LABOR CASES FOR DIGEST Petitioner was not paid her mid-year bonus allegedly
because the company was not earning well. In October
ANGELINA FRANCISCO VS NLRC -- GR 170087
FACTS:
In 1995, petitioner Angelina Francisco was hired by Kasei
Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and
was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the
City of Makati to secure business permits, construction
permits and other licenses for the initial operation of the
company
Although she was designated as Corporate Secretary, she
was not entrusted with the corporate documents; neither
did she attend any board meeting nor required to do so.
She never prepared any legal document and never
represented the company as its Corporate Secretary.
However, on some occasions, she was prevailed upon to
sign documentation for the company.
In 1996, petitioner was designated Acting Manager. The
corporation also hired Gerry Nino as accountant in lieu of
petitioner. As Acting Manager, petitioner was assigned to
handle recruitment of all employees and perform
management administration functions; represent the
company in all dealings with government agencies,
especially with the Bureau of Internal Revenue (BIR), Social
Security System (SSS) and in the city government of Makati;
and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated
by Kasei Corporation.
or five years, petitioner performed the duties of Acting
Manager. As of December 31, 2000, her salary was P27,
500.00 plus P3, 000.00 housing allowance and a 10% share
in the profit of Kasei Corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes
as Manager. Petitioner alleged that she was required to
sign a prepared resolution for her replacement but she was
assured that she would still be connected with Kasei
Corporation. Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei Corporation
and announced that nothing had changed and that
petitioner was still connected with Kasei Corporation as
Technical Assistant to Seiji Kamura and in charge of all BIR
matters.
Thereafter, Kasei Corporation reduced her salary by P2,
500.00 a month beginning January up to September 2001
for a total reduction of P22, 500.00 as of September 2001.
2001, petitioner did not receive her salary from the
company. She made repeated follow-ups with the company
cashier but she was advised that the company was not
earning well.
On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed
that she is no longer connected with the company. Since
she was no longer paid her salary, petitioner did not report
for work and filed an action for constructive dismissal
before the labor arbiter.
Argument of Private Respondent: Private respondents
averred that petitioner is not an employee of Kasei
Corporation. They alleged that petitioner was hired in 1995
as one of its technical consultants on accounting matters
and act concurrently as Corporate Secretary. As technical
consultant, petitioner performed her work at her own
discretion without control and supervision of Kasei
Corporation. Petitioner had no daily time record and she
came to the office any time she wanted. The company
never interfered with her work except that from time to
time; the management would ask her opinion on matters
relating to her profession. Petitioner did not go through the
usual procedure of selection of employees, but her services
were engaged through a Board Resolution designating her
as technical consultant. The money received by petitioner
from the corporation was her professional fee subject to
the 10% expanded withholding tax on professionals, and
that she was not one of those reported to the BIR or SSS as
one of the company’s employees.
Petitioner’s designation as technical consultant depended
solely upon the will of management. As such, her
consultancy may be terminated any time considering that
her services were only temporary in nature and dependent
on the needs of the corporation.
To prove that petitioner was not an employee of the
corporation, private respondents submitted a list of
employees for the years 1999 and 2000 duly received by
the BIR showing that petitioner was not among the
employees reported to the BIR, as well as a list of payees
subject to expanded withholding tax which included
petitioner. SSS records were also submitted showing that
petitioner’s latest employer was Seiji Corporation.
Labor Arbiter: Petitioner was illegally dismissed
NLRC: the decision of the Labor Arbiter was affirmed
On appeal, the Court of Appeals reversed and set aside the
decision of the NLRC. The subsequent motion for
reconsideration was also denied, hence, the present
recourse.
ISSUES:
(1) Whether there was an employer-employee relationship
between Petitioner and private respondent Kasei
Corporation; and if in the affirmative
(2) Whether petitioner was illegally dismissed.
(1) YES. By applying the control test, there is no doubt that
petitioner is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji
Kamura, the corporation’s Technical Consultant. She
reported for work regularly and served in various capacities
as Accountant, Liaison Officer, Technical Consultant, Acting
Manager and Corporate Secretary, with substantially the
same job functions, that is, rendering accounting and tax
services to the company and performing functions
necessary and desirable for the proper operation of the
corporation such as securing business permits and other
licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can
likewise be said to be an employee of respondent
corporation because she had served the company for six
years before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to December
18, 2000. When petitioner was designated General
Manager, respondent corporation made a report to the SSS
signed by Irene Ballesteros. Petitioner’s membership in the
SSS as manifested by a copy of the SSS specimen signature
card which was signed by the President of Kasei
Corporation and the inclusion of her name in the on-line
inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and
Respondent Corporation. It is therefore apparent that
petitioner is economically dependent on Respondent
Corporation for her continued employment in the latter’s
line of business.
Petitioner is an employee of respondent Kasei Corporation.
She was selected and engaged by the company for
compensation, and is economically dependent upon
respondent for her continued employment in that line of
business. Her main job function involved accounting and
tax services rendered to Respondent Corporation on a
regular basis over an indefinite period of engagement.
Respondent Corporation hired and engaged petitioner for
compensation, with the power to dismiss her for cause.
More importantly, Respondent Corporation had the power
to control petitioner with the means and methods by which
the work is to be accomplished.
(2) YES. The corporation constructively dismissed petitioner
when it reduced her salary by P2, 500 a month from
January to September 2001. This amounts to an illegal
termination of employment, where the petitioner is
entitled to full back wages. Since the position of petitioner
as accountant is one of trust and confidence, and under the
principle of strained relations, petitioner is further entitled
to separation pay, in lieu of reinstatement.
SAN MIGUEL FOODS VS HANNIBAL
The petitioner, a corporation organized and existing under
Philippine laws, is engaged in the feeds, and poultry and
meats businesses. Its poultry business involves growing,
breeding, dressing, sale and marketing of poultry products.
To maximize efficiency and cost effectiveness, the
petitioner opted to outsource the invoicing services, which
it deems merely ancillary to its business as it simply
involved: (1) witnessing and checking the unloading of
chicken products in designated outlets; (2) preparation of
invoice, delivery receipt and other documents required to
complete the delivery in designated outlets; (3) securing
from designated outlets such receiving documents and/or
information necessary for the liquidation and subsequent
collection of the delivery; and (4) submission of reports to
the petitioner on actual volumes delivered to designated
outlets.
Thus, sometime in 2005, the petitioner forged a six-month
invoicing services contract,6 that is from January 17, 2005
to July 16, 2005, with IMSHR Corporate Support, Inc. (ICSI),
an independent contractor duly registered with the
Department of Labor and Employment (DOLE) and engaged
in the business of providing and supplying various services,
like invoicing, to different companies.7 The parties agreed
that after the contract term expired and they still want to
continue their relations but without having to execute a
written renewal, they shall continue to be governed by the
same contract in its entirety, except for the term, which
should subsist on a month-to-month basis.
In compliance therewith, ICSI assigned its employees,
including the respondents, to the petitioner to perform the
invoicing services. Sometime in 2009, however, the
petitioner decided to discontinue its invoicing operations at
its JMT/GMA office (head office), where the respondents
were assigned, and set up a new one at its San Fernando,
Pampanga, and Nueva Ecija Plants. This is to standardize its
North and South Luzon operations, among others. The
petitioner accordingly informed ICSI of this decision and the
latter, in turn, informed its employees, including the
respondents, of the said development and that all the
affected employees shall be considered for assignment in
San Fernando, Pampanga. Those interested to be
transferred were instructed to submit a Request for
Transfer on or before July 13, 2009. Of all the respondents,
only one complied with the said directive while the others
submitted their resignation letters, some others continued
working and some no longer reported to work
With the discontinuance of the invoicing operations at the
petitioner's head office, the respondents filed their
consolidated Complaints for Constructive Dismissal,
Regularization, Underpayment of Salaries and Service
Incentive Leave Pay, Non-Payment of 13th Month Pay,
Vacation/Sick Leave, Maternity/Paternity Leave, Refund of
Cash Bond, Tax Refund, Illegal Deduction - Variance Bond,
Moral and Exemplary Damages, and Attorney's Fees
(Complaints), against the former before the Labor Arbiter
(LA).10. The workers are under the direct supervision of the
petitioner under submission of reports/
They further contended that on May 22, 2009, the
petitioner issued a memorandum to ICSI declaring that it
will not anymore renew the contract as to the invoicing
operations at its head office, where they were all
employed; in its stead, new operations will be set up at its
San Fernando Plant in San Fernando, Pampanga, which will
be subjected to Region 3 labor rates and terms; and those
who would not accept these conditions should be properly
separated under authorized causes. These prompted them
to file a case against the petitioner initially for
regularization due to the apparent threat to their
employment and the discovery and enlightenment of its
real identity as their true and lawful employer. On July 3,
2009, ICSI issued a similarly worded memorandum. On July
16, 2009, however, some of them did not anymore receive
their respective schedules and assignments from the
petitioner; thus, they amended their Complaints to include
constructive dismissal and other monetary claims.
For its part, the petitioner vehemently maintained that it is
not the respondents' employer but ICSI as the latter was
the one that hired and selected them and they were simply
deployed to the former. Also, ICSI was the one that paid the
respondents' salaries and made the necessary deductions
thereto of their Social Security System (SSS), PAG-IBIG, and
Philippine Health Insurance Corporation (Philhealth)
contributions. Even the four-fold test to determine the
existence of an employer-employee relationship revealed
that the same exists between ICSI and the respondents,
and not between the petitioner and the respondents.
The CA held that an employer-employee relationship exists
between the petitioner and the respondents; and that ICSI
was only its agent or intermediary. Applying the control
test, it was the petitioner that exercises direct supervision
and control over the respondents. The petitioner was the
one that issued to respondents various orders on how to
perform their respective tasks from menial instructions on
how to distribute the CSSR and how to use delivery
receipts, invoice and shrinkage forms, to the more complex
ones of chart preparation on its activity-based system.
ot every form of control is indicative of employer-employee
relationship. A person who performs work for another and
is subjected to its rules, regulations, and code of ethics
does not necessarily become an employee. As long as the
level of control does not interfere with the means and
methods of accomplishing the assigned tasks, the rules
imposed by the hiring party on the hired party do not
amount to the labor law concept of control that is
indicative of employer-employee relationship. Thus, No
employer-employee relationship
JOAQUIN LU VS TISO ENORIA
Facts:
Respondents were hired from January 20, 1994 to March
20, 1996 as crew members of the fishing mother boat F/B
MG-28 owned by respondent Joaquin "Jake" Lu (herein
petitioner Lu) who is the sole proprietor of Mommy Gina
Tuna Resources [MGTR] based in General Santos City.
Petitioners and Lu had an income-sharing arrangement
wherein 55% goes to Lu, 45% to the crew members, with
an additional 4% as "backing incentive." They also equally
share the expenses for the maintenance and repair of the
mother boat, and for the purchase of nets, ropes and
payaos.
Sometime in August 1997, Lu proposed the signing of a
Joint Venture Fishing Agreement between them, but
petitioners refused to sign the same as they opposed the
one-year term provided in the agreement. According to
petitioners, during their dialogue on August 18, 1997, Lu
terminated their services right there and then because of
their refusal to sign the agreement.
On August 25, 1997, petitioners filed their complaint for
illegal dismissal, monetary claims and damages. Petitioners
alleged that their refusal to sign the Joint Venture Fishing
Agreement is not a just cause for their termination.
On the other hand, Lu denied having dismissed petitioners,
claiming that their relationship was one of joint venture
where he provided the vessel and other fishing
paraphernalia, while petitioners, as industrial partners,
provided labor by fishing in the high seas. Lu alleged that
there was no employer-employee relationship as its
elements were not present
Whether or not an employer-employee relationship existed
between petitioner Lu and respondents, Enopia et al.
Ruling:
Yes, there is an employer-employee relationship. In
determining the existence of an employer-employee
relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) the power
to control the worker's conduct; (3) the payment of wages
by whatever means; and (4) the power of dismissal. We
find all these elements present in this case.
It is settled that no particular form of evidence is required
to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to
prove the relationship may be admitted.
In this case, petitioner contends that it was the piado who
hired respondents, however, it was shown by the latter's
evidence that the employer stated in their Social Security
System (SSS) online inquiry system printouts was MGTR,
which is owned by petitioner. Printouts of their individual
sss contribution sheet that the date of the SSS remitted
contributions coincided with the date of respondents'
employment with petitioner. Petitioner failed to rebut such
evidence. Thus, the fact that petitioner had registered the
respondents with SSS is proof that they were indeed his
employees. The coverage of the Social Security Law is
predicated on the existence of an employer-employee
relationship. Moreover, the records show that these
fishermen obtain vale or cash advance from petitioner and
not from the piado who allegedly hired and had control
over them.It should be remembered that the control test
merely calls for the existence of the right to control, and
not necessarily the exercise thereof. It is not essential that
the employer actually supervises the performance of duties
by the employee. It is enough that the former has a right to
wield the power.
The private respondent (petitioner) controls the entire
fishing operations. Petitioner assigned a master fisherman
(pi ado) and assistant master fisherman (assistant pi ado)
for each mother fishing boat, who every now and then
supervise the fishing operations. Private respondent also
assigned checkers based on the office to monitor and
contact every now and then the crew at sea through radio.
The checkers advise the private respondent of the
condition and the latter, through radio, will then instruct
the "piado" how to conduct the fishing operations.
The payment of respondents' wages based on the
percentage share of the fish catch falls within the scope
and meaning of the term “wage” as defined under Article
97(f) of the Labor Code
Petitioner wielded the power of dismissal over respondents
when he dismissed them after they refused to sign the joint
fishing venture agreement.
The primary standard for determining regular employment
is the reasonable connection between the particular
activity performed by the employee in relation to the usual
trade or business of the employer
There is a direct linkage or causal connection between the
nature of petitioners' (now respondents) work visa- vis
MGTR's line of business. In fact, MGTR's line of business
could not possibly exist, let alone flourish without people
like the fishermen crew members of its fishing vessels who
actually undertook the fishing activities in the high seas.
Considering that respondents were petitioner's regular
employees, the latter's act of asking them to sign the joint
fishing venture agreement which provides that the venture
shall be for a period of one year from the date of the
agreement, subject to renewal upon mutual agreement of
the parties, and may be pre-terminated by any of the
parties before the expiration of the one-year period, is
violative of the former's security of tenure. And
respondents' termination based on their refusal to sign the
same, not being shown to be one of those just causes for
termination under Article 282, is, therefore, illegal.
OSCAR VILLAMARIA VS CA.
Facts:
Oscar Villamaria, Jr. was the owner of Villamaria Motors, a
sole proprietorship engaged in assembling passenger
jeepneys with a public utility franchise to operate along the
Baclaran-Sucat route. Villamaria stopped assembling
jeepneys and retained only nine,... four of which he
operated by employing drivers on a "boundary basis." One
of those drivers was respondent Bustamante who drove
the jeepney with Plate No. PVU-660. Bustamante remitted
P450.00 a day
1997, Villamaria verbally agreed to sell the jeepney to
Bustamante under the "boundary-hulog scheme," where
Bustamante would remit to Villarama P550.00 a day for a
period of four years; Bustamante would then become the...
owner of the vehicle and continue to drive the same under
Villamaria's franchise. It was also agreed that Bustamante
would make a downpayment of P10,000.00... parties...
agreed that if Bustamante failed to pay the boundary-hulog
for three days, Villamaria Motors would hold on to the
vehicle until Bustamante paid his arrears, including a
penalty of P50.00 a day; in case Bustamante failed to remit
the daily boundary-hulog for a period... of one week, the
Kasunduan would cease to have legal effect and
Bustamante would have to return the vehicle
Bustamante was prohibited from driving the vehicle
without prior authority from Villamaria Motors. Thus,
Bustamante was authorized to operate the vehicle to
transport passengers only and not for other purposes. He
was required to display an identification card in front of the
windshield of the vehicle; in case of failure to do so, any
fine that may be imposed by government authorities would
be charged against his account
1999, Bustamante and other drivers who also had the same
arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. This prompted Villamaria to
serve a "Paalala," reminding them that under the
Kasunduan, failure to pay the daily boundary-hulog for one
week, would mean their respective jeepneys would be
returned to him without any complaints.
Villamaria took back the jeepney driven by Bustamante and
barred the latter from driving the vehicle. Bustamante filed
a Complaint for Illegal Dismissal... spouses Villamaria
argued that Bustamante was not illegally dismissed since
the Kasunduan executed on August 7, 1997 transformed
the employer-employee relationship into that of vendor-
vendee.
Labor Arbiter rendered judgment[17] in favor of the
spouses Villamaria and ordered the complaint dismissed.
NLRC rendered judgment[20] dismissing the appeal for lack
of merit NLRC ruled that under the Kasunduan, the juridical
relationship between Bustamante and Villamaria was that
of vendor and vendee, hence, the Labor Arbiter had no
jurisdiction over the complaint.
CA reversed and set aside the NLRC decision.
appellate court ruled that the Labor Arbiter had jurisdiction
over Bustamante's complaint. Under the Kasunduan, the
relationship between him and Villamaria was dual: that of
vendor-vendee and employer-employee. The CA
ratiocinated that Villamaria's exercise of... control over
Bustamante's conduct in operating the jeepney is
inconsistent with the former's claim that he was not
engaged in the transportation business.
Issues:
CA erred in ruling that the juridical relationship between
him and respondent under the Kasunduan was a
combination of employer-employee and vendor-vendee
relationships.
Ruling:
We agree with the ruling of the CA that, under the
boundary-hulog scheme incorporated in the Kasunduan, a
dual juridical relationship was created between petitioner
and respondent: that of employer-employee and vendor-
vendee. The Kasunduan... did not extinguish the employer-
employee relationship of the parties extant before the
execution of said deed. jeepney owner/operator-driver
relationship under the boundary system is that of
employer-employee and not lessor-lessee. boundary
system is a scheme by an owner/operator engaged in
transporting passengers as a common carrier to primarily
govern the compensation of the driver, that is, the latter's
daily earnings are remitted to the owner/operator less the
excess of the boundary which... represents the driver's
compensation. Under this system, the owner/operator
exercises control and supervision over the driver. It is unlike
in lease of chattels where the lessor loses complete control
over the chattel leased but the lessee is still ultimately
responsible for the... consequences of its use. The
management of the business is still in the hands of the
owner/operator, who, being the holder of the certificate of
public convenience, must see to it that the driver follows
the route prescribed by the franchising and regulatory
authority, and the... rules promulgated with regard to the
business operations. The fact that the driver does not
receive fixed wages but only the excess of the "boundary"
given to the owner/operator is not sufficient to change the
relationship between them. Indubitably, the driver
performs... activities which are usually necessary or
desirable in the usual business or trade of the
owner/operator. daily remittances also had a dual purpose:
that of petitioner's boundary and respondent's partial
payment (hulog) for the vehicle. This dual purpose was
expressly stated in the Kasunduan. The... well-settled rule is
that an obligation is not novated by an instrument that
expressly recognizes the old one, changes only the terms of
payment, and adds other obligations not incompatible with
the old provisions or where the new contract merely
supplements the previous one.
The two obligations of the respondent to remit to
petitioner the boundary-hulog can stand together. Under
the Kasunduan, petitioner retained supervision and control
over the conduct of the respondent as driver of the
jeepney,... Under the boundary-hulog scheme, petitioner
retained ownership of the jeepney although its material
possession was vested in respondent as its driver. In case
respondent failed to make his P550.00 daily installment
payment for a week, the agreement would be of no... force
and effect and respondent would have to return the
jeepney to petitioner; the employer-employee relationship
would likewise be terminated unless petitioner would allow
respondent to continue driving the jeepney on a boundary
basis of P550.00 daily despite the termination... of their
vendor-vendee relationship.
The juridical relationship of employer-employee between
petitioner and respondent was not negated by the
foregoing stipulation in the Kasunduan, considering that
petitioner retained control of respondent's conduct as
driver of the vehicle. Neither is such juridical relationship
negated by petitioner's claim that the terms and conditions
in the Kasunduan relative to respondent's behavior and
deportment as driver was for his and respondent's benefit
What is primordial is that petitioner retained control over
the conduct of the respondent as driver of the jeepney.
petitioner, as the owner of the vehicle and the holder of
the franchise, is entitled to exercise supervision and control
over the respondent, by seeing to it that the route provided
in his franchise, and the rules and regulations of the Land
Transportation Regulatory Board are duly complied with.
Moreover, in a business establishment, an identification
card is usually provided not just as a security measure but
to mainly identify the holder thereof as a bona fide
employee of the firm who issues it.
Fuji Television Network vs. Arlene 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. "Arlene's employment contract initially
provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon
every renewal.Arlene was diagnosed with lung cancer. She
informed Fuji about her condition. In turn, the Chief of
News Agency of Fuji, Yoshiki Aoki, informed Arlene "that
the company will have a problem renewing her contract"
since it would be difficult for her to perform her job. She
"insisted that she was still fit to work as certified by her
attending physician.
Arlene and Fuji signed a non-renewal contract... the day
after Arlene signed the non-renewal contract, she filed a
complaint for illegal dismissal. She alleged that she was
forced to sign the non-renewal contract when Fuji came to
know of her illness and that Fuji withheld her salaries and
other benefits
Labor Arbiter Corazon C. Borbolla dismissed Arlene's
complaintm Alene appealed before the National Labor
Relations Commission. The National Labor Relations
Commission reversed the Labor Arbiter's decision. It held
that Arlene was a regular employee with respect to the
activities for which she was employed since she
continuously rendered services that were deemed
necessary and desirable to Fuji's business. in the assailed
decision, the Court of Appeals affirmed the National Labor
Relations Commission with the modification that Fuji
immediately reinstate Arlene to her position as News
Producer without loss of seniority rights
Issues:
Whether the Court of Appeals correctly determined that no
grave abuse of discretion was committed by the National
Labor Relations Commission when it ruled that Arlene was
a regular employee, not an independent contractor, and
that she was illegally dismissed; and
Whether the Court of Appeals properly modified the
National Labor Relations Commission's decision by
awarding reinstatement, damages, and attorney's fees
Ruling:
Whether the Court of Appeals correctly affirmed the
National Labor Relations Commission's finding that Arlene
was a regular employee
Fuji alleges that Arlene was an independent contractor,
citing Sonza v. ABS-CBN and relying on the following facts:
(1) she was hired because of her skills; (2) her salary was
US$1,900.00, which is higher than the normal rate; (3) she
had the power to bargain with her... employer; and (4) her
contract was for a fixed term.
Arlene argues that she was a regular employee because Fuji
had control and supervision over her work. The news
events that she covered were all based on the instructions
of Fuji. She maintains that the successive renewal of her
employment contracts for... four (4) years indicates that
her work was necessary and desirable.
On her illness, Arlene points out that it was not a ground
for her dismissal because her attending physician certified
that she was fit to work.
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."[179] For regular employees, the
necessity and desirability of... their work in the usual course
of the employer's business are the determining fac... tors.
On the other hand, independent contractors do not have
employer-employee relationships with their principals.
Arlene was hired by Fuji as a news producer, but there was
no showing that she... was hired because of unique skills
that would distinguish her from ordinary employees.
Neither was there any showing that she had a celebrity
status. Her monthly salary amounting to US$1,900.00
appears to be a substantial sum, especially if compared to
her salary when she was... still connected with GMA.[199]
Indeed, wages may indicate whether one is an independent
contractor. Wages may also indicate that an employee is
able to bargain with the employer for better pay. However,
wages should not be the conclusive factor in... determining
whether one is an employee or an independent contractor.
Fuji had the power to dismiss Arlene, as provided for in
paragraph 5 of her professional employment contract.[200]
Her contract also indicated that Fuji had control over her
work because she was required to work for eight (8) hours
from Monday to Friday,... although on flexible time.[201]
Sonza was not required to work for eight (8) hours, while
Dumpit-Murillo had to be in ABC to do both on-air and off-
air tasks.
The expiration of Arlene's contract does not negate the
finding of illegal dismissal by Fuji. The manner by which Fuji
informed Arlene that her contract would no longer be
renewed is tantamount to constructive dismissal. To make
matters worse, Arlene was asked to sign a letter... of
resignation prepared by Fuji.[235] The existence of a fixed-
term contract should not mean that there can be no illegal
dismissal. Due process must still be observed in the pre-
termination of fixed-term contracts of employment.
There is no evidence showing that Arlene was 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.
It... did not ask her how her condition would affect her
work. Neither did it suggest for her to take a leave, even
though she was entitled to sick leaves. Worse, it did not
present any certificate from a competent public health
authority. What Fuji did was to inform her that her...
contract would no longer be renewed, and when she did
not agree, her salary was withheld.
well-entrenched is the rule that an illegally dismissed
employee is entitled to reinstatement as a matter of right.
To protect labor's security of tenure, we emphasize that
the doctrine of "strained relations" should be strictly
applied so as not to deprive an illegally dismissed employee
of his right to reinstatement. Every labor dispute almost
always results in "strained relations" and the... phrase
cannot be given an overarching interpretation, otherwise,
an unjustly dismissed employee can never be reinstated.
The Court of Appeals reasoned that strained relations are a
question of fact that must be supported by evidence. 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
available. Nothing in the records shows that Arlene's
reinstatement would cause an atmosphere of antagonism
in the workplace. Arlene filed her complaint in 2009. Five
(5) years are not yet a substantial period
Principles:
It is the burden of the employer to prove that a person
whose services it pays for is an independent contractor
rather than a regular employee with or without a fixed
term. That a person has a disease does not per se entitle
the employer to terminate his or... her services.
Termination is the last resort. At the very least, a
competent public health authority must certify that the
disease cannot be cured within six (6) months, even with
appropriate treatment. A petition for certiorari under Rule
65 is an original action where the issue is limited to grave
abuse of discretion. As an original action, it cannot be
considered as a continuation of the proceedings of the
labor tribunals.
On the other hand, a petition for review on certiorari under
Rule 45 is a mode of appeal where the issue is limited to
questions of law. In labor cases, a Rule 45 petition is limited
to reviewing whether the Court of Appeals correctly
determined the presence or absence of grave... abuse of
discretion and deciding other jurisdictional errors of the
National Labor Relations Commission.
SONZA VS. ABS-CBN
FACTS:
In May 1994, respondent ABS-CBN Broadcasting
Corporation (“ABSCBN”) 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 Carmela Tiangco
(“TIANGCO”), as 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 for SONZA’s services a monthly
talent fee of P310, 000 for the first year andP317, 000 for
the second and third year of the Agreement. ABS-CBN
would pay the talent fees on the 10thand 25th days of the
month.
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s
President, Eugenio Lopez III, stating in the letter that Mr.
Sonza irrevocably resigned in view of recent events**
concerning his programs and career; that these were due
to acts of the station in violation and breach of their
agreement; that the letter served as notice of rescission of
said agreement; and that he is waiving and renouncing
recovery of the remaining amount stipulated in paragraph
7 of the Agreement but reserves the right to seek recovery
of the other benefits under said Agreement.
On 30 April 1996, SONZA filed a complaint against ABS-CBN
before the Department of Labor and Employment, National
Capital Region in Quezon City. SONZA complained that
ABS-CBN did not pay his salaries, separation pay, service
incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock
Option Plan (“ESOP”).
On 10 July 1996, ABS-CBN filed a Motion to dismiss on the
ground that no employer-employee relationship existed
between the parties, to which SONZA filed an opposition to
the motion.
LA: The Labor Arbiter denied the motion to dismiss. The
Labor Arbiter ruled:
“In this instant case, complainant for having invoked a
claim that he was an employee of respondent company
until April 15, 1996 and that he was not paid certain claims,
it is sufficient enough as to confer jurisdiction over the
instant case in this Office. And as to whether or not such
claim would entitle complainant to recover upon the causes
of action asserted is a matter to be resolved only after and
as a result of a hearing. Thus, the respondent’s plea of lack
of employer-employee relationship may be pleaded only as
a matter of defense. It behooves upon it the duty to prove
that there really is no employer-employee relationship
between it and the complainant.”
The Labor Arbiter then considered the case submitted for
resolution. The parties submitted their position papers on
24 February 1997. The Labor Arbiter rendered his Decision
dated 8 July 1997 dismissing the complaint for lack of
jurisdiction:
“It must be noted that complainant was engaged by
respondent by reason of his peculiar skills and talent as a
TV host and a radio broadcaster. Unlike an ordinary
employee, he was free to perform the services he
undertook to render in accordance with his own style…
Whatever benefits complainant enjoyed arose from specific
agreement by the parties and not by reason of employer-
employee relationship… The fact that complainant was
made subject to respondent’s Rules and Regulations,
likewise, does not detract from the absence of employer-
employee relationship.”
NLRC: Affirmed the LA’s decision of lack of jurisdiction.
Motion for reconsideration denied.
MJMDC is an agent of SONZA, not a mere ‘labor-only’
contractor of ABSCBN such that there exists an employer-
employee relationship between the latter and SONZA.
Jurisdiction over the instant controversy belongs to the
regular courts, the same being in the nature of an action for
alleged breach of contractual obligation on the part of
respondent-appellee. The compensation and bonuses for
Mr. Sonza’s services are not based on the Labor Code but
rather on the provisions of their agreement.
CA: Petitioner filed a special civil action for certiorari, to
which the CA dismissed the case.
The Court of Appeals affirmed the NLRC’s finding that no
employer-employee relationship existed between SONZA
and ABS-CBN.
The Court of Appeals ruled that the existence of an
employer-employee relationship between SONZA and ABS-
CBN is a factual question that is within the jurisdiction of
the NLRC to resolve. A special civil action for certiorari
extends only to issues of want or excess of jurisdiction of
the NLRC. Such action cannot cover an inquiry into the
correctness of the evaluation of the evidence which served
as basis of the NLRC’s conclusion.
ISSUES:
Whether the Court of Appeals gravely erred in affirming the
NLRC’s decision and refusing to find that an Employer-
Employee relationship existed between SONZA and ABS-
CBN.
HELD:
NO, the Court of Appeals did not. No convincing reason
exists to warrant a reversal of the decision of the Court of
Appeals affirming the NLRC ruling which upheld the Labor
Arbiter’s dismissal of the case for lack of jurisdiction.
SONZA maintains that all essential elements of an
employer-employee relationship are present in this case.
Case law has consistently held that the elements of an
employer-employee relationship are: (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 last element, the so-called
“control test”, is the most important element.
On Selection: ABS-CBN engaged SONZA’s services to co-
host its television and radio programs because of SONZA’s
peculiar skills, talent and celebrity status. 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.
On wages: All the talent fees and benefits paid to SONZA
were the result of negotiations that led to the Agreement.
Whatever benefits SONZA enjoyed arose from contract and
not because of an employer-employee relationship.
On 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.
On control: Applying the control test to the present case,
we find that SONZA is not an employee but an independent
contractor. ABSCBN was not involved in the actual
performance that produced the finished product of
SONZA’s work. ABS-CBN did not instruct SONZA how to
perform his job. ABS-CBN merely reserved the right to
modify the program format and airtime schedule “for more
effective programming.” ABS-CBN’s sole concern was the
quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means
and methods of performance of SONZA’s work.
Although ABS-CBN did have the option not to broadcast
SONZA’s show, ABS-CBN was still obligated to pay SONZA’s
talent fees. Thus, even if ABS-CBN was completely
dissatisfied with the means and methods of SONZA’s
performance of his work, or even with the quality or
product of his work, ABS-CBN could not dismiss or even
discipline SONZA. All that ABS-CBN could do is not to
broadcast SONZA’s show but ABS-CBN must still pay his
talent fees in full. The present case does not call for an
application of the Labor Code provisions but an
interpretation and implementation of the May 1994
Agreement. In effect, SONZA’s cause of action is for breach
of contract which is intrinsically a civil dispute cognizable by
the regular courts.