
which it imposes no direct sanctions on the caddies.
17. SEMBLANTE V. CA
FACTS: Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar)
assert that they were hired by respondents-spouses Vicente and Maria
Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as the official
masiador and sentenciador, respectively, of the cockpit sometime in 1993.
As themasiador, Semblante calls and takes the bets from the gamecock
owners and other bettors and orders the start of the cockfight. He also
distributes the winnings after deducting thearriba, or the commission for
the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper
gaffing of fighting cocks, determines the fighting cocks physical condition
and capabilities to continue the cockfight, and eventually declares the
result of the cockfight.
On November 14, 2003, however, petitioners were denied entry into the
cockpit upon the instructions of respondents, and were informed of the
termination of their services effective that date. This prompted petitioners
to file a complaint for illegal dismissal against respondents. In answer,
respondents denied that petitioners were their employees and alleged that
they were associates of respondents independent contractor, Tomas Vega.
Respondents claimed that petitioners have no regular working time or day
and they are free to decide for themselves whether to report for work or
not on any cockfighting day. In times when there are few cockfights
inGallera de Mandaue, petitioners go to other cockpits in the vicinity.
Lastly, petitioners, so respondents assert, were only issued identification
cards to indicate that they were free from the normal entrance fee and to
differentiate them from the general public.
Labor Arbiter Julie C. Rendoque found petitioners to be regular employees
of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of
years. The Labor Arbiter also ruled that petitioners were illegally dismissed,
and so ordered respondents to pay petitioners their backwages and
separation pay. Respondents counsel received the Labor Arbiters Decision
on September 14, 2004. And within the 10-day appeal period, he filed the
respondents appeal with the NLRC on September 24, 2004, but without
posting a cash or surety bond equivalent to the monetary award granted by
the Labor Arbiter. It was only on October 11, 2004 that respondents filed an
appeal bond dated October 6, 2004. Hence, in a Resolution dated August
25, 2005, the NLRC denied the appeal for its non-perfection. Subsequently,
however, the NLRC, acting on respondents Motion for Reconsideration,
reversed its Resolution on the postulate that their appeal was meritorious
and the filing of an appeal bond, albeit belated, is a substantial compliance
with the rules.The NLRC held in its Resolution of October 18, 2006 that
there was no employer-employee relationship between petitioners and
respondents, respondents having no part in the selection and engagement
of petitioners, and that no separate individual contract with respondents
was ever executed by petitioners. The appellate court found for
respondents, noting that referees and bet-takers in a cockfight need to
have the kind of expertise that is characteristic of the game to interpret
messages conveyed by mere gestures. Hence, petitioners are akin to
independent contractors who possess unique skills, expertise, and talent to
distinguish them from ordinary employees. The CA refused to reconsider its
Decision. Hence, petitioners came to this Court, arguing in the main that
the CA committed a reversible error in entertaining an appeal, which was
not perfected in the first place.
ISSUE: Did the CA err in entertaining an appeal which was not perfected?
HELD: Indeed, the posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the Decision of the Labor
Arbiter. Article 223 of the Labor Code provides:
Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions,
awards, or orders. Such appeal may be entertained only on any of the
following grounds: In case of a judgment involving a monetary award,an
appeal by the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the
judgment appealed from.
Time and again, however, this Court, considering the substantial merits of
the case, has relaxed this rule on, and excused the late posting of, the
appeal bond when there are strong and compelling reasons for the
liberality, such as the prevention of miscarriage of justice extant in the
caseor the special circumstances in the case combined with its legal merits
or the amount and the issue involved.After all, technical rules cannot
prevent courts from exercising their duties to determine and settle,
equitably and completely, the rights and obligations of the parties. This is
one case where the exception to the general rule lies. While respondents
had failed to post their bond within the 10-day period provided above, it is
evident, on the other hand, that petitioners are NOT employees of
respondents, since their relationship fails to pass muster the four-fold test
of employment We have repeatedly mentioned in countless decisions:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employees conduct, which is the most
important element.
As found by both the NLRC and the CA, respondents had no part in
petitioners selection and management; petitioners compensation was paid
out of the arriba (which is a percentage deducted from the total bets), not
by petitioners; and petitioners performed their functions as masiador and
sentenciador from the direction and control of respondents. In the conduct
of their work, petitioners relied mainly on their expertise that is
characteristic of the cockfight gambling, and were never given by
respondents any tool needed for the performance of their work.
Respondents, not being petitioners employers, could never have dismissed,
legally or illegally, petitioners, since respondents were without power or
prerogative to do so in the first place. The rule on the posting of an appeal
bond cannot defeat the substantive rights of respondents to be free from
an unwarranted burden of answering for an illegal dismissal for which they
were never responsible. Strict implementation of the rules on appeals must
give way to the factual and legal reality that is evident from the records of
this case.After all, the primary objective of our laws is to dispense justice
and equity, not the contrary. DENIED.
18. 'BROTHERHOOD' LABOR UNITY MOVEMENT OF PHILIPPINES v.
RONALDO B. ZAMORA
FACTS: The records disclose that on July 11, 1969, BLUM filed a complaint
with the now defunct Court of Industrial Relations, charging San Miguel
Corporation
and its... and the... officers... of unfair labor practice... and of illegal
dismissal. It was alleged that respondents ordered the individual
complainants to disaffiliate from the complainant union; and that
management dismissed the individual complainants... when they insisted
on their union membership. On their part, respondents moved for the
dismissal of the complaint on the grounds that the complainants are not
and have never been employees of respondent company but employees of
the independent contractor; that respondent company has never had
control over... the means and methods followed by the independent
contractor who enjoyed full authority to hire and control said employees;
and that the individual complainants are barred by estoppel from asserting
that they are employees of respondent company. The dispute was taken
over by the National Labor Relations Commission (NLRC) with the decreed
abolition of the CIR and the hearing of the case Labor Arbiter... found for
complainants which was concurred in by the NLRC The amount of
backwages awarded, however, was reduced by NLRC to the equivalent... of
one (1) year salary. On appeal, the Secretary... set aside the NLRC ruling,
stressing the absence of an employer-employee relationship as borne out
by the records of the case. The petitioners strongly argue that there exists
an employer-employee relationship between them and the respondent
company and that they were dismissed for unionism, an act constituting
unfair labor practice "for which respondents must be made to answer".
Unrebutted evidence and testimony on record establish that the
petitioners are workers who have been employed at the San Miguel Parola
Glass Factory since 1961, averaging about seven (7) years of service at the
time of their... termination. They worked as "cargadores" or "pahinantes"
at the SMC Plant loading, unloading, piling or palleting empty bottles and
wooden shells to and from company trucks and... warehouses. At times,
they accompanied the company trucks on their delivery routes. Work in the
glass factory was neither regular nor continuous, depending wholly on the
volume of bottles manufactured to be loaded and unloaded, as well as the
business activity of the company. Work did not necessarily mean a full
eight (8) hour day for the... petitioners. However, work, at times, exceeded
the eight (8) hour day and necessitated work on Sundays and holidays. For
this, they were neither paid overtime nor compensation for work on
Sundays and holidays. Petitioners were paid every ten (10) days on a piece
rate basis, that is, according to the number of cartons and wooden shells
they were able to load, unload, or pile. The petitioners worked exclusively
at the SMC plant, never having been assigned to other companies or
departments of SMC plant, even when the volume of work was at its
minimum. When any of the glass furnaces suffered a breakdown, making a
shutdown... necessary, the petitioners' work was temporarily suspended.
Thereafter, the petitioners would return to work at the glass plant.
Sometime in January, 1969, the petitioner workers numbering one hundred
and forty (140) organized and affiliated themselves with the petitioner
union and engaged in union activities. Believing themselves entitled to
overtime and holiday pay, the petitioners... pressed management, airing
other grievances such as being paid below the minimum wage law, in
human treatment, being forced to borrow at usurious rates of interest and
to buy raffle tickets, coerced by withholding their salaries, and salary
deductions made without their... consent. However, their gripes and
grievances were not heeded by the respondents. The petitioner union filed
a notice of strike with the Bureau of Labor Relations in connection with the
dismissal of some of its members who were allegedly castigated for their
union membership and warned that should they persist in continuing with
their... union activities they would be dismissed from their jobs. San Miguel
refused to bargain with the petitioner union alleging that the workers are
not their employees. All the petitioners were dismissed from their jobs and,
thereafter, denied entrance to respondent company's glass factory despite
their regularly reporting for work. A complaint for illegal dismissal and...
unfair labor practice was filed by the petitioners.
ISSUES: Whether or not an employer-employee relationship exists between
petitioners - members of the "Brotherhood Labor Unit Movement of the
Philippines" (BLUM) and respondent San Miguel Corporation, is the main...
issue in this petition.
RULING: In determining the existence of an employer-employee
relationship, the elements that are generally considered are the following:
(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 with respect to the means and methods by which the
work is to be accomplished. It is the so-called "control test" that is the
most important element. Applying the above criteria, the evidence strongly
indicates the existence of an employer-employee relationship between
petitioner workers and respondent San Miguel Corporation.
Uncontroverted is the fact that for an average of seven (7) years, each of
the petitioners had worked continuously and exclusively for the respondent
company's shipping and warehousing department. Considering the length
of... time that the petitioners have worked with the respondent company,
there is justification to conclude that they were engaged to perform
activities necessary or desirable in the usual business or trade of the
respondent, and the petitioners are, therefore regular... employees
Even under the assumption that a contract of employment had indeed
been executed between respondent SMC and the alleged labor contractor,
respondent's case will, nevertheless, fail. We find that Guaranteed and
Reliable Labor contractors have neither substantial capital nor investment
to qualify as an independent contractor under the law. The premises, tools,
equipment and paraphernalia used by the petitioners in their jobs are...
admittedly all supplied by respondent company. It is only the manpower or
labor force which the alleged contractors supply, suggesting the existence
of a "labor-only" contracting scheme prohibited by law. In fact, even the
alleged contractor's office, which consists of a space at respondent
company's warehouse, table, chair, typewriter and cabinet, are provided
for by respondent
SMC. It is therefore clear that the alleged contractors have no capital
outlay involved in the conduct of its business, in the maintenance thereof
or in the payment of its workers' salaries.
20. INSULAR LIFE VS NLRC
FACTS: Insular Life (company) and Basiao entered into a contract by which
Basiao was authorized to solicit for insurance in accordance with the rules
of the company. He would also receive compensation, in the form of
commissions. The contract also contained the relations of the parties,
duties of the agent and the acts prohibited to him including the modes of
termination. After 4 years, the parties entered into another contract – an
Agency Manager’s Contact – and to implement his end of it, Basiao
organized an agency while concurrently fulfilling his commitment under the
first contract. The company terminated the Agency Manager’s Contract.
Basiao sued the company in a civil action. Thus, the company terminated
Basiao’s engagement under the first contract and stopped payment of his
commissions.
ISSUE: W/N Basiao had become the company’s employee by virtue of the
contract, thereby placing his claim for unpaid commissions
HELD: No. Rules and regulations governing the conduct of the business are
provided for in the Insurance Code. These rules merely serve as guidelines
towards the achievement of the mutually desired result without dictating
the means or methods to be employed in attaining it. Its aim is only to
promote the result, thereby creating no employer-employee relationship. It
is usual and expected for an insurance company to promulgate a set of
rules to guide its commission agents in selling its policies which prescribe
the qualifications of persons who may be insured. None of these really
invades the agent’s contractual prerogative to adopt his own selling
methods or to sell insurance at his own time and convenience, hence
cannot justifiable be said to establish an employer-employee relationship
between Basiao and the company. The respondents limit themselves to
pointing out that Basiao’s contract with the company bound him to observe
and conform to such rules. No showing that such rules were in fact
promulgated which effectively controlled or restricted his choice of
methods of selling insurance. Therefore, Basiao was not an employee of the
petitioner, but a commission agent, an independent contract whose claim
for unpaid commissions should have been litigated in an ordinary civil
action.
Wherefore, the complain of Basiao is dismissed.
21. SONZA VS ABS-CBN
FACTS: In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by
Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to
provide Sonza’s services exclusively to ABS-CBN as talent for radio and
television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000
for the first year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN's President, Eugenio Lopez
III, where he irrevocably resigned in view of the recent events concerning
his program and career. The acts of the station are violative of the
Agreement and said letter will serve as notice of rescission of said contract.
The letter also contained the waiver and renunciation for recovery of the
remaining amount stipulated but reserves the right to seek recovery of the
other benefits under said Agreement. After the said letter, Sonza filed with
the Department of Labor and Employment a complaint alleging that ABS-
CBN did not pay his salaries, separation pay, service incentive pay,13th
month pay, signing bonus, travel allowance and amounts under the
Employees Stock Option Plan (ESOP). ABS-CBN contended that no
employee-employer relationship existed between the parties. However,
ABS-CBN continued to remit Sonza’s monthly talent fees but opened
another account for the same purpose. The Labor Arbiter dismissed the
complaint and found that there is no employee-employer relationship. The
LA ruled that he is not an employee by reason of his peculiar skill and talent
as a TV host and a radio broadcaster. Unlike an ordinary employee, he was
free to perform his services in accordance with his own style. NLRC and CA
affirmed the LA. Should there be any complaint, it does not arise from an
employer-employee relationship but from a breach of contract.
ISSUE: Whether or not there was employer-employee relationship between
the parties.
HELD: There is no employer-employee relationship between Sonza and
ABS-CBN. Petition denied. Judgment decision affirmed. Case law has
consistently held that the elements of an employee-employer relationship
are selection and engagement of the employee, the payment of wages, the
power of dismissal and the employer’s power to control the employee on
the means and methods by which the work is accomplished. The last
element, the so-called "control test", is the most important element.
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and radio
programs because of SONZA’s peculiar skills, talent and celebrity status.
SONZA contends that the “discretion used by respondent in specifically
selecting and hiring complainant over other broadcasters of possibly similar
experience and qualification as complainant belies respondent’s claim of
independent contractorship.” However, independent contractors often
present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and
hiring of SONZA, because of his unique skills, talent and celebrity status not
possessed by ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. If SONZA did not
possess such unique skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but would have hired him
through its personnel department just like any other employee.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his
fees going to MJMDC. SONZA asserts that this mode of fee payment shows
that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN
granted him benefits and privileges “which he would not have enjoyed if he
were truly the subject of a valid job contract.” All the talent fees and
benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBN’s employee, there would be no need
for the parties to stipulate on benefits such as “SSS, Medicare, x x x and
13th month pay” which the law automatically incorporates into every
employer-employee contract. Whatever benefits SONZA enjoyed arose
from contract and not because of an employer-employee relationship. In
addition, SONZA’s talent fees are so huge and out of the ordinary that they
indicate more an independent contractual relationship rather than an
employer-employee relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZA’s unique skills, talent and celebrity
status not possessed by ordinary employees.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate
their relationship. SONZA failed to show that ABS-CBN could terminate his
services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws. During the life of the
Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long as “AGENT
and Jay Sonza shall faithfully and completely perform each condition of this
Agreement.” Even if it suffered severe business losses, ABS-CBN could not
retrench SONZA because ABS-CBN remained obligated to pay SONZA’s
talent fees during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs,
ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its
undertaking in the Agreement to continue paying SONZA’s talent fees
during the remaining life of the Agreement even if ABS-CBN cancelled
SONZA’s programs through no fault of SONZA.
D. Power of Control
First, SONZA contends that ABS-CBN exercised control over the means and
methods of his work. SONZA’s argument is misplaced. ABS-CBN engaged
SONZA’s services specifically to co-host the “Mel & Jay” programs. ABS-CBN
did not assign any other work to SONZA. To perform his work, SONZA only
needed his skills and talent. How SONZA delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBN’s control. SONZA
did not have to render eight hours of work per day. The Agreement
required SONZA to attend only rehearsals and tapings of the shows, as well
as pre- and post-production staff meetings. ABS-CBN could not dictate the
contents of SONZA’s script. However, the Agreement prohibited SONZA
from criticizing in his shows ABS-CBN or its interests. The clear implication
is that SONZA had a free hand on what to say or discuss in his shows
provided he did not attack ABS-CBN or its interests. Second, SONZA urges
us to rule that he was ABS-CBN’s employee because ABS-CBN subjected
him to its rules and standards of performance. SONZA claims that this
indicates ABS-CBN’s control “not only [over] his manner of work but also
the quality of his work." The Agreement stipulates that SONZA shall abide
with the rules and standards of performance “covering talents” of ABS-CBN.
The Agreement does not require SONZA to comply with the rules and
standards of performance prescribed for employees of ABS-CBN. The code
of conduct imposed on SONZA under the Agreement refers to the
“Television and Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its
Code of Ethics.” The KBP code applies to broadcasters, not to employees of
radio and television stations. Broadcasters are not necessarily employees
of radio and television stations. Clearly, the rules and standards of
performance referred to in the Agreement are those applicable to talents
and not to employees of ABS-CBN. In any event, not all rules imposed by
the hiring party on the hired party indicate that the latter is an employee of
the former. In this case, SONZA failed to show that these rules controlled
his performance. We find that these general rules are merely guidelines
towards the achievement of the mutually desired result, which are top-
rating television and radio programs that comply with standards of the
industry.
Lastly, SONZA insists that the “exclusivity clause” in the Agreement is the
most extreme form of control which ABS-CBN exercised over him. This
argument is futile. Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control. The hiring of
exclusive talents is a widespread and accepted practice in the
entertainment industry. This practice is not designed to control the means
and methods of work of the talent, but simply to protect the investment of
the broadcast station. The broadcast station normally spends substantial
amounts of money, time and effort “in building up its talents as well as the
programs they appear in and thus expects that said talents remain exclusive
with the station for a commensurate period of time.” Normally, a much
higher fee is paid to talents who agree to work exclusively for a particular
radio or television station. In short, the huge talent fees partially
compensates for exclusivity, as in the present case.
22. SMC VS. NLRC
FACTS: Petitioner Corporation sponsored an Innovation Program which
rewarded cash to SMC employees who will submit ideas and suggestions
beneficial to the corporation. Rustico Vega submitted his proposal entitled
“Modified Grande Pasteurization Process” and claimed entitlement to the
cash award. SMC denied utilizing such proposal but Vega alleged otherwise
and filed a complaint with the NLRC which arbitrated against the Petitioner.
ISSUE: W/N the money claim of Vega falls within the jurisdiction of the
labor arbiter and the NLRC.
HELD: No, said money claim falls outside the jurisdiction of said agencies.
The jurisdiction of the NLRC is outlined in Art. 217 of the Labor Code which
includes in par. 3 “all money claims of workers, including those based on
nonpayment or underpayment of wages, overtime compensation,
separation pay and other benefits provided by law or appropriate
agreement…” While par. 3 refers to “all money claims of workers,” it is not
necessary to suppose that the entire universe of money claims has been
absorbed into the jurisdiction of the NLRC. Par. 3 should not be read in
isolation with the context formed by par. 1 (unfair labor practices), par. 2
(terms and conditions of employment), par. 4 (household services), par. 5
(prohibited activities). The unifying element of pars. 1-5 is that they refer to
cases or disputes arising out of or in connection with an employer-
employee relationship. The scope of par. 3 is clarified by its associated
paragraphs wherein money claims falling within the original and exclusive
jurisdiction of the NLRC are those which have some reasonable causal
connection with the employer-employee relationship.
23. PEPSI COLA VS. GALANG
FACTS: The private respondents were employees of the petitioner who
were suspected of complicity in the irregular disposition of empty Pepsi
Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint for
theft against them but this was later withdrawn and substituted with a
criminal complaint for falsification of private documents. On November 26,
1987, after a preliminary investigation conducted by the Municipal Trial
Court, the complaint was dismissed. The dismissal was affirmed by the
Office of the Provincial Prosecutor. Meantime, allegedly after an
administrative investigation, the private respondents were dismissed by the
petitioner company on November 23, 1987. As a result, they filed a
complaint for illegal dismissal before the Labor Arbiter, and demanded
reinstatement with damages. They also filed a separate civil complaint
against the petitioners for damages arising from what they claimed to be
their malicious prosecution before the RTC. The petitioners moved to
dismiss the civil complaint on the ground that the trial court had no
jurisdiction over the case because it involved employee-employer relations
that were exclusively cognizable by the labor arbiter. The motion was
granted. However, the respondent judge, acting on the motion for
reconsideration, reinstated the complaint, saying it was “distinct from the
labor case for damages now pending before the labor courts.”
ISSUE: Whether the trial court has jurisdiction over the case.
HELD: Yes. The trial court has jurisdiction over the case.
The petitioners invoke Article 217 of the Labor Code and a number of
decisions of this Court to support their position that the private
respondents’ civil complaint for damages falls under the jurisdiction of the
labor arbiter. The Court held at the outset that the case is not in point
because what was involved there was a claim arising from the alleged
illegal dismissal of an employee, who chose to complain to the regular
court and not to the labor arbiter. It must be stressed that not every
controversy involving workers and their employers can be resolved only by
the labor arbiters. This will be so only if there is a “reasonable causal
connection” between the claim asserted and employee-employer relations
to put the case under the provisions of Article 217. Absent such a link, the
complaint will be cognizable by the regular courts of justice in the exercise
of their civil and criminal jurisdiction.
The case at bar involves a complaint for damages for malicious prosecution
which was filed with the Regional Trial Court by the employees of the
defendant company. It does not appear that there is a “reasonable causal
connection” between the complaint and the relations of the parties as
employer and employees. The complaint did not arise from such relations.
What the employees are alleging is that the petitioners acted with bad faith
when they filed the criminal complaint. This is a matter which the labor
arbiter has no competence to resolve as the applicable law is not the Labor
Code but the Revised Penal Code.
24. MEDINA VS. CASTRO BARTOLOME
FACTS: Cosme de Aboitiz, acting in his capacity as President and Chief
Executive Officer of the defendant Pepsi-Cola Bottling Company of the
Philippines, Inc., went to the Pepsi-Cola Plant in Muntinlupa, Metro Manila
and without any provocation, shouted and maliciously humiliated Ernesto
Medina and Jose G. Ong: GOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT
UP! FUCK YOU! YOU ARE BOTH SHIT TO ME! YOU ARE FIRED (referring to
Ernesto Medina). YOU TOO ARE FIRED! '(referring to Jose Ong ) for having
allegedly delayed the use of promotional crowns, effected on the very day
that plaintiffs were awarded rings of loyalty to the Company, 5 days before
Christmas and on the day when the employees' Christmas party was held so
that when Medina and Ong went home that day and found their wives and
children already dressed up for the party, they didn't know what to do and
so they cried unashamedly. A joint criminal complaint for oral defamation
against Aboitiz
Provincial Fiscal: dismissed the complaint since uttered not to slander but
to express anger and displeasure.
Petition for Review with the office of the Secretary of Justice (now Ministry
of Justice): reversed
Aboitiz filed a motion to dismiss on the ground of lack of jurisdiction but it
was dismissed since the complaint for civil damages is clearly not based on
an employer-employee relationship but on the manner of plaintiffs'
dismissal and the effects flowing therefrom
This case was filed on May 10, 1979. The amendatory decree, P.D. 1367,
which took effect on May 1, 1978 and which provides that Regional
Directors shall not indorse and Labor Arbiters shall not entertain claims for
moral or other forms of damages, now expressly confers jurisdiction on the
courts in these cases, specifically under the plaintiff's causes of action
alreadly settled by jurisprudence that mere asking for reinstatement does
not remove from the CFI jurisdiction over the damages. The case must
involve unfair labor practices to bring it within the jurisdiction of the CIR
(now NLRC). A second motion to dismiss was filed because of the
promulgation of P.D. No. 1691 amending Art. 217 of the Labor Code of the
Philippines and Batasan Pambansa Bldg. 70 which took effect on May 1,
1980, amending Art. 248 of the Labor Code, jurisdiction over employee-
employer relations and claims of workers have been removed from the
Courts of First Instance
ISSUE: W/N the Labor Code has any relevance to the reliefs sought
HELD: NO. petition is granted. Simple action for damages for tortuous acts
is governed by the Civil Code and not the Labor Code
Separate Opinions
AQUINO, J.,dissenting:
I dissent with due deference to the opinion penned by Mr. Justice Abad
Santos
The two signed on January 5, 1978 letters of resignation and quitclaims and
were paid P93,063 and P84,386 as separation pay, respectively
More than a month after their dismissal, or on January 27, 1978, Medina
and Ong filed with the Ministry of Labor, a complaint for illegal dismissal -
dismissed that complaint because of their resignation and quitclaim.
17 days after that order of dismissal, or on May 10, 1979, filed for damages
In my opinion the dismissal of the civil action for damages is correct
because the claims of Medina and Ong were within the exclusive
jurisdiction of the Labor Arbiter and the NLRC, as originally provided in
article 217 of the Labor Code and as reaffirmed in Presidential Decree No.
1691. Medina and Ong could not split their cause of action against Aboitiz
and Pepsi-Cola.
25. URBANES VS. SECRETARY OF LABOR
FACTS: Petitioner Placido O. Urbanes agreed to provide security services to
Social Security Systems (SSS). During the pendency of their agreement,
Urbanes requested SSS for an upward adjustment of their contract rate in
compliance with the mandated wage increases. SSS ignored the request
which led Urbanes to pull out his agency’s services and tosubsequently file
a complaint against SSS for the implementation of the wage increase. The
Regional Director of the DOLE-NCR issued an order in favor of Urbanes. SSS
filed an appeal to the Secretary of Labor who later on set aside the order of
the Regional Director. Urbanes filed an appeal by certiorari to the Supreme
Court stating that the Secretary of Labor does not have jurisdiction to
review appeals from decisions of the Regional Director over complaints for
recovery of wages when it should have been appealed to the National
Labor Relations Commission. SSS, on the other hand, contends that Art.
128, not Art. 129 of the Labor Code should be applied.
ISSUE: Whether or not the DOLE Secretary can exercise jurisdiction over
decisions of Regional Directors involving complaints for recovery of wages
HELD: When the relief sought is not under the Labor Code but for payment
of a sum of money and damages on a breach of contract, it is within the
realm of civil law and jurisdiction belongs to the regular courts. Neither the
Ubanes’ contention nor the SSS’ is impressed with merit. Lapanday
Agricultural Development Corporation v. Court of Appeals instructs so. In
that case, the security agency filed a complaint before the Regional Trial
Court (RTC) against the principal or client Lapanday for the upward
adjustment of the contract rate in accordance with Wage Order Nos. 5 and
6. Lapanday argued that it is the National Labor Relations Commission, not
the civil courts, which has jurisdiction to resolve the issue in the case, it
involving the enforcement of wage adjustment and other benefits due the
agency’s security guards as mandated by several wage orders. The Court
ruled in Lapanday that the RTC has jurisdiction over the subject matter of
the present case. It is well settled in law and jurisprudence that where no
employeremployee relationship exists between the parties and no issue is
involved which may be resolved by reference to the Labor Code, other
labor statutes or any collective bargaining agreement, it is the Regional
Trial Court that has jurisdiction. In its complaint, private respondent is not
seeking any relief under the Labor Code but seeks payment of a sum of
money and damages on account of petitioner's alleged breach of its
obligation under their Guard Service Contract. The action is within the
realm of civil law hence jurisdiction over the case belongs to the regular
courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the
solidary liability of the petitioner to the respondent where no employer-
employee relation exists. In the case at bar, even if Urbanes filed the
complaint on his and also on behalf of the security guards, the relief sought
has to do with the enforcement of the contract between him and the SSS
which was deemed amended by virtue of Wage Order No. NCR-03. The
controversy subject of the case at bar is thus a civil dispute, the proper
forum for the resolution of which is the civil courts. But even assuming
arguendo that Urbanes’ complaint were filed with the proper forum, for
lack of cause of action it must be dismissed. In fine, the liability of the SSS
to reimburse Urbanes’ arises only if and when Urbanes pays his employee-
security guards ―the increases‖ mandated by Wage Order No. NCR-03. The
Court in Lapanday Agricultural Development Corporation v. Court of
Appeals held that: ―It is only when the contractor pays the increases
mandated that it can claim an adjustment from the principal to cover the
increases payable to the security guards.‖ The records do not show that
Urbanes’ has paid the mandated increases to the security guards. The
security guards in fact have filed a complaint with the NLRC against
Urbanes’ relative to, among other things, underpayment of wages.
26. YUSEN AIR AND SEA SERVICE PHILIPPINES INC. vs VILLAMOR
FACTS: Petitioner hired respondent Villamor as branch manager in its Cebu
Office. Later, petitioner reclassified respondent’s position to that of Division
Manager, which position respondent held until his resignation on February
1, 2002. Immediately after his resignation, respondent started working for
Aspac International, a corporation engaged in the same line of business as
that of petitioner. Thereafter, petitioner Yusen Air filed against respondent
a complaint for injunction and damages with prayer for a temporary
restraining order in the RTC of Parañaque City, on the ground that
respondent violated the provision in his contract that he should not affiliate
himself with competitors for a period of two years from his resignation or
separation from petitioner company. Respondent also filed against
petitioner a case for illegal dismissal before the NLRC. Instead of filing an
answer to the case in the RTC, respondent moved for the dismissal of said
case, arguing that the RTC has no jurisdiction over the subject matter of
said case because an employer-employee relationship is involved.
Petitioner contends that its cause of action did not arise from employer-
employee relations even if the claim therein is based on a provision in its
handbook.
ISSUE: Whether or not the RTC has jurisdiction over the present
controversy.
HELD: The SC held that the RTC has jurisdiction over the case.
Jurisprudence has evolved the rule that claims for damages under
paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have
a reasonable causal connection with any of the claims provided for in that
article. Only if there is such a connection with the other claims can a claim
for damages be considered as arising from employer-employee relations.
Article 217, as amended by Section 9 of RA 6715, provides: Jurisdiction of
Labor Arbiters and the Commission. — (a) Except as otherwise provided
under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even
in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;"
While paragraph 3 above refers to “all money claims of workers,” it is not
necessary to suppose that the entire universe of money claims that might
be asserted by workers against their employers has been absorbed into the
original and exclusive jurisdiction of Labor Arbiters. In the first place,
paragraph 3 should be read not in isolation from but rather within the
context formed by paragraph 1 (relating to unfair labor practices),
paragraph 2 (relating to claims concerning terms and conditions of
employment), paragraph 4 (claims relating to household services, a
particular species of employer-employee relations), and paragraph 5
(relating to certain activities prohibited to employees or employers). It is
evident that there is a unifying element which runs through paragraph 1 to
5 and that is, that they all refer to cases or disputes arising out of or in
connection with an employer-employee relationship. This is, in other
words, a situation where the rule of noscitur a sociis may be usefully
invoked in clarifying the scope of paragraph 3, and any other paragraph of
Article 217 of the Labor Code, as amended.
We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P. Blg 227, and even
though earlier versions of Article 217 of the Labor Code expressly brought
within the jurisdiction of the Labor Arbiters and the NLRC “cases arising
from employer-employee relations,” which clause was not expressly carried
over, in printer’s ink, in Article 217 as it exists today. For it cannot be
presumed that money claims of workers which do not arise out of or in
connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of regular courts of justice,
were intended by the legislative authority to be taken away from the
jurisdiction of the courts and lodged with Labor Arbiters on an exclusive
basis. The Court, therefore, believes and so holds that the “money claims of
workers” referred to in paragraph 3 of Article 217 embraces money claims
which arise out of or in connection with the employer-employee
relationship, or some aspect or incident of such relationship. Put a little
differently, that money claims of workers which now fall within the original
and exclusive jurisdiction of Labor Arbiters are those money claims which
have some reasonable causal connection with the employer-employee
relationship. When, as here, the cause of action is based on a quasi-delict
or tort, which has no reasonable causal connection with any of the claims
provided for in Article 217, jurisdiction over the action is with the regular
courts.
As it is, petitioner does not ask for any relief under the Labor Code. It
merely seeks to recover damages based on the parties’ contract of
employment as redress for respondent's breach thereof. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy
belongs to the regular courts. More so must this be in the present case,
what with the reality that the stipulation refers to the post-employment
relations of the parties. For sure, a plain and cursory reading of the
complaint will readily reveal that the subject matter is one of claim for
damages arising from a breach of contract, which is within the ambit of the
regular court’s jurisdiction.
It is basic that jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether or not the
plaintiff is entitled to recover upon the claim asserted therein, which is a
matter resolved only after and as a result of a trial. Neither can jurisdiction
of a court be made to depend upon the defenses made by a defendant in
his answer or motion to dismiss. If such were the rule, the question of
jurisdiction would depend almost entirely upon the defendant.
The orders of the lower courts are set aside.
27. PCI AUTOMATION CENTER VS. NLRC
FACTS: In 1985, Philippine Commercial International Bank (PCIB)
commenced its 4th GL Environment Conversion Project intended to link all
existing computer systems within PCIB and its various branches around the
country. It entered into a Computer Services Agreement with petitioner PCI
Automation Center, Inc. (PCI-AC), under which petitioner obligated itself to
direct, supervise and run the development of the software, computer
software applications and computer system of PCIB. On the other hand,
PCIB agreed to provide the petitioner with encoders and computer
attendants, among others.3
To comply with its obligation to procure manpower for the petitioner, PCIB
engaged the services of Prime Manpower Resources Development, Inc.
(Prime). PCIB and Prime entered into an External Job Contract
On September 20, 1985, private respondent Hector Santelices was hired by
Prime and assigned to petitioner as a data encoder to work on the 4th GL
Environment Conversion Project of PCIB.5 However, on March 18, 1991,
Prime decided to terminate private respondent's services after it was
informed by the petitioner that his services were no longer needed in the
project
ISSUE: Is Hector employee of PCI Automation
(Job Contracting vs Labor-Only Contracting)
(extent of liability)
HELD: The petitioner, through PCIB, contracted Prime to provide it with
qualified personnel to work on the computer conversion project of PCIB.17
The External Job Contract between Prime and PCIB must be read in
conjunction with the Computer Services Agreement between PCIB and the
petitioner. Under the Computer Services Agreement, the petitioner shall
direct and supervise the computer conversion project of PCIB while PCIB
shall provide the petitioner with data encoders and computer attendants to
work on the project. Pursuant to said Agreement, PCIB called on Prime to
furnish the petitioner with the needed personnel, one of whom was private
respondent. Hence, although the parties in the External Job Contract are
only Prime and PCIB, the legal consequences of such contract must also be
made to apply to the petitioner. Under the circumstances, PCIB merely
acted as a conduit between the petitioner and Prime. The project was
under the management and supervision of the petitioner and it was the
petitioner which exercised control over the persons working on the project.
Under the law, any person (hereinafter referred to as the "principal
employer") who enters into an agreement with a job contractor, either for
the performance of a specified work or for the supply of manpower,
assumes responsibility over the employees of the latter.18 However, for
the purpose of determining the extent of the principal employer's liability,
the law makes a distinction between legitimate job contracting and labor-
only contracting. Article 106 of the Labor Code states:
Art. 106. Contractor or subcontractor. — Whenever an employer enters
into a contract with another person for the performance of the former's
work, the employees of the contractor and of the latter's subcontractor, if
any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly
and severally liable with his contractor or subcontractor to such employees
to the extent of the work performed under the contract, in the same
manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit
the contracting out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who
among the parties involved shall be considered the employer for purposes
of this Code, to prevent any violation or circumvention of any provision of
this Code. There is "labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such persons are performing
activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by
him. In legitimate job contracting, no employer-employee relationship
exists between the employees of the job contractor and the principal
employer. Even then, the principal employer becomes jointly and severally
liable with the job contractor for the payment of the employees' wages
whenever the contractor fails to pay the same. In such case, the law creates
an employer-employee relationship between the principal employer and
the job contractor's employees for a limited purpose, that is, to ensure that
the employees are paid their wages. Other than the payment of wages, the
principal employer is not responsible for any claim made by the
employees.On the other hand, in labor-only contracting, an employer-
employee relationship is created by law between the principal employer
and the employees of the labor-only contractor. In this case, the labor-only
contractor is considered merely an agent of the principal employer. The
principal employer is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the
principal employer. The principal employer therefore becomes solidarily
liable with the labor-only contractor for all the rightful claims of the
employees. Thus, in legitimate job contracting, the principal employer is
considered only an indirect employer,21 while in labor-only contracting, the
principal employer is considered the direct employer of the employees
Considering the terms of the External Job Contract executed by Prime and
PCIB, it cannot be doubted that Prime is a labor-only contractor. Under the
contract, Prime merely acted as a placement agency providing manpower
to the petitioner through PCIB. The service rendered by Prime in favor of
the petitioner was not the performance of a specific job, but the supply of
qualified personnel to work as data encoders and computer attendants in
connection with the petitioner's project. Petitioner solidarily liable with
Prime for the payment of all the monetary claims of private respondent.
29. NERI VS NLRC AND FEBTC
FACTS: Petitioners Virginia Neri and Jose Cabelin were hired by Building
Care (BCC), a corporation engaged in providing technical, maintenance,
engineering, housekeeping, security and other specific services to its
clientele. They were assigned to respondent Far East Bank and Trust
Company (FEBTC), with Neri as a radio/telex operator and Cabelin as
janitor/messenger. Petitioners then instituted an action with the Regional
Arbitration Branch No. 10 to compel FEBTC to recognize and accept them as
regular employees. The Labor Arbiter denied the complaint for lack of
merit, declaring that BCC was considered an independent contractor
because it proved it had substantial capital of P1M. Neri and Cabelin,
however, contend that BCC is engaged in LOC because it failed to adduce
evidence purporting to show that it invested in the form of tools,
equipment, machineries, work premises and other materials which are
necessary in the conduct of its business. Moreover, they argued that they
performed duties which are directly related to the principal business of
FEBTC.
ISSUE: Whether or not BCC is engaged in LOC.
HELD: BCC is an independent contractor. One is not required to possess
both a) substantial capital and b) investment in the form of tools,
equipment, machinery, work premises, among others, to be considered a
job contractor. Possession of either attribute is sufficient for the purposes
of complying with one of the conditions for the establishment of
permissible job contracting. In this case, BCC proved it had substantial
capital of P1M. On the issue of control, petitioners do not deny that they
were selected and hired by BCC before being deployed in FEBTC. BCC
likewise acknowledges that petitioners are its employees. The record is
replete with evidence disclosing the BCC maintained supervision and
control over petitioners through its Housekeeping and Special Services
Division. Petitioners reported for work wearing the prescribed uniform of
BCC: leaves for absence were filed directly with the BCC and salaries were
drawn only from BCC. As a matter of fact, Neri even secured a certificate
from BCC that she was employed by the latter. More importantly, under
the terms and conditions of the contract, it was BCC alone which had the
power to reassign petitioners. These are indications that BCC carries an
independent business according to its own manner and method, free from
the control and supervision of its principal in all matters except as to the
results thereof. The Court has already taken judicial notice of the general
practice adopted in several government and private institutions and
industries of hiring independent contractors to perform special services
ranging from janitorial, security and even technical or other specific
services such as those performed by Neri and Cabelin. While these services
may be considered directly related to the principal business of the
employer, nevertheless they are not necessary in the conduct of the
principal business of the employer.
30. VINOYA VS NLRC
FACTS: Petitioner Vinoya was hired by RFC as sales representative. He avers
that he was transferred by RFC to PMCI, an agency which provides RFC with
additional contractual workers. In PMCI, he was reassigned to RFC as sales
representative and then later informed by the personnel manager of RFC
that his services were terminated. RFC maintains that no employer-
employee relationship existed between petitioner and itself. Petitioner filed
complaint for illegal dismissal. RFC alleges that PMCI is an independent
contractor as the latter is a highly capitalized venture.
ISSUE: Whether or not petitioner was an employee of RFC and thereby,
illegally dismissed.
HELD: Yes. PMCI was a labor-only contractor. Although the Neridoctrine
stated that it was enough that a contractor had substantial capital to show
it was an independent contractor, the case of Fuji Xerox clarified the
doctrine stating that an independent business must undertake the
performance of the contract according to its own manner and method free
from the control of the principal. In this case, PMCI did not even have
substantial capitalization as only a small amount of its authorized capital
stock was actually paid-in. Also, PMCI did not carry on an independent
business or undertake the performance of its contract according to its own
manner and method. Furthermore, PMCI was not engaged to perform a
specific and special job or service, which is one of the strong indicators that
is an independent contractor. Lastly, in labor-only contracting,
theemployees supplied by the contractor perform activities, which are
directly related to the main business of its principal. It is clear that in this
case, the work of petitioner as sales representative was directly related to
the business of RFC. Since due to petitioner’s length of service, he attained
the status of regular employee thus cannot be terminated without just or
valid cause. RFC failed to prove that his dismissal was for cause and that he
was afforded procedural due process. Petitioner is thus entitled to
reinstatement plus full backwages from his dismissal up to actual
reinstatement.
31. FUJI TELEVISION VS ESPIRITU
FACTS: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network,
Inc. (Fuji) as a news correspondent/producer tasked to report Philippine
news to Fuji through its Manila Bureau field office. The employment
contract was initially for one year, but was successively renewed on a
yearly basis with salary adjustments upon every renewal. In January 2009,
Arlene was diagnosed with lung cancer. She informed Fuji about her
condition, and the Chief of News Agency of Fuji, Yoshiki Aoki, informed the
former that the company had a problem with renewing her contract
considering her condition. Arlene insisted she was still fit to work as
certified by her attending physician. After a series of verbal and written
communications, Arlene and Fuji signed a non-renewal contract. In
consideration thereof, Arlene acknowledged the receipt of the total
amount of her salary from March-May 2009, year-end bonus, mid-year
bonus and separation pay. However, Arlene executed the non-renewal
contract under protest. Arlene filed a complaint for illegal dismissal with
the NCR Arbitration Branch of the NLRC, alleging that she was forced to sign
the non-renewal contract after Fuji came to know of her illness. She also
alleged that Fuji withheld her salaries and other benefits when she refused
to sign, and that she was left with no other recourse but to sign the non-
renewal contract to get her salaries.
ISSUES:
1. Was Arlene an independent contractor?
2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed?
4. Did the Court of Appeals correctly awarded reinstatement,
damages and attorney’s fees?
LAWS:
Art. 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 services 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 exist.
Art. 279. Security of tenure. In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause of
when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
Thus, on the right to security of tenure, no employee shall be dismissed,
unless there are just or authorized causes and only after compliance with
procedural and substantive due process is conducted.
Art. 284. Disease as ground for termination. An employer may terminate
the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered
as one (1) whole year.
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor
Code. Disease as a ground for dismissal. – Where the employee suffers
from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the employer
shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at
such a stage that it cannot be cured within a period of six (6) months even
with proper medical treatment. If the disease or ailment can be cured
within the period, the employer shall not terminate the employee but shall
ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his
normal health.
CASE HISTORY:
Labor Arbiter dismissed the complaint and held that Arlene was not a
regular employee but an independent contractor. The NLRC reversed the
Labor Arbiter’s decision and ruled that Arlene was a regular employee since
she continuously rendered services that were necessary and desirable to
Fuji’s business. The Court of Appeals affirmed that NLRC ruling with
modification that Fuji immediately reinstate Arlene to her position without
loss of seniority rights and that she be paid her backwages and other
emoluments withheld from her. The Court of Appeals agreed with the NLRC
that Arlene was a regular employee, engaged to perform work that was
necessary or desirable in the business of Fuji, and the successive renewals
of her fixed-term contract resulted in regular employment. The case of
Sonza does not apply in the case because Arlene was not contracted on
account of a special talent or skill. Arlene was illegally dismissed because
Fuji failed to comply with the requirements of substantive and procedural
due process. Arlene, in fact, signed the non-renewal contract under protest
as she was left without a choice. Fuji filed a petition for review on certiorari
under Rule 45 before the Supreme Court, alleging that Arlene was hired as
an independent contractor; that Fuji had no control over her work; that the
employment contracts were renewed upon Arlene’s insistence; that there
was no illegal dismissal because she freely agreed not to renew her fixed-
term contract as evidenced by her email correspondences. Arlene filed a
manifestation stating that the SC could not take jurisdiction over the case
since Fuji failed to authorize Corazon Acerden, the assigned attorney-in-fact
for Fuji, to sign the verification.
RULING:
1. Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza
case. She was hired because of her skills. Her salary was higher than the
normal rate. She had the power to bargain with her employer. Her contract
was for a fixed term. It also stated that Arlene was not forced to sign the
non-renewal agreement, considering that she sent an email with another
version of her non-renewal agreement. Arlene argued (1) that she was a
regular employee because Fuji had control and supervision over her work;
(2) that she based her work on instructions from Fuji; (3) that the
successive renewal of her contracts for four years indicated that her work
was necessary and desirable; (4) that the payment of separation pay
indicated that she was a regular employee; (5) that the Sonza case is not
applicable because she was a plain reporter for Fuji; (6) that her illness was
not a ground for her dismissal; (7) that she signed the non-renewal
agreement because she was not in a position to reject the same.
Distinctions among fixed-term employees, independent contractors, and
regular employees
Fixed Term Employment
1) The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.
These indications, which must be read together, make the Brent doctrine
applicable only in a few special cases wherein the employer and employee
are on more or less in equal footing in entering into the contract. The
reason for this is evident: when a prospective employee, on account of
special skills or market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less protection
than the ordinary worker. Lesser limitations on the parties’ freedom of
contract are thus required for the protection of the employee.155
(Citations omitted)
For as long as the guidelines laid down in Brent are satisfied, this court will
recognize the validity of the fixed-term contract. (GMA Network, Inc. vs.
Pabriga)
Independent Contractor
One who carries on a distinct and independent business and undertakes to
perform the job, work, or service on its own account and under one’s own
responsibility according to one’s own manner and method, free from the
control and direction of the principal in all matters connected with the
performance of the work except as to the results thereof.
No employer-employee relationship exists between the independent
contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the former’s work,
the employees of the contractor and of the latter’s subcontractor, if any,
shall be paid in accordance with the provisions of this Code.
XXX
The Secretary of Labor and Employment may, by appropriate regulations,
restrict or prohibit the contracting-out of labor to protect the rights of
workers established under this Code. In so prohibiting or restricting, he may
make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and
determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is “labor-only” contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities
which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Department Order No. 18-A, Series of 2011, Section 3
(c) . . . an arrangement whereby a principal agrees to put out or farm out
with a contractor the performance or completion of a specific job, work or
service within a definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed within or outside
the premises of the principal.
This department order also states that there is a trilateral relationship in
legitimate job contracting and subcontracting arrangements among the
principal, contractor, and employees of the contractor. There is no
employer-employee relationship between the contractor and principal who
engages the contractor’s services, but there is an employer-employee
relationship between the contractor and workers hired to accomplish the
work for the principal.162chanRoblesvirtualLawlibrary
Jurisprudence has recognized another kind of independent contractor:
individuals with unique skills and talents that set them apart from ordinary
employees. There is no trilateral relationship in this case because the
independent contractor himself or herself performs the work for the
principal. In other words, the relationship is bilateral.
XXX
There are different kinds of independent contractors: those engaged in
legitimate job contracting and those who have unique skills and talents that
set them apart from ordinary employees. Since no employer-employee
relationship exists between independent contractors and their principals,
their contracts are governed by the Civil Code provisions on contracts and
other applicable laws.
Regular Employees
Contracts of employment are different and have a higher level of regulation
because they are impressed with public interest. Article 13, Section 3 of the
1987 Constitution provides full protection to labor. Apart from the
Constitutional guarantee, Article 1700 of the Civil Code states that : The
relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special laws on
labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects. In contracts
of employment, the employer and the employee are not on equal footing.
Thus, it is subject to regulatory review by the labor tribunals and courts of
law. The law serves to equalize the unequal. The labor force is a special
class that is constitutionally protected because of the inequality between
capital and labor.176 This presupposes that the labor force is weak. The
level of protection to labor should vary from case to caese. When a
prospective employee, on account of special skills or market forces, is in a
position to make demands upon the prospective employer, such
prospective employee needs less protection than the ordinary worker. The
level of protection to labor must be determined on the basis of the nature
of the work, qualifications of the employee, and other relevant
circumstances such as but not limited to educational attainment and other
special qualifications.
Fuji’s argument that Arlene was an independent contractor under a fixed-
term contract is contradictory. Employees under fixed-term contracts
cannot be independent contractors because in fixed-term contracts, an
employer-employee relationship exists. The test in this kind of contract is
not the necessity and desirability of the employee’s activities, “but the day
certain agreed upon by the parties for the commencement and termination
of the employment relationship.” For regular employees, the necessity and
desirability of their work in the usual course of the employer’s business are
the determining factors. On the other hand, independent contractors do
not have employer-employee relationships with their principals.
To determine the status of employment, the existence of employer-
employee relationship must first be settled with the use of the four-fold
test, especially the qualifications for the power to control.
The distinction is in this guise:
Rules that merely serve as guidelines towards the achievement of a
mutually desired result without dictating the means or methods to be
employed creates no employer-employee relationship; whereas those that
control or fix the methodology and bind or restrict the party hired to the
use of such means creates the relationship.
In appliacation, Arlene was hired by Fuji as a news producer, but there was
no evidence that she was hired for her unique skills that would distinguish
her from ordinary employees. Her monthly salary appeared to be a
substantial sum. Fuji had the power to dismiss Arlene, as provided for in
her employment contract. The contract also indicated that Fuji had control
over her work as she was rquired to report for 8 hours from Monday to
Friday. Fuji gave her instructions on what to report and even her mode of
transportation in carrying out her functions was controlled.
Therefore, Arlene could not be an independent contractor.
2. Arlene was a regular employee with a fixed-term contract.
In determining whether an employment should be considered regular or
non-regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer. The standard, supplied by the law itself,
is whether the work undertaken is necessary or desirable in the usual
business or trade of the employer, a fact that can be assessed by looking
into the nature of the services rendered and its relation to the general
scheme under which the business or trade is pursued in the usual course. It
is distinguished from a specific undertaking that is divorced from the
normal activities required in carrying on the particular business or trade.
However, there may be a situation where an employee’s work is necessary
but is not always desirable in the usual course of business of the employer.
In this situation, there is no regular employment.
Fuji’s Manila Bureau Office is a small unit213 and has a few employees.
Arlene had to do all activities related to news gathering.
A news producer “plans and supervises newscast [and] works with
reporters in the field planning and gathering information, including
monitoring and getting news stories, rporting interviewing subjects in front
of a video camera, submission of news and current events reports
pertaining to the Philippines, and traveling to the regional office in
Thailand.” She also had to report for work in Fuji’s office in Manila from
Mondays to Fridays, eight per day. She had no equipment and had to use
the facilities of Fuji to accomplish her tasks.
The successive renewals of her contract indicated the necessity and
desirability of her work in the usual course of Fuji’s business. Because of
this, Arlene had become a regular employee with the right to security of
tenure.
Arlene’s contract indicating a fixed term did not automatically mean that
she could never be a regular employee. For as long as it was the employee
who requested, or bargained, that the contract have a “definite date of
termination,” or that the fixed-term contract be freely entered into by the
employer and the employee, then the validity of the fixed-term contract
will be upheld.
3. Arlene was illegally dismissed. After Arlene had informed Fuji of her cancer, she was informed that there
would be problems in renewing her contract on account of her condition.
As a regular employee, Arlene was entitled to security of tenure under This information caused Arlene mental anguish, serious anxiety, and
Article 279 of the Labor Code and could be dismissed only for just or wounded feelings. The manner of her dismissal was effected in an
authorized causaes and after observance of due process. oppressive approach with her salary and other benefits being withheld until
May 5, 2009, when she had no other choice but to sign the non-renewal
The expiration of the contract does not negate the finding of illegal contract.
dismissal. The manner by which Fuji informed Arlene of non-renewal
through email a month after she informed Fuji of her illness is tantamount With regard to the award of attorney’s fees, Article 111 of the Labor Code
to constructive dismissal. Further, Arlene was asked to sign a letter of states that “[i]n cases of unlawful withholding of wages, the culpable party
resignation prepared by Fuji. The existence of a fixed-term contract should may be assessed attorney’s fees equivalent to ten percent of the amount of
not mean that there can be no illegal dismissal. Due process must still be wages recovered.” In actions for recovery of wages or where an employee
observed. was forced to litigate and, thus, incur expenses to protect his rights and
interest, the award of attorney’s fees is legally and morally justifiablen.”
Moreoever, disease as a ground for termination under Article 284 of the Due to her illegal dismissal, Arlene was forced to litigate.
Labor Code and Book VI, Rule 1, Section 8 of the Omnibus Rules
Implementing the Labor Code require two requirements to be complied Therefore, the awards for reinstatement, damages and attorney’s fees
with: (1) the employee’s disease cannot be cured within six months and his were proper.
continued employment is prohibited by law or prejudicial to his health as
well as to the health of his co-employees; and (2) certification issued by a
competent public health authority that even with proper medical
treatment, the disease cannot be cured within six months. The burden of
proving compliance with these requisites is on the employer. Non-
compliance leads to illegal dismissal. blesvirtualLawlibrary
Arlene was not accorded due process. After informing her employer of her
lung cancer, she was not given the chance to present medical certificates.
Fuji immediately concluded that Arlene could no longer perform her duties
because of chemotherapy. Neither did it suggest for her to take a leave. It
did not present any certificate from a competent public health authority.
Therefore, Arlene was illegally dismissed.
4. The Court of Appeals correctly awarded reinstatement,
damages and attorney’s fees.
The Court of Appeals awarded moral and exemplary damages and
attorney’s fees. It also ordered reinstatement, as the grounds when
separation pay was awarded in lieu of reinstatement were not proven.
The Labor Code provides in Article 279 that illegally dismissed employees
are entitled to reinstatement, backwages including allowances, and all
other benefits.
Separation pay in lieu of reinstatement is allowed only (1) when the
employer has ceased operations; (2) when the employee’s position is no
longer available; (3) strained relations; and (4) a substantial period has
lapsed from date of filing to date of finality.
The doctrine of strained relations should be strictly applied to avoid
deprivation of the right to reinstatement. In the case at bar, no evidence
was presented by Fuji to prove that reinstatement was no longer feasible.
Fuji did not allege that it ceased operations or that Arlene’s position was no
longer feasible. Nothing showed that the reinstatement would cause an
atmosphere of antagonism in the workplace.
Moral damages are awarded “when the dismissal is attended by bad faith
or fraud or constitutes an act oppressive to labor, or is done in a manner
contrary to good morals, good customs or public policy.” On the other
hand, exemplary damages may be awarded when the dismissal was
effected “in a wanton, oppressive or malevolent manner.