LABOR RELATIONS LAW

I. GENERAL PRINCIPLES

a. Historical Perspective
1. People of the Philippine Islands vs. Pomar

THE PEOPLE OF THE PHILIPPINE ISLANDS, VS. POMAR

FACTS The defendant, Julio Pomar, being the manager and person in charge of La Flor de la Isabela, a tobacco factory pertaining to La Compania General de Tabacos de Filipinas, a corporation
duly authorized to transact business in the City of Manila, and having, during the year 1923, in his employ and service as cigar-maker in said factory, a woman by the name of Macaria
Fajardo, whom he granted vacation leave which began on the 16th day of July 1923, by reason of her pregnancy, did then and there willfully, unlawfully, and feloniously fail and refuse to
pay to said woman the sum of eighty pesos (P 80), Philippine currency, to which she was entitled as her regular wages corresponding to thirty days before and thirty days after her delivery
and confinement which took place on the 12th day of August, 1923, despite and over the demands made by her, the said Macaria Fajardo, upon said accused, to do so.

The prosecuting attorney of the City of Manila presented a complaint in the Court of First Instance, accusing Julio Pomar of a violation of section 13 in connection with section 15 of Act No.
3071 of the Philippine Legislature.

To said complaint, Pomar demurred, alleging that the facts therein contained did not constitute an offense. The demurrer was overruled, whereupon Pomar answered and admitted at the
trial court all of the allegations contained in the complaint, and contented that the provisions of said Act No. 3071, upon which the complaint was based were illegal, unconstitutional and
void.

COURT OF The Honorable C.A. Imperial, judge, found Pomar guilty of the alleged offense described in the complaint, and sentenced him to pay a fine of P50, in accordance with the provisions of
APPEALS section 15 of said Act, to suffer subsidiary imprisonment in case of insolvency, and to pay the costs.

ISSUE RULING

Whether or not The provisions of section 13, of Act No. 3071 of the Philippine Legislature, are unconstitutional and void, in that they violate and are contrary to the provisions of the first paragraph of
the provisions section 3 of the Act of Congress of the United State of August 29, 1916.
of sections 13
and 15 of Act Said section 13 was enacted by the Legislature of the Philippine Islands in the exercise of its supposed police power, with the praiseworthy purpose of safeguarding the health of pregnant
No. 3071 are a women laborers in “factory, shop or place of labor of any description,” and of insuring to them, to a certain extent, reasonable support for one month before and one month after their
reasonable and delivery.
lawful exercise
of the police In section 13, it will be seen that no person, firm, or corporation owning or managing a factory shop, or place of labor of any description, can make a contract with woman without incurring
power of the the obligation, whatever the contract of employment might be, unless he also promises to pay to such woman employed as a laborer, who may become pregnant, her wages for thirty days
state. before and thirty days after confinement.

In other words, said section creates a term or condition in every contract made by every person, firm, or corporation with any woman who may, during the course of her employment,
become pregnant, and a failure to include in said contract the terms fixed to a fine and imprisonment.

Clearly, therefore, the law has deprived, every person, firm, or corporation owning or managing a factory, shop or place of labor of any description within the Philippine Islands, of his right
to enter into contracts of employment upon such terms as he and the employee may agree upon. The law creates a term in every contract, without the consent of the parties. Such persons
are, therefore, deprived of their liberty to contract. The constitution of the Philippine Islands guarantees to every citizen his liberty and one of his liberties is the liberty to contract.

It will also be noted from an examination of said section 13, that it takes no account of contracts for the employment of women by the day nor by the piece. The law is equally applicable to
 each case. It will hardly be contended that the person, firm or corporation owning or managing a factory, shop or place of labor, who employs women by the day or by the piece, could be
compelled under the law to pay for sixty days during which no services were rendered.

The right to contract about one’s affairs is a part of the liberty of the individual, protected by the “due process of law” clauses of the constitution.

2. West Coast Hotel Co. vs. Parrish

WEST COAST HOTEL CO. VS. PARRISH

FACTS The Act, entitled “Minimum Wages for Women,” authorizes the fixing of minimum wage for women and minors.

The appellee, Elsie Parrish, was employed as a chambermaid and (with her husband) brought the suit to recover the difference between the wages paid her and the minimum wage fixed
pursuant to the state law. The minimum wage was $14.50 per week of 48 hours. The appellant challenged the act as repugnant to the due process clause of the Fourteenth Amendment of
the Constitution of the United States. The Supreme Court of the State, reversing the trial court, sustained the statute and directed judgment for the plaintiff.

The case is here on appeal

ISSUE RULING

Whether or not It is manifest that this established principle is peculiarly applicable in relation to the employment of women in whose protection that state has a special interest. That phase of the subject
the minimum received elaborate consideration in Muller v. Oregon, where the constitutional authority of the state to limit the working hours of women was sustained.
wage law of the
State of We emphasized the consideration that ‘woman’s physical structure and the performance of maternal functions place her at a disadvantage in the struggle for subsistence’ and that her
Washington is physical well being ‘becomes an object of public interest and care in order to preserve the strength and vigor of the race.’
constitutionally
valid. We emphasized the need of protecting women against oppression despite her possession of contractual rights. We said that ‘though limitations upon personal and contractual rights may
be removed by legislation, there is that in her disposition and habits of life which will operate against a full assertion of those rights. She will still be where some legislation to protect her
seems necessary to secure a real equality of right.’ Hence, she was ‘properly placed in a class by herself, and legislation designed for her protection may be sustained, even when like
legislation is not necessary for men, and could not be sustained.’

We concluded that the limitations which the statute there in question ‘places upon her contractual powers, upon her right to agree with her employer, as to the time she shall labor’ were
‘not imposed solely for her benefit, but also largely for the benefit of all.

3. ACCFA vs. CUGCO, ASA, AWA and The CIR

ACA vs. ASA, AWA, and The CIR

THE AGRICULTURAL CREDIT AND COOPERATIVE FINANCING ADMINISTRATION (ACCFA), VS. ACCFA SUPERVISORS’ ASSOCIATION, ACCFA WORKERS’ ASSOCIATION, AND THE COURT OF INDUSTRIAL RELATIONS

FACTS The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government agency created under Republic Act No. 821, as amended. Its administrative machinery wasin
reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land Reform Code (Republic Act No. 3844).

On the other hand, the ACCFA Supervisors’ Association (ASA) and the ACCFA Workers’ Association (AWA), hereinafter referred to as the Unions, are labor organizations composed of the supervisors
and the rank-and-file employees, respectively, in the ACCFA (now ACA).
 G.R. No. L-21484 G.R. No. L-23605

A collective bargaining agreement, which was to be effective for a period of one (1) year from During the pendency of the case (G.R. No. L-21484), the President of the Philippines signed into
July 1, 1961, was entered into by and between the Unions and the ACCFA. law the Agricultural Land Reform Code (R.A. No. 3844)

A few months thereafter, the Unions started protesting against the alleged violations and non-
implementation of said agreement.

Finally, the Unions declared a strike, which was ended when the strikers voluntarily returned to
work.

The Unions, together with its mother union, the Confederation of Unions in Government
Corporations and Offices (CUGCO), filed a complaint with the Court of Industrial Relations against
the ACCFA for having allegedly committed acts of unfair labor practice, namely: violation of the
collective bargaining agreement in order to discourage the members of the Unions in the
exercise of their right to self-organization, discrimination against said members in the matter of
promotions, and refusal to bargain.

The ACCFA denied the charges and interposed as affirmative and special defenses lack of
jurisdiction of the CIR over the case, illegality of the bargaining contract, expiration of said
contract and lack of approval by the office of the President of the fringe benefits provided for
therein.

Brushing aside the foregoing defenses, the CIR in its decision ordered the ACCFA:

1. To cease and desist from committing further acts tending to discourage the members
of complainant unions in the exercise of their right to self-organization;
2. To comply with and implement the provision of the collective bargaining contract
executed, including the payment of P30.00 a month living allowance;
3. To bargain in good faith and expeditiously with the herein complainants.

Separate Opinion of Justice Fernando

Governmental functions are classified into constituent and ministrant..

“The former are those which constitute the very bonds of society and are compulsory in nature; the latter are those that are undertaken only by way of advancing the general interests of society, and are
merely optional.

President Wilson enumerates the constituent functions as follows:

(1) The keeping of order and providing for the protection of persons and property from violence and robbery.
(2) The fixing of the legal relations between man and wife and between parents and children.
(3) The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or for crime.
 (4) The determination of contract rights between individuals.
(5) The definition and punishment of crime.
(6) The administration of justice in civil cases.
(7) The determination of the political duties, privileges, and relations of citizens.
(8) Dealings of the state with foreign powers; the preservation of the state from external danger or encroachment and the advancement of its international interests.”

The ministrant functions were then enumerated, followed by a statement of the basis that would justify engaging in such activities. Thus: “The most important of the ministrant functions are: public works,
public education, public charity, health and safety regulations, and regulations of trade and industry. The principles determining whether or not a government shall exercise certain of these optional functions
are:

(1) That a government should do for the public welfare those things which private capital would not naturally undertake; and
(2) That a government should do these things which by its very nature it is better equipped to administer for the public welfare than is any private individual or group of individuals.”

4. Bengzon vs. Drilon

FACTS: On 15 Jan 1992, some provisions of the Special Provision for the Supreme Court and the Lower Court’s General Appropriations were vetoed by the President because a resolution by the Court
providing for appropriations for retired justices has been enacted. The vetoed bill provided for the increase of the pensions of the retired justices of the Supreme Court, and the Court of Appeals as well as
members of the Constitutional Commission.

ISSUE: Whether or not the veto of the President on that portion of the General Appropriations bill is constitutional.

HELD: The Justices of the Court have vested rights to the accrued pension that is due to them in accordance to Republic Act 1797. The president has no power to set aside and override the decision of the
Supreme Court neither does the president have the power to enact or amend statutes promulgated by her predecessors much less to the repeal of existing laws. The veto is unconstitutional since the power
of the president to disapprove any item or items in the appropriations bill does not grant the authority to veto part of an item and to approve the remaining portion of said item.

NOTES: Pocket Veto Not Allowed

Under the Constitution, the President does not have the so-called pocket-veto power, i.e., disapproval of a bill by inaction on his part. The failure of the President to communicate his veto of any bill
represented to him within 30 days after the receipt thereof automatically causes the bill to become a law.

This rule corrects the Presidential practice under the 1935 Constitution of releasing veto messages long after he should have acted on the bill. It also avoids uncertainty as to what new laws are in force.

When is it allowed?

The exception is provided in par (2),Sec 27 of Art 6 of the Constitution which grants the President power to veto any particular item or items in an appropriation, revenue or tariff bill. The veto in such case
shall not affect the item or items to which he does not object.

3 ways how a bill becomes a law.

1. When the President signs it

2. When the President vetoes it but the veto is overridden by 2/3 vote of all the members of each House; and

3. When the president does not act upon the measure within 30 days after it shall have been presented to him.

b. Constitutional basis
i. Sections 10 and 18, Article II of the Constitution

Section 10. The State shall promote social justice in all phases of national development.

Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.

ii. Section 3, Article XIII of the Constitution

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of share responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.cala

5. Calalang vs. Williams

CALALANG, VS. WILLIAMS.

FACTS Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, alleged in the petition that the National Traffic Commission, in its resolution, resolved to recommend to the
Director of Public Works and to the Secretary of Public Works and Communication that animal-drawn vehicles be prohibited from passing along:

● Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m to 5:30 p.m.;

and along:
● Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m. from a period of one year from the date of the opening of the
Colgante Bridge to traffic;

That the Chairman of the National Traffic Commission recommended to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance
 of the provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate
rules and regulations to regulate

ISSUE RULING

The petitioner The writ of prohibition prayed for is hereby denied.

avers that the
rules and The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group.
regulations
complained of Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the equalization of social and economic forces by the State so that
infringe upon justice in its rational and objectively secular conception may at least be approximated.
the
constitutional Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of
precept society, though the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures
regarding the legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex.
promotion of
social justice to Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection that should be equally
insure the well- and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health,
being and comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."
economic
security of all
the people.

6. Brew Master vs. NAFLU

BREW MASTER INTERNATIONAL, INC. VS. NATIONAL FEDERATION OF LABOR UNIONS (NAFLU)

FACTS Antonio Estrada was first employed by Brew Master International, Inc. as a route helper with the latest daily wage of P119.00. For a period of one (1) month, Estrada went absent without
permission (AWOP). Brew Master International, Inc. thur Mr. Rodolfo Valentin, sent a Memo to Estrada, to wit: “Please explain in writing within 24 hours of your receipt of this memo why
no disciplinary action should be taken against you.”

In answer to the aforesaid memo, Estrada explained: “Dahil inuwi ko ang mga anak ko sa Samar dahil ang asawa ko ay lumayas at walang mag-aalaga sa mga anak ko. Kaya naman hindi ako
naka long distance or telegrama dahil wala akong pera at ibinili ko ng gamot ay puro utang pa.”

Finding said explanation unsatisfactory, Brew Master International, Inc. thru its Sales Manager, Mr. Henry A. Chongco issued a Notice of Termination, which reads: “You are aware of the
company Rules and Regulations that absence without permission for six (6) consecutive working days is considered abandonment of work.”

Hence, this complaint.

Estrada contends that his dismissal was done without just cause; that if was not sufficiently established that his absence from April 19, 1993 to June 16, 1993 are unjustified; that the
penalty of dismissal for such violation is too severe; that in imposing such penalty, Brew Master International, Inc. should have taken into consideration his length of service and as a first
offender, a penalty less punitive will suffice such as suspension for a definite period.

Upon the other hand, Brew Master International contends that Estrada’s dismissal for cause allowed by the company Rules and Regulations and the Labor Code; that the act of Estrada in
 absenting from work for one (1) month without official leave is deleterious to the business of Brew Master International, Inc; that it will result to stoppage of production which will not only
destructive to respondent’s interest but also to the interest of its employees in general; that the dismissal of complainant from the service is legal.

LABOR ARBITER The Labor Arbiter dismissed the complaint for lack of merit, citing the principle of managerial control, which recognizes the employer’s prerogative to prescribed reasonable rules and
regulations to govern the conduct of his employees. The principle allows the imposition of disciplinary measures which are necessary for the efficiency of both the employer and
employees.

In Estrada’s case, he persisted in not reporting for work until 16 June 1993, notwithstanding his receipt of the memorandum requiring him to explain his absence without approval.

NLRC Estrada appealed to the NLRC, alleging that the immediate filing of the complaint for illegal dismissal verily indicated that he never intended to abandon his work, then cited Policarpio v.
Vicente Dy Sun, Jr., where the NLRC ruled that prolonged, absence does not, by itself, necessarily mean abandonment.

Accordingly, there must be a concurrence of intention and overt acts from which it can be inferred that the employee is no longer interested in working.

Estrada likewise invoked compassion in the application of sanctions, as dismissal from employment brings untold hardship and sorrows on the dependents of the wage earners. In his case,
a penalty less punitive than dismissal could have sufficed.

The NLRC modified the Labor Arbiter’s decision and held that Estrada’s dismissal was invalid for the following reasons:

Estrada’s prolonged absences, although unauthorized, may not amount to gross neglect or abandonment of work to warrant outright termination of employment. Dismissal is to severe a
penalty. For one, the mere fact that Estrada is a first offender must be considered in his favor. Besides, it is generally impossible for an employee to anticipate when he would be ill or
compelled to attend to some family problems or emergency like in the case at bar.

The NLRC then decreed as follows:

“The Decision of the Labor Arbiter, is hereby MODIFIED, by directing the reinstatement of Estrada to his former position without loss of seniority rights and other benefits, but without
backwages.

ISSUE RULING

Whether or not Estrada’s “prolonged” absence without approval does not fall within the definition of abandonment and that his dismissal was unjustified.
Estrada’s
“prolonged Estrada’s absence was precipitated by grave family problem as his wife unexpectedly deserted him and abandoned the family. Considering that he had a full-time job, there was no one to
absence whom to the could entrust the children and he was thus compelled to bring them to the province. It would have been extremely difficult for him to have been husband and wife/father and
without mother at the same time to the children in the metropolis. He was then under emotional, psychological, spiritual and physical stress and strain. The reason for his absence is, under these
approval fall circumstances, justified. While his failure to inform and seek petitioner’s approval was an omission which must be corrected and chastised, he did not merit the severest penalty of
within the dismissal from the service.
definition of
abandonment Brew Master International, Inc’s finding that Estrada was guilty of abandonment is misplaced.
and that his
dismissal was Abandonment as a just and valid ground for dismissal requires the deliberate, unjustified refusal of the employee to resume his employment.
justified.
Two elements must then be satisfied:
(1) The failure to report for work or absence without valid or justifiable reason; and
(2) A clear intention to sever the employee-employer relation.
 The second element is more determinative factor and must be evinced by over acts.

Likewise, the burden of proof is on the employer to show the employee’s clear and deliberate intent to discontinue him employment without any intention of returning, mere absence is
not sufficient.

These elements are not present here.

First, as held above, Estrada’s absence was justified under the circumstances.

As to the second requisite, we are not convinced that Estrada ever intended to sever the employer-employee relationship. Estrada immediately complied with the memo requiring him to
explain his absence, and upon knowledge of his termination, immediately sued for illegal dismissal. These plaintly refuted any claim that he was no longer interested in returning to work.
Without doubt, the intention is lacking.

Moreover, Brew Master International, Inc. failed to discharge the burden of proof that Estrada was guilty of abandonment. No evidence other than Estrada’s letter explaining his absence
was presented. Needless to state, the letter did not indicate, in the least, that Estrada was no longer interested in returning to work. On the contrary, Estrada sought Brew Master
International, Inc’s understanding.

In declaring him guilty of abandonment, Brew Master International, Inc. merely relied on its Rules and Regulations which limited its application to a six-day continuous absence, contrary to
the purpose of the law. While the employer is not precluded from prescribing rules and regulations to govern the conduct of his employees, these rules and their implementation must be
fair, just and reasonable.

It must be underscored that no less than our stated policy, but under the Article on Social Justice and Human Rights, thus placing labor contracts on a higher place and with greater
safeguards. Verily, relations between capital and labor are not merely contractual. They are impressed with public interest and labor contracts must, perforce, yield to the common good.

7. Fuentes vs. NLRC

FUENTES, VS. NATIONAL LABOR RELATIONS COMMISSION

FACTS Petitioners, numbering to seventy-five (75), were regular employees of private respondent Agusan Plantations, Inc., which was engaged in the operation of a palm tree plantation in Agusan
del Sur.

Claiming that it was suffering business losses which resulted in the decision of the head office in Singapore to undertake retrenchment measures, private respondent sent notices of
termination to petitioners and the Department of Labor and Employment (DOLE).

Petitioner filed with the DOLE office in Cagayan de Oro City a complaint for illegal dismissal with prayer for reinstatement, backwages, and damages against private respondent Agusan
Plantation, Inc., and/or Chang Chee Kong.

In their answer respondent denied the allegations of petitioners and contented that upon receipt of instructions from the head office in Singapore to implement retrenchment, private
respondent conducted grievance conferences or meetings with petitioners’ representative labor organization, the Association of Trade Unions through its national president Jorge
Alegarbes, its local president and its board of directors. Private respondents also contented that the 30-day notice of termination were duly sent to petitioners.

LABOR ARBITER The Labor Arbiter rendered a decision in favor of petitioners ordering the private respondents to pay the former separation pay equivalent to fifteen (15) day pay for every year of service
plus salary differentials and attorney’s fees.
 NLRC On appeal by respondent to the NLRC, the decision of the Labor Arbiter was revered.

ISSUE RULING

Whether or not The State is bound under the Constitution to afford full protection to labor and when conflicting interests of labor and capital are to be weighed on the scales of social justice the heavier
petitioners’ influence of the latter should be counterbalanced with the sympathy and compassion the law accords the less privileged workingman. This is only fair if the worker is to be given the
dismissal or opportunity and the right to assert and defend his cause not as a subordinate but as part of management with which he can negotiate on even plane. Thus labor is not a mere employee of
retrenchment capital but its active and equal partner.
did not comply
with the The ruling of the Labor Arbiter that there was no valid retrenchment is correct.
requirements of
Art. 282 of the Article 283 of the Labor Code clearly states:
Labor Code.
“Art. 283, Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installment of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of the title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination
due to installment of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in case of closure or reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (½) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Under Art. 283 therefore retrenchment may be valid only when the following requisites are met:
(a) It is to prevent losses;
(b) Written notices were served on the workers and the Department of Labor and Employment (DOLE) at least one (1) month before the effective date of retrenchment, and
(c) Separation pay is paid to the affected workers.

The closure of a business establishment is a ground for the termination of the services of an employee unless the closing is for the purpose of circumventing pertinent provisions of the
Labor Code. But while business reverses can be a just cause for terminating employees, they must be sufficiently proved by the employer.

In the case before us, the private respondent merely alleged in their answer and position paper that after their officials from the head office had visited the plantation respondent manager
Chang Chee Kong received a letter from the head office directing him to proceed immediately with the termination of redundant workers and staff and changes the operations to contract
system against direct employment.

They also alleged that after five (5) years of operations, the return of investments of respondent company was meager; that the coup attempt in August 1987 as well as that of December
1989 aggravated the floundering financial state of respondent company; that the financial losses due to lack of capital funding resulted in the non-payment of long-overdue accounts; that
the untimely cut in the supply of fertilizers and manuring materials and equipment parts delayed the payment of salaries and the implementation of weekly job rotations by the workers.
Except for these allegations, private respondents did not present any other documentary proof of their alleged losses which could have been easily proven in the financial statements
which unfortunately were not shown.

There is no question that an employer may reduce its work force to prevent losses. However, these losses must be serious, actual and real. Otherwise, this ground for termination of
employment would be susceptible of abuse by scheming employers who might be merely feigning losses in their business ventures in order to ease out employees.

Indeed, private respondents failed to prove their claim of business losses. What they submitted to the Labor Arbiter were mere self-serving documents and allegations. Private respondents
never adduced evidence which would show clearly the extent of losses they suffered as a result of lack of capital funding, which failure is fatal to their cause.

As regards the It is undisputed that the Notice of Retrenchment was submitted to the Department of Labor and Employment on 12 September 1990. The findings of both the Labor Arbiter and NLRC show
requirement of that petitioners were terminated either on 25 or 30 September 1990. The one-month notice of retrenchment filed with the DOLE and served on the workers before the intended date
notices of thereof is mandatory. Private respondents failed to comply with this requisite. The earliest possible date of termination should be 12 October 1990 or one (1) month after the notice was
termination to sent to DOLE unless the notice of termination was sent to the workers later than the notice to DOLE on 12 September 1990, in which case, the date of termination should be at least one (1)
the employees month from the date of notice to the workers. Petitioners were terminated less than a month after notice was sent to DOLE and to each of the workers.

8. Jamer vs NLRC

JAMER, VS. NATIONAL LABOR RELATIONS COMMISSION

FACTS Complainant, Corazon Jamer was employed as a Cashier at “Joy Mart,” a sister company of Isetann. After two (2) years, she was later on promoted to the position of counter supervisor.
She was transferred to Isetann, Carriedo Branch, as a money changer. In 1982, she was transferred to the Cubao Branch of Isetann, as a money changer, till her dismissal on August 31,
1990.

Complainant Cristina Amortizado, on the other hand, was employed also at “Joy Mart” as a sales clerk. In 1980, she was promoted to the position as counter cashier. Thereafter, she was
transferred to “Young Un Department Store” as an assistant to the money changer. Later on, or in 1985, she was transferred to Isetann, Cubao Branch where she worked as a Store Cashier
till her dismissal on August 31, 1990.

Both complainants were receiving a salary of Php. 4,182.00 for eight (8) hours work at the time of their dismissal.

Respondent Isetann Department Store, on the other hand, is a corporation duly organized and existing under the laws of the Philippines and is engaged in the retail trade and the
department store business. Individual respondent, John Go is the President/General Manager of respondent Department Store.

This complaint arose from the dismissal of the complainants by the respondents. They were both dismissed on August 31, 1990 on the alleged ground of dishonesty in their work as Store
Cashiers.

LABOR ARBITER The Labor Arbiter rendered a decision in favor of herein petitioners, finding that the petitioners had been illegally dismissed.

NLRC Expectedly, respondent Isetann and John Go appealed the aforesaid decision to the NLRC

ISSUE RULING

Whether or not Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee by his employer are two-fold: the substantive and the procedural. Not only must the
the petitioners dismissal be for a valid or authorized cause as provided by law (Article 282, 283, and 284, of the Labor Code, as amended), but the rudimentary requirements of due process, basic of
were validly which are the opportunity to be heard and to defend himself, must be observed before an employee may be dismissed.
dismissed for
just cause and With respect to the first requisites, Article 282 of the Labor Code, as amended, provides:
after
observation of Article 282. Termination of Employer. - An employer may terminate an employment for any of the following causes:
due process. (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing;

In the instant case, herein petitioners were guilty of acts of dishonesty by incurring several occurrences of shortages in the amount of Php. 15, 353.78, Php. 1,000.00, Php. 450.00 and Php.
 70.00 which they failed to turnover and account for/and in behalf of respondent herein.

(1) With regard to the several occurrences of shortages of the amount of Php. 15, 353.78

c. Article 4 of the Labor Code

Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.

9. Marcopper Mining vs. NLRC

MARCOPPER MINING CORPORATION, VS. NATIONAL LABOR RELATIONS COMMISSION

FACTS Marcopper Mining Corporation, a corporation duly organized and existing under the laws of the Philippines, engaged in the business of mineral prospecting, exploration and extraction, and
private respondent NAMAWU-MIF, a labor federation duly organized and registered with the Department of Labor and Employment (DOLE), to which the Marcopper Employees Union (the
exclusive bargaining agent of all rank-and-file workers of petitioner) is affiliated, entered into a Collective Bargaining Agreement (CBA) effective from 1 May 1984 until 30 April 1987.

Section 1, Article V of the said Collective Bargaining Agreement provides:

Section 1. The COMPANY agrees to grant general wage increase to all employees within the bargaining unit as follows:

Increase per day on

Effectivity the Basic Wage

May 1, 1985 5%
May 1, 1986 5%

It is expressly understood that this wage increase shall be exclusive of any increase in the minimum wage and/or mandatory living allowance that may be promulgated during the
life of this Agreement.

Prior to the expiration of the aforesaid Agreement, petitioner and private respondent executed a Memorandum of Agreement (MOA) wherein the terms of the CBA, specifically on matters
of wage increase and facilities allowance, were modified.

1. The COMPANY hereby grants a wage increase of 10% of the basic rate to all employees within the bargaining unit as follows:

(a) 5% effective May 1, 1986

This will mean that the members of the bargaining unit will get an effective increase of 10% from May 1, 1986.

(b) 5% effective May 1, 1987

2. The COMPANY hereby grants an increase of the facilities allowance from Php. 50.00 to Php. 100.00 per month effective May 1, 1986.
 In compliance with the amended CBA, petitioner implemented the initial 5% wage increase due on 1 May 1986.

Executive Order (E.O.) No. 178 was promulgated mandating the integration of the cost of living allowance under Wage Orders No. 1, 2, 3, 5 and 6 into the basic wage of workers, its
effectivity retroactive to 1 May, 1987. Consequently, effective on 1 May 1987, the basic wage rate of petitioner’s laborers categorized as non-agricultural workers was increased by Pho,
9.00 per day.

Petitioner implemented the second five percent (5%) wage increase due on 1 May 1987 and thereafter added the integrated COLA.

Private respondent, however, assailed the manner in which the second wage increase was effected. It argued that the COLE should first be integrated into the basic wage before the 5%
wage increase is computed.

Consequently, the union filed a complaint for underpayment of wages before the Regional Arbitration Branch IV, Quezon City

LABOR ARBITER The Labor Arbiter promulgated a decision in favor of the union.

NLRC Petitioner appealed the Labor Arbiter’s decision, and the NLRC rendered its decision sustaining the Labor Arbiter’s ruling.

ISSUE RULING

What would be It is unnecessary to delve too much on the intention of the parties as to what they allegedly meant by the term “basic wage” at the time the CBA and MOA were executed because there is
the basis for the no question that as of 1 May 1987, as mandated by E.O. No. 178, the basic wage of workers, or the statutory minimum wage, was increased with the integration of the COLA. As of said
computation of date then, the term “basic wage” includes the COLA. This is what the law ordains and to which the collective bargaining agreement of the parties must conform.
the CBA
increase, the There cannot be any doubt that the computation of the CBA increase on the basis of the “integrated” wage does not constitute a violation of the CBA.
basic wage
without the
COLA or the so-
called
“integrated”
basic wage
which, by
mandate of E.O.
No 178,
includes the
COLA

10. PLDT vs NLRC

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, VS. NATIONAL LABOR RELATIONS COMMISSION

FACTS Private respondent Lettie Corpuz was employed as traffic operator at the Manila International Traffic Division (MITD) by the Philippine Long Distance Telephone Company (PLDT) for ten
years and nine months. Her primary task was to facilitate requests for incoming and outgoing international calls through the use of a digital switchboard.

Sometime in December 1987, PLDT’s rank-and-file employees and telephone operators went on strike, prompting the supervisors of the MITD to discharge the former’s duties to prevent a
 total shutdown of its business operations.

“While in the course of their emergency assignments, two supervisors almost simultaneously received two diffferent requests for overseas calls bounds for different Middle East countries
and both callers reported the same calling numbers (98-68-16). The tone verifications having yielded negative results, the callers were advised to hang up their telephones to enable the
supervisors to effect an alternative verification system by calling the same number again. As in the first instance, the number remained unverified. Investigating the seemingly anomalous
incident, the matter was reported to the Quality Control Inspection Department (QCID) which revealed that the subject number was temporarily disconnected on June 10, 1987, and
permanently on September 24, 1987. It also showed that 439 overseas calls were made through the same number between may and November 1987.

On account of such disclosure, the microfiches containing the completed calls through telephone number 98-68-16 were ordered to be re-run. It yielded the following results:

(1) 235 telephone operators handled the 439 calls placed through the supposed disconnected number;
(2) Respondent handled 56 or 12.8% of the total calls, while the other operators had an average of only 1.8% calls each;
(3) Respondent completed one call and effected 34 calls after the disconnection, 24 of which were completed through tone verification while the other 10 calls were done without
the requisite tone verification or call-back procedure, and 21 other calls were canceled;
(4) Of the 21 canceled calls handled by respondent, one bared a BU report (party unavailable) but fetched a long OCD (operator call duration) of 13 minutes and 21 sections while
another call registered a BB report (called party, busy) but with an OCD of 22 minutes and 34 seconds, both considered unusually protracted by respondent for holding a
connection; and
(5) Respondent made several personal calls to telephone numbers 96-50-72, 99-92-82 and 97-25-68, the latter being her home phone number.

Premised on the above findings, MITD Manager Erlinda Kabigting directed respondent to explain her alleged infraction, that is, facilitating 34 calls using the disconnected number.

Instead of tendering the required explanation, respondent requested a formal investigation to allow her to confront the witnesses and ebut the proofs that may be brought against her. On
the grounds of serious misconduct and breach of trust, the Legal Department recommended her dismissal. In the letter dated June 16, 1989, respondent was terminated from
employment effective the following day.

LABOR ARBITER In a complaint for illegal dismissal filed by respondent petitioner, Labor Arbiter rendered a decision, ordering PLDT to reinstate the complaint to her former position with all the rights,
benefits, and privileges thereto appertaining including seniority plus backwages.

NLRC On appeal, said decision was affirmed by the NLRC.

ISSUE RULING

Whether or not While the power to dismiss is a normal prerogative of the employer, the same is not without limitations. The right of an employer to freely discharge his employees is subject to regulation
PLDT illegally by the State, basically through the exercise of its police power. This is so because the preservation of the lives citizens is a basic duty of the State, an obligation more vital than the
dismissed the preservation of corporate profits.
private
respondent. Petitioner insists that respondent was guilty of defrauding them when she serviced 56 of the 439 calls coming from telephone number 98-68-16 and received numerous requests for
overseas calls virtually from the same calling number, which could not have been a mere coincidence but most likely was a pre-arranged undertaking in connivance with certain subscribers.

The record show, however, that the subject phone calls were neither unusual nor coincidental as other operators share similar experiences.

This Court will not sanction a dismissal premised on mere conjectures and suspicions. To be a valid ground for respondent’s dismissal, the evidence must be substantial and not arbitrary
and must be founded on clearly established facts sufficient to warrant his separation from work.

In termination cases, the employer bears the burden of proving that the dismissal is for just cause failing which would mean that the dismissal is not justified and the employee is entitled
to reinstatement. The essence of due process in administrative proceedings is the opportunity to explain one’side or a chance to seek reconsideration of the action or ruling complained of.
 The twin requirements of notice and hearing constitute the essential elements of due process . This simply means that the employer shall afford the worker ample opportunity to be
heard and to defend himself with the assistance of his representative, if he so desires. Ample opportunity connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation. In the instant case, the petitioner failed to convincingly establosh valid bases on the alleged serious
misconduct and loss of trust and confidence.

d. Balancing of interest
11. JMM Promotions vs. CA

JMM PROMOTION AND MANAGEMENT, INC., VS. COURT OF APPEALS

FACTS Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered a total ban against deployment of performing artist in Japan and other foreign
destinations. The ban was, however, rescinded after leaders of the overseas employment industry promised to extend full support for a program aimed at removing kinks in the system of
deployment.In its place, the government, through the Secretary of Labor and Employment, subsequently issued Department Order No. 28, creating the Entertainment Industry Advisory
Council (EIAC), which was tasked with issuing guidelines on the training, testing certification and deployment of performing artists abroad.

Pursuant to the EIAC's recommendations,the Secretary of Labor, on January 6, 1994, issued Department Order No. 3 establishing various procedures and requirements for screening
performing artists under a new system of training, testing, certification and deployment of the former. Performing artists successfully hurdling the test, training and certification
requirement were to be issued an Artist's Record Book (ARB), a necessary prerequisite to processing of any contract of employment by the POEA. Upon request of the industry,
implementation of the process, originally scheduled for April 1, 1994, was moved to October 1, 1994.

Thereafter, the Department of Labor, following the EIAC's recommendation, issued a series of orders fine-tuning and implementing the new system.

In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the Philippines (FETMOP), on January 27, 1995 filed a class suit assailing these department orders,
principally contending that said orders:

(1) violated the constitutional right to travel;

(2) abridged existing contracts for employment; and
(3) deprived individual artists of their licenses without due process of law.

FETMOP, likewise, averred that the issuance of the Artist Record Book (ARB) was discriminatory and illegal and "in gross violation of the constitutional right... to life liberty and property."
Said Federation consequently prayed for the issuance of a writ of preliminary injunction against the aforestated orders.

On February 2, 1992, JMM Promotion and Management, Inc. Kary International, Inc., herein petitioners, filed a Motion for Intervention in said civil case, which was granted by the trial
court in an Order dated 15 February, 1995.

TRIAL COURT The trial court issued an Order denying petitioners’ prayed for a writ of preliminary injunction and dismissed the complaint.

COURT OF On appeals from the trial court’s Order, respondent court dismissed the same. Respondent court concluded that the issuance constituted a valid exercise by the state of the police power.
APPEALS

ISSUE RULING

Whether or not The latin maxim salus populi est surprema lex embodies the character of the entire spectrum of public laws aimed at promoting the general welfare of the people under the State's police
the assailed power. As an inherent attribute of sovereignty which virtually "extends to all public needs,” this "least limitable" of governmental powers grants a wide panoply of instruments through
Department which the state, as parens patriae gives effect to a host of its regulatory powers.
Order
constitutes a "The police power of the State" is a power coextensive with self-protection, and is not inaptly termed "the law of overruling necessity." It may be said to be that inherent and plenary
valid exercise power in the state which enables it to prohibit all things hurtful to the comfort, safety and welfare of society." Carried onward by the current of legislature, the judiciary rarely attempts
by the State of to dam the onrushing power of legislative discretion, provided the purposes of the law do not go beyond the great principles that mean security for the public welfare or do not arbitrarily
police power. interfere with the right of the individual.

Thus, police power concerns government enactments which precisely interfere with personal liberty or property in order to promote the general welfare or the common good . As the
assailed Department Order enjoys a presumed validity, it follows that the burden rests upon petitioners to demonstrate that the said order, particularly, its ARB requirement, does not
enhance the public welfare or was exercised arbitrarily or unreasonably.

Of the hundreds of thousands of workers who left the country for greener pastures in the last few years, women composed slightly close to half of those deployed, constituting 47%
between 1987-1991, exceeding this proportion (58%) by the end of 1991, the year former President Aquino instituted the ban on deployment of performing artists to Japan and other
countries as a result of the gruesome death of Filipino entertainer Maricris Sioson.

It was during the same period that this Court took judicial notice not only of the trend, but also of the fact that most of our women, a large number employed as domestic helpers and
entertainers, worked under exploitative conditions "marked by physical and personal abuse.” Even then, we noted that "[t]he sordid tales of maltreatment suffered by migrant Filipina
workers, even rape and various forms of torture, confirmed by testimonies of returning workers" compelled "urgent government action."
Pursuant to the alarming number of reports that a significant number of Filipina performing artists ended up as prostitutes abroad (many of whom were beaten, drugged and forced into
prostitution), and following the deaths of number of these women, the government began instituting measures aimed at deploying only those individuals who met set standards which
would qualify them as legitimate performing artists. In spite of these measures, however, a number of our countrymen have nonetheless fallen victim to unscrupulous recruiters, ending up
as virtual slaves controlled by foreign crime syndicates and forced into jobs other than those indicated in their employment contracts. Worse, some of our women have been forced into
prostitution.

Thus, after a number of inadequate and failed accreditation schemes, the Secretary of Labor issued on August 16, 1993, D.O. No. 28, establishing the Entertainment Industry Advisory
Council (EIAC), the policy advisory body of DOLE on entertainment industry matters. Acting on the recommendations of the said body, the Secretary of Labor, on January 6, 1994, issued the
assailed orders. These orders embodied EIAC's Resolution No. 1, which called for guidelines on screening, testing and accrediting performing overseas Filipino artists. Significantly, as the
respondent court noted, petitioners were duly represented in the EIAC, 10which gave the recommendations on which the ARB and other requirements were based.

Clearly, the welfare of Filipino performing artists, particularly the women was paramount in the issuance of Department Order No. 3. Short of a total and absolute ban against the
deployment of performing artists to "high risk" destinations, a measure which would only drive recruitment further underground, the new scheme at the very least rationalizes the method
of screening performing artists by requiring reasonable educational and artistic skills from them and limits deployment to only those individuals adequately prepared for the unpredictable
demands of employment as artists abroad. It cannot be gainsaid that this scheme at least lessens the room for exploitation by unscrupulous individuals and agencies.

Moreover, here or abroad, selection of performing artists is usually accomplished by auditions, where those deemed unfit are usually weeded out through a process which is inherently
subjective and vulnerable to bias and differences in taste. The ARB requirement goes one step further, however, attempting to minimize the subjectivity of the process by defining the
minimum skills required from entertainers and performing artists. As the Solicitor General observed, this should be easily met by experienced artists possessing merely basic skills. The test
are aimed at segregating real artists or performers from those passing themselves off as such, eager to accept any available job and therefore exposing themselves to possible exploitation.
As to the other provisions of Department Order No. 3 questioned by petitioners, we see nothing wrong with the requirements for document and booking confirmation (D.O. 3-C), a
minimum salary scale (D.O. 3-E), or the requirement for registration of returning performers. The requirement for a venue certificate or other documents evidencing the place and nature
or work allows the government closer monitoring of foreign employers and helps keep our entertainers away from prostitution fronts and other worksites associated with unsavory,
immoral, illegal or exploitative practices. Parenthetically, none of these issuances appear to us, by any stretch of the imagination, even remotely unreasonable or arbitrary. They address a
felt need of according greater protection for an oft-exploited segment of our OCW's. They respond to the industry's demand for clearer and more practicable rules and guidelines. Many of
these provisions were fleshed out following recommendations by, and after consultations with, the affected sectors and non-government organizations. On the whole, they are aimed at
enhancing the safety and security of entertainers and artists bound for Japan and other destinations, without stifling the industry's concerns for expansion and growth.
 In any event, apart from the State's police power, the Constitution itself mandates government to extend the fullest protection to our overseas workers. The basic constitutional
statement on labor, embodied in Section 18 of Article II of the Constitution provides:

Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.

More emphatically, the social justice provisions on labor of the 1987 Constitution in its first paragraph states:

The State shall afford full protection to labor, local and overseas, organized and unorganized and promote full employment and equality of employment opportunities for all.

Obviously, protection to labor does not indicate promotion of employment alone. Under the welfare and social justice provisions of the Constitution, the promotion of full employment,
while desirable, cannot take a backseat to the government's constitutional duty to provide mechanisms for the protection of our workforce, local or overseas.

As this Court explained in Philippine Association of Service Exporters (PASEI) v. Drilon, in reference to the recurring problems faced by our overseas workers:
What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters
to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-adequate protection, personally and economically, while
away from home.

Petitioners' We find this contention untenable.

assertion that
the police A profession, trade of calling is a property right within the meaning of our constitutional guarantees. One cannot be deprived of the right to work and right to make a living because these
power cannot, rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong.
nevertheless, Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has always been upheld as a legitimate subject of a valid exercise of the police power
abridge the by the state particularly when their conduct affects either the execution of legitimate governmental functions, the preservation of the State, the public health and welfare and public
right of our morals. According to the maxim, sic utere tuo ut alienum non laedas, it must of course be within the legitimate range of legislative action to define the mode and manner in which every
performing one may so use of his own property so as not to pose injury to himself or others.
workers to In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of regulatory measures is certainly much wider. To pretend that licensing or
return to work accreditation requirements violates the due process clause is to ignore the settled practice, under the mantle of the police power, of regulating entry to the practice of various trades or
abroad after professions. Professionals leaving for abroad are required to pass rigid written and practical exams before they are deemed fit to practice their trade. Seamen are required to take tests
having earlier determining their seamanship. Locally, the Professional Regulation Commission has began to require previously licensed doctors and other professionals to furnish documentary proof that
qualified under they has either re-trained or had undertaken continuing education courses as a requirement for renewal of their licenses. It is not claimed that these requirements pose an unwarranted
the old process, deprivation of a property right under the due process clause. So long as professionals and other workers meet reasonable regulatory standards no such deprivation exists.
because, having
previously been Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of the Constitution to support their argument that the government cannot enact the assailed
accredited, regulatory measures because they abridge the freedom to contract. In Philippine Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment clause of the
their Constitution... must yield to the loftier purposes targeted by the government." Equally important, into every contract is read provisions of existing law, and always, a reservation of the
accreditation police power for so long as the agreement deals with a subject impressed with the public welfare.
became a
"property A last point. Petitioners suggest that the singling out of entertainers and performing artists under the assailed department orders constitutes class legislation which violates the equal
right," protection clause of the Constitution. We do not agree.
protected by
the due process The equal protection clause is directed principally against undue favor and individual or class privilege. It is not intended to prohibit legislation which is limited to the object to which it is
clause. directed or by the territory in which it is to operate. It does not require absolute equality, but merely that all persons be treated alike under like conditions both as to privileges conferred
and liabilities imposed.16 We have held, time and again, that the equal protection clause of the Constitution does not forbid classification for so long as such classification is based on real
and substantial differences having a reasonable relation to the subject of the particular legislation. 17 If classification is germane to the purpose of the law, concerns all members of the
class, and applies equally to present and future conditions, the classification does not violate the equal protection guarantee.
 In the case at bar, the challenged Department Order clearly applies to all performing artists and entertainers destined for jobs abroad. These orders, we stressed hereinfore, further the
Constitutional mandate requiring government to protect our workforce, particularly those who may be prone to abuse and exploitation as they are beyond the physical reach of
government regulatory agencies. The tragic incidents must somehow stop, but short of absolutely curtailing the right of these performers and entertainers to work abroad, the assailed
measures enable our government to assume a measure of control.

12. PASEI vs. Drilon

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC, VS. HON. FRANKLIN M. DRILON

FACTS The petitioner, Philippine Association of Service Exporters, Inc. (PASEI), a firm “engaged principally in the recruitment of Filipino workers, male and female, for overseas placement,”
challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment in the character of “GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS.”

Specifically, the measure is assailed for “discrimination against males or femals,” that it “does not apply to all Filipino workers but only to domestic helpers and female with similar skills and
that it is violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking power, police power being legislative, and not executive, in character.

ISSUE RULING

Department The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact legislation that may interfere with personal liberty or property in
Order No. 1 is in order to promote the general welfare." As defined, it consists of
the nature of a (1) an imposition of restraint upon liberty or property,
police power (2) in order to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
measure.
Whether or not "Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to
it is valid under conditions and circumstances thus assuring the greatest benefits."
the "The police power of the State ... is a power coextensive with self- protection, and it is not inaptly termed the "law of overwhelming necessity." It may be said to be that inherent and
Constitution. plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society." It constitutes an implied limitation on the Bill of Rights.

Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and
in that event, it defeats the purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used to further private interests at the expense of the citizenry,
there is a clear misuse of the power.

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed validity. In the absence of clear and convincing evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that Department Order No. 1 applies only to "female contract
workers," but it does not thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law" under the Constitution does not import a perfect
Identity of rights among all men and women.

It admits of classifications, provided that

(1) such classifications rest on substantial distinctions;
(2) they are germane to the purposes of the law;
(3) they are not confined to existing conditions; and
 (4) they apply equally to all members of the same class.
(5)
The Court is satisfied that the classification made-the preference for female workers — rests on substantial distinctions.

As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad, especially domestic servants, amid exploitative working
conditions marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture,
confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely the caretaker of Constitutional rights, the Court is called upon to protect
victims of exploitation. In fulfilling that duty, the Court sustains the Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for isolated instances, our men abroad have been afflicted with an
Identical predicament. The petitioner has proffered no argument that the Government should act similarly with respect to male workers. The Court, of course, is not impressing some male
chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter of evidence (that women domestic workers are being ill-treated abroad in
massive instances) and not upon some fanciful or arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable demonstration and evidence
this Court accepts. The Court cannot, however, say the same thing as far as men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that insofar
as classifications are concerned, this Court is content that distinctions are borne by the evidence. Discrimination in this case is justified.

As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican regime, it is the executive branch that enforces policy. For their part, the
courts decide, in the proper cases, whether that policy, or the manner by which it is implemented, agrees with the Constitution or the laws, but it is not for them to question its wisdom. As
a co-equal body, the judiciary has great respect for determinations of the Chief Executive or his subalterns, especially when the legislature itself has specifically given them enough room on
how the law should be effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with this at greater length shortly, that Department Order No. 1
implements the rule-making powers granted by the Labor Code. But what should be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that
prevailing conditions indeed call for a deployment ban.

There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the
protection for Filipino female overseas workers" this Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be
for their own good and welfare.

The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those conditions exist. This is clear from the Order itself ("Pending review of
the administrative and legal measures, in the Philippines and in the host countries . . ." 18), meaning to say that should the authorities arrive at a means impressed with a greater degree of
permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability, depending on the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. — The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.

The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it does not apply to "all Filipina workers" 20 is not an argument for
unconstitutionality. Had the ban been given universal applicability, then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced.
What the Constitution prohibits is the singling out of a select person or group of persons within an existing class, to the prejudice of such a person or group or resulting in an unfair
advantage to another person or group of persons. To apply the ban, say exclusively to workers deployed by A, but not to those recruited by B, would obviously clash with the equal
protection clause of the Charter. It would be a classic case of what Chase refers to as a law that "takes property from A and gives it to B." 21 It would be an unlawful invasion of property
rights and freedom of contract and needless to state, an invalid act. 22 (Fernando says: "Where the classification is based on such distinctions that make a real difference as infancy, sex, and
stage of civilization of minority groups, the better rule, it would seem, is to recognize its validity only if the young, the women, and the cultural minorities are singled out for favorable
treatment. There would be an element of unreasonableness if on the contrary their status that calls for the law ministering to their needs is made the basis of discriminatory legislation
against them. If such be the case, it would be difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the assailed Order clearly accords protection to certain
women workers, and not the contrary.)
 It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered provisions of the Order, it is evident that such a total ban has hot been
contemplated.

The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is subject, among other things, to the requirements of "public safety," "as may
be provided by law." Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor," pursuant to the respondent
Department of Labor's rule-making authority vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable simply because of its impact on the right to travel, but as we
have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto.

Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It is true that police power is the domain of the legislature, but it
does not mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and Employment with rulemaking powers
in the enforcement whereof.

The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes affecting their rights and benefits" is not well-taken. The right
granted by this provision, again, must submit to the demands and necessities of the State's power of regulation.

The Constitution declares that:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. 30
"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and
humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the
Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. In this case, the Government has evidence,
an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on deployment.
The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition with respect to certain
countries as manifested by the Solicitor General.

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by the Government. Freedom of contract and enterprise, like all other
freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life.

This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government regulation. The interest of the State is to provide a decent living to its citizens. The
Government has convinced the Court in this case that this is its intent. We do not find the impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief
prayed for.

II. EMPLOYEE-EMPLOYER RELATIONSHIP

1. “Employer” - Article 219 (e) of the Labor Code

“Employer” includes any person acting in that interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agency except when acting as employer.

2. “Employee” - Article 219 (f) of the Labor Code

“Employee” includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual
whose work has ceased as a result of or in connection with any current labor disputes or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.
 a. Importance
13. LVN vs. Philippine Musician Guild

LVN PICTURES, INC., VS. PHILIPPINE MUSICIAN GUILD (FFW)

FACTS The Philippine Musicians Guild (FFW), hereafter, referred to as the Guild, averred:

(1) that it is a duly registered legitimate labor organization;

(2) that LVN Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under the Philippine laws, engaged in the making of motion
pictures and in the processing and distribution thereof;
(3) that said companies employ musicians for the purpose of making music recordings for title music, background music, musical numbers, finale music and other incidental music,
without which a motion picture is incomplete;
(4) that ninety-five percent (95%) of all the musicians playing for the musical recordings of said companies are members of the Guild; and
(5) That the same has no knowledge of the existence of any other legitimate labor organization representing musicians in said companies.

Premised upon these allegations, the GUILD prayed that it be certified as the sole and exclusive bargaining agency for all musicians working in the aforementioned companies.

In the respective answer, the latter denied that they have any musicians as employees, and alleged that the musical numbers in the filling of the companies are furnished by independent
contractors.

LOWER COURT The lower court, however, rejected this pretense and sustained the theory of the Guild, with the result already adverted to.

ISSUE RULLING

Whether or not The film companies summon the musicians to work. The film companies, not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at
there is an dinner time.
employer-
employee What is more - in the language of the order appealed from - “during the recording sessions, the motion picture director who is an employee of the company” - not the musical director -
relationship “supervises the recording of the musicians and tells them what to do in every detail”. The motion picture director - not the musical director - “solely directs and performance of the
exists between musicians before the camera”. The motion picture director “supervises the performance of all the actors, including musicians who appear in the senses, so that in the actual performance
the companies to be shown in the sceen, the musical director’s intervention has stopped”.
and the
musicians. Or, as testified to in the lower court, “the movie director tells the musical director what to do; tells the music to be cut or tells additional music in this part or he eliminates the entire music
he does not (want) or he may want more drums or move violin or piano, as the case may be”. The movie director “directly controls the activities of the musicians.” He “says he wants more
drums and the drummer plays more” or “if he wants more violin or he does not like that.”

It is well settled that “an employer-employee relationship exists . . where the person for whom the services are performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end . . .” the decisive nature of said control over the “means to be used’, is in which, by reason of said control, the employer-employee
relationship was held to exist between the management and the workers, notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power to hire
and fire said workers. The aforementioned control over the means to be used” in reading the desired end is possessed and exercise by the film companies over the musicians in the cases
before us.

b. Test to determine
14. Rosario Brothers vs. Ople
 ROSARIO BROTHERS INC. (MANILA COD DEPARTMENT STORE), VS. HON. BLAS F. OPLE

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. For their services, they were paid weekly wage on a piece-work 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 or 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.

Quoting from the comment of the Solicitor General, petitioner, in its memorandum, said -

(1) Once the job orders and the corresponding materials were distributed to them, private respondents were on their own. They were free to do their jobs either in the petitioner’s
shop or elsewhere at their option, without observing the regular working time of the company provided that they finished their work on time and in accordance with the
specifications. As a matter of fact, they were allowed to contract other persons to do the job for them; and also to accept tailoring job from other establishments.

REGIONAL The private respondents filed with the Regional Office of the Department of Labor a complaint for violation of P.D. No. 851 (13th month pay) and P.D. No. 525, as amended by P.D. No.
OFFICE OF THE 1123 (Emergency Living Allowance) against herein petitioner.
DEPARTMENT
OF LABOR Labor Arbiter rendered a decision dismissing the “private respondents” claim for unpaid emergency living allowance and 13th month pay, for lack of merit, upon finding that the
complainants (herein private respondents) are not employee of the respondent (herein petitioner) within the meaning of Article 267 (b) of the Labor Code. As a consequence, the
private respondent were dismissed and this prompted them to file a complaint for illegal dismissal with the Department of Labor.

NLRC Complaint and respondent are correct in considering their relationship as one between employees and employers.

ISSUE RULLING

Whether or not The existence of employer-employee relationship is determined by the following elements, namely:
an employer-
employee (1) The selection and engagement of the employee;
relationship (2) The payment of wages;
exists between (3) The power of dismissal; and
the petitioner (4) The power to control employee’s conduct although the latter is the most important element.
and the private
respondents. 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. The procedure was modified when the employment of personnel in the tailoring department was made by the management itself after
the applicants' qualifications had been passed upon by a committee of four. Later, further approval by the Personnel Department was required.
2.
3. 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 (PD 442), thus —
(f) "Wage" paid to any employee shag mean the remuneration or earnings, however, designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or
 unwritten contract of employment for work done or to be done or for services rendered or to be rendered, and includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging or other facilities customarily furnished by the employer to the employee. …

4. Petitioner had the power to dismiss private respondents, as shown by the various memoranda issued for strict compliance by private respondents, violations of which, in extreme
cases, are grounds for outright dismissal. In fact, they were dismissed on January 2, 1978, although, the dismissal was declared illegal by the Labor Arbiter. The case is pending
appeal with the National Labor Relations Commission.

5. Private respondents' conduct in the performance of their work was controlled by petitioner, such as:
a. they were required to work from Monday through Saturday;
b. they worked on job orders without waiting for the deadline;
c. they were to observe cleanliness in their place of work and were not allowed to bring out tailoring shop patterns; and
d. they were subject to quality control by petitioner.

6. 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).

7. Well-established is the principle that "findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally
accorded not only respect but even finality. Judicial review by this Court on labor cases do not go so far as to evaluate the sufficiency of the evidence upon which the Deputy
Minister and the Regional Director based their determinations but are limited to issues of jurisdiction or grave abuse of discretion (Special Events & Central Shipping Office
Workers Union vs. San Miguel Corporation, 122 SCRA 557)." In the case at bar, the questioned decision and order of execution of public respondents are not tainted with
unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction and, therefore, this Court finds no necessity to disturb, much less, reverse the same.

15. Sy vs. CA

SY, VS. COURT OF APPEALS

FACTS Sometime in 1958, private respondent Jaime Sahot 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.

In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from 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 had filed a week-long leave sometime in May 1994. On May 27th, he was medically examined and treated for EOR, presleyopia, hypertensive retinopathy G II (n4, respectively), 6
HPM, UTI, Osteoarthritis and heart enlargement. On said grounds, Belen Paulino of the SBT Trucking Service management told him to file a formal request for extension of his leave. At the
end of his week-long absence, Sahot applied for extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to terminate his
employment should he refuse to go back to work.

At this point, Sahot found himself in a dilemma. He was facing dismissal if he refused to work, But he could not retire on pension because petitioners never paid his correct SSS premiums.
The fact remained he could no longer work as his left thigh hurt abominably. Petitioners ended his dilemma. They carried out their threat and dismissed him from work, effective June 30,
1994. He ended up sick, jobless and penniless.

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.

Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on leave and was not able to report for work for almost seven days. On June 1, 1994, Sahot asked permission to
extend his leave of absence until June 30, 1994. It appeared that from the expiration of his leave, private respondent never reported back to work nor did he file an extension of his leave.
Instead, he filed the complaint for illegal dismissal against the trucking company and its owners.

Petitioners add that due to Sahot’s refusal to work after the expiration of his authorized leave of absence, he should be deemed to have voluntarily resigned from his work. They contended
that Sahot had all the time to extend his leave or at least inform petitioners of his health condition. Lastly, they cited NLRC Case No. RE-4997-76, entitled " Manuelito Jimenez et al. vs. T.
Paulino Trucking Service," as a defense in view of the alleged similarity in the factual milieu and issues of said case to that of Sahot’s, hence they are in pari material and Sahot’s complaint
ought also to be dismissed.

ISSUE RULLING

Whether or not
an employer- A computation of the age of complainant shows that he was only twenty-three (23) years when he started working with respondent as truck helper. How can we entertain in our mind that
employee a twenty-three (23) year old man, working as a truck helper, be considered an industrial partner. Hence we rule that complainant was only an employee, not a partner of respondents from
relationship the time complainant started working for respondent.
existed
between Because the Court of Appeals also found that an employer-employee relationship existed, petitioners aver that the appellate court’s decision gives an "imprimatur" to the "illegal" finding
petitioners and and conclusion of the NLRC.
respondent
Sahot; Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written agreement, no proof that he received a share in petitioners’ profits, nor
was there anything to show he had any participation with respect to the running of the business.

The elements to determine the existence of an employment 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’s conduct. The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work
to be done, but also as to the means and methods to accomplish it.

As found by the appellate court, petitioners owned and operated a trucking business since the 1950s and by their own allegations, they determined private respondent’s wages and rest
day. Records of the case show that private respondent actually engaged in work as an employee. During the entire course of his employment he did not have the freedom to determine
where he would go, what he would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his wages. Indeed, said the
CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but under the latter’s control.

Article 176721 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. 22 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, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime Sahot was not an industrial partner but an employee of petitioners from 1958 to 1994.
The existence of an employer-employee relationship is ultimately a question of fact 23 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. 24

Time and again this Court has said that "if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter." 25 Here,
we entertain no doubt. Private respondent since the beginning was an employee of, not an industrial partner in, the trucking business.

Whether or not
there was valid In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause and validly made. 28 Article 277(b) of the Labor Code puts
dismissal. the burden of proving that the dismissal of an employee was for a valid or authorized cause on the employer, without distinction whether the employer admits or does not admit the
dismissal.29 For an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. 30

Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, viz:

Art. 284. Disease as a 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 prejudicial to his health as well as the health of his co-employees: xxx

However, in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Sec. 8. 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 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. (Italics
supplied).

As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC, 31 the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it
would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy in the protection of labor.

In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected.

In addition, we must likewise determine if the procedural aspect of due process had been complied with by the employer.

From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by the management of the trucking company. The employer is
required to furnish an employee with two written notices before the latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is
sought, which is the equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer
and to be heard on his defense. 33 These, the petitioners failed to do, even only for record purposes. What management did was to threaten the employee with dismissal, then actually
implement the threat when the occasion presented itself because of private respondent’s painful left thigh.

All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahot’s dismissal is tainted with invalidity.

16. Manila Golf vs NLRC

MANILA GOLF & COUNTRY CLUB, INC., VS.

 ISSUE RULLING

Whether or not The private respondent, Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that petitioner is under no obligation to report him for compulsory coverage to
persons the Social Security System.
rendering
caddying (Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner. He may work with any other golf club or
services for he may seek employment a caddy or otherwise with any entity or individual without restriction by petitioner. . . .
members of
golf clubs and . . . In the final analysis, petitioner has no was 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
their guests in 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.
said clubs'
courses or 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
premises are petitioner and go to such other place of work that he wishes (sic). Or a caddy who is on call for a particular day may deliberately absent himself if he has more profitable caddying, or
the employees another, engagement in some other place. These are things beyond petitioner's control and for which it imposes no direct sanctions on the caddies. . .
of such clubs
and therefore
within the
compulsory
coverage of the
Social Security
System (SSS).

17. Semblante vs. CA

SEMBLANTE, VS. COURT OF APPEALS

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 the masiador, 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 the
arriba, 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.

For their services as masiador and sentenciador, Semblante receives PhP 2,000 per week or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month.
They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last
until 12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had both been issued employees’ identification cards 5 that they wear every
time they report for duty. They alleged never having incurred any infraction and/or violation of the cockpit rules and regulations.

Petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the termination of their services effective that date.

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 in Gallera 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 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

NLRC 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.

ISSUE RULLING

Whether or not
there is a actual 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:
employer-
employee (1) he selection and engagement of the employee;
relationship (2) the payment of wages;
between the (3) the power of dismissal; and
petitioners and (4) the power to control the employee’s conduct, which is the most important element. 1avvphi1
the private
respondents. 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 free 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.1avvphi

18. Brotherhood Labor Movement vs. Zamora

BROTHERHOOD LABOR MOVEMENT, VS. ZAMORA

FACTS
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 "pahinante" at the SMC Plant loading, unloading, piling or palleting empty bottles and woosen shells to and from company trucks and warehouses. At times, they
accompanied the company trucks on their delivery routes.

The petitioners first reported for work to Superintendent-in-Charge Camahort. They were issued gate passes signed by Camahort and were provided by the respondent company with the
tools, equipment and paraphernalia used in the loading, unloading, piling and hauling operation.

Job orders emanated from Camahort. The orders are then transmitted to an assistant-officer-in-charge. In turn, the assistant informs the warehousemen and checkers regarding the same.
 The latter, thereafter, relays said orders to the capatazes or group leaders who then give orders to the workers as to where, when and what to load, unload, pile, pallet or clean.

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 group leader notes
down the number or volume of work that each individual worker has accomplished. This is then made the basis of a report or statement which is compared with the notes of the checker
and warehousemen as to whether or not they tally. Final approval of report is by officer-in-charge Camahort. The pay check is given to the group leaders for encashment, distribution, and
payment to the petitioners in accordance with payrolls prepared by said leaders. From the total earnings of the group, the group leader gets a participation or share of ten (10%) percent
plus an additional amount from the earnings of each individual.

The petitioners worked exclusive 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, inhuman
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.

On February 6, 1969, 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. Several conciliation conferences were
scheduled in order to thresh out their differences, On February 12, 1969, union member Rogelio Dipad was dismissed from work. At the scheduled conference on February 19, 1969, the
complainant union through its officers headed by National President Artemio Portugal Sr., presented a letter to the respondent company containing proposals and/or labor demands
together with a request for recognition and collective bargaining.

San Miguel refused to bargain with the petitioner union alleging that the workers are not their employees.

On February 20, 1969, 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.

ISSUE RULING

Whether or not 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)
there exists an 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.
employer- It. is the called "control test" that is the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra,
employee and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).
relationship
between them Applying the above criteria, the evidence strongly indicates the existence of an employer-employee relationship between petitioner workers and respondent San Miguel Corporation.
and the
respondent The facts and evidence on record negate respondent SMC's claim.
company and
that they were The existence of an independent contractor relationship is generally established by the following criteria: "whether or not the contractor is carrying on an independent business; the nature
dismissed for
unionism, an and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the
act constituting work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises tools,
unfair labor appliances, materials and labor; and the mode, manner and terms of payment" (56 CJS Master and Servant, Sec. 3(2), 46; See also 27 AM. Jur. Independent Contractor, Sec. 5, 485 and
practice "for Annex 75 ALR 7260727)
which
respondents None of the above criteria exists in the case at bar.
must be made
to answer." Highly unusual and suspect is the absence of a written contract to specify the performance of a specified piece of work, the nature and extent of the work and the term and duration of the
relationship. The records fail to show that a large commercial outfit, such as the San Miguel Corporation, entered into mere oral agreements of employment or labor contracting where the
same would involve considerable expenses and dealings with a large number of workers over a long period of time. Despite respondent company's allegations not an iota of evidence was
offered to prove the same or its particulars. Such failure makes respondent SMC's stand subject to serious doubts.

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 (Phil. Fishing Boat Officers and Engineers Union v. Court of
Industrial Relations, 112 SCRA 159 and RJL Martinez Fishing Corporation v. National Labor Relations Commission, 127 SCRA 454).

As we have found in RJL Martinez Fishing Corporation v. National Labor Relations Commission (supra):

... [T]he employer-employee relationship between the parties herein is not coterminous with each loading and unloading job. As earlier shown, respondents are engaged in the business of
fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal in
nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents' vessels and then loading the same to refrigerated vans, are
necessary or desirable in the business of respondents. This circumstance makes the employment of complainants a regular one, in the sense that it does not depend on any specific project
or seasonable activity. (NLRC Decision, p. 94, Rollo).lwphl@itç

so as it with petitioners in the case at bar. In fact, despite past shutdowns of the glass plant for repairs, the petitioners, thereafter, promptly returned to their jobs, never having been
replaced, or assigned elsewhere until the present controversy arose. The term of the petitioners' employment appears indefinite. The continuity and habituality of petitioners' work
bolsters their claim of employee status vis-a-vis respondent company,

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.

Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides:

Job contracting. — There is job contracting permissible under the Code if the following conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free
from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his
business.

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 (Article 106, 109 of the Labor Code; Section 9(b), Rule VIII, Book III, Implementing Rules and
Regulations of the Labor Code). 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.

The payment of the workers' wages is a critical factor in determining the actuality of an employer-employee relationship whether between respondent company and petitioners or
between the alleged independent contractor and petitioners. It is important to emphasize that in a truly independent contractor-contractee relationship, the fees are paid directly to the
manpower agency in lump sum without indicating or implying that the basis of such lump sum is the salary per worker multiplied by the number of workers assigned to the company. This is
the rule in Social Security System v. Court of Appeals (39 SCRA 629, 635).

The alleged independent contractors in the case at bar were paid a lump sum representing only the salaries the workers were entitled to, arrived at by adding the salaries of each worker
which depend on the volume of work they. had accomplished individually. These are based on payrolls, reports or statements prepared by the workers' group leader, warehousemen and
checkers, where they note down the number of cartons, wooden shells and bottles each worker was able to load, unload, pile or pallet and see whether they tally. The amount paid by
respondent company to the alleged independent contractor considers no business expenses or capital outlay of the latter. Nor is the profit or gain of the alleged contractor in the conduct
of its business provided for as an amount over and above the workers' wages. Instead, the alleged contractor receives a percentage from the total earnings of all the workers plus an
additional amount corresponding to a percentage of the earnings of each individual worker, which, perhaps, accounts for the petitioners' charge of unauthorized deductions from their
salaries by the respondents.

Anent the argument that the petitioners are not employees as they worked on piece basis, we merely have to cite our rulings in Dy Keh Beng v. International Labor and Marine Union of the
Philippines (90 SCRA 161), as follows:

"[C]ircumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not define the essence of the relation. Units of time . . . and
units of work are in establishments like respondent (sic) just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe payment by
the piece where work is done in such an establishment so as to put the worker completely at liberty to turn him out and take in another at pleasure."

Article 106 of the Labor Code provides the legal effect of a labor only contracting scheme, to wit:

... 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.

Firmly establishing respondent SMC's role as employer is the control exercised by it over the petitioners that is, control in the means and methods/manner by which petitioners are to go
about their work, as well as in disciplinary measures imposed by it.

Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to the means and manner of performing the same is practically nil. For, how many ways are there
to load and unload bottles and wooden shells? The mere concern of both respondent SMC and the alleged contractor is that the job of having the bottles and wooden shells brought to and
from the warehouse be done. More evident and pronounced is respondent company's right to control in the discipline of petitioners. Documentary evidence presented by the petitioners
establish respondent SMC's right to impose disciplinary measures for violations or infractions of its rules and regulations as well as its right to recommend transfers and dismissals of the
piece workers. The inter-office memoranda submitted in evidence prove the company's control over the petitioners. That respondent SMC has the power to recommend penalties or
dismissal of the piece workers, even as to Abner Bungay who is alleged by SMC to be a representative of the alleged labor contractor, is the strongest indication of respondent company's
right of control over the petitioners as direct employer. There is no evidence to show that the alleged labor contractor had such right of control or much less had been there to supervise or
deal with the petitioners.

The petitioners were dismissed allegedly because of the shutdown of the glass manufacturing plant. Respondent company would have us believe that this was a case of retrenchment due
to the closure or cessation of operations of the establishment or undertaking. But such is not the case here. The respondent's shutdown was merely temporary, one of its furnaces needing
repair. Operations continued after such repairs, but the petitioners had already been refused entry to the premises and dismissed from respondent's service. New workers manned their
positions. It is apparent that the closure of respondent's warehouse was merely a ploy to get rid of the petitioners, who were then agitating the respondent company for benefits, reforms
 and collective bargaining as a union. There is no showing that petitioners had been remiss in their obligations and inefficient in their jobs to warrant their separation.

As to the charge of unfair labor practice because of SMC's refusal to bargain with the petitioners, it is clear that the respondent company had an existing collective bargaining agreement
with the IBM union which is the recognized collective bargaining representative at the respondent's glass plant.

There being a recognized bargaining representative of all employees at the company's glass plant, the petitioners cannot merely form a union and demand bargaining. The Labor Code
provides the proper procedure for the recognition of unions as sole bargaining representatives. This must be followed.

19. La Suerte vs. Director of BLR

FACTS:

Some thirty-one (31) local union members signed a joint letter withdrawing their membership from NATU.
Nonetheless, on April 18, 1979, the local union and NATU filed a petition for direct certification or certification election which alleged among others, that forty-eight of the sixty sales personnel of the
Company were members of the local union; that the petition is supported by no less than 75% of the sales force; that there is no existing recognized labor union in the Company representing the said sales
personnel; that there is likewise no existing collecting bargaining agreement; and that there had been no certification election in the last twelve months preceding the filing of the petition.

The Company then filed a motion to dismiss the petition on June 13, 1979 on the ground that it is not supported by at least 30% of the members of the proposed bargaining unit because (a) of the alleged
forty-eight (48) members of the local union, thirty-one (31) had withdrawn prior to the filing of the petition; and (b) fourteen (14) of the alleged members of the union were not employees of the Company
but were independent contractors.

NATU and the local union opposed the Company's motion to dismiss alleging that the fourteen dealers are actually employees of the Company because they are subject to its control and supervision.
On August 29, 1979, the Med-Arbiter issued an order dismissing the petition for lack of merit as the fourteen dealers who joined the union should not be counted in determining the 30% consent requirement
because they are not employees but independent contractors and the withdrawal of the 31 salesmen from the union prior to the filing of the petition for certification election was uncontroverted by the
parties.

ISSUE:

Whether or not the 14 dealers are employees or independent contractors.

RULING:

Corollarily, when a petition for certification election is supported by 48 signatories in a bargaining unit composed of 60 salesmen, but 14 of the 48 lacks employee status, the petition is vitiated thereby. Herein
lies the importance of resolving the status of the dealers in this case.

It is the contention of the company that the dealers in the sale of its tobacco products are independent contractors. On the other hand, the Union contends that such dealers are actually employees entitled
to the coverage and benefits of labor relations laws.

According to the petitioner, to effectively market its products, the Company maintains a network of dealers all over the country. These arrangements are covered by a dealership agreement signed between
the Company and a dealer in a particular area or territory. And attached to the petition is a representative copy of the said dealership agreement.

The status of the 14 members of the local union involved herein mainly on their dealership agreements for verily, "a different approach would lead this Court astray into the field of factual controversy where
its legal pronouncements would not rest on solid grounds."

Accordingly, after considering the terms and stipulations of the Dealership Contracts which are clear and leave no doubt upon the intention of the contracting parties in establishing the relationship between
the dealers on one hand and the company on the other as that of buyer and seller, We find that the status thereby created is one of independent contractorship, pursuant to the first rule in the
interpretation of contracts that the literal meaning of the stipulations shall control. (Article 1370, New Civil Code)

From the plain language of the Dealership Agreement, We find that the same is premised with the prefatory statement "the factory has accepted the application of (name of applicant) and therefore has
appointed him as one of its dealers." Its terms and conditions include the following: that the dealer shall handle the products in accordance with existing laws and regulations of the government (par. ); that
the dealer shall send his orders to the factory plant in cash in any amount or on credit up to the amount of not more than P10,000.00 only at any given time (par. 2); that the factory shall supply the dealer
with a truck or a panel delivery and all expenses for repairs shall be borne by the factory (par. 3); and that the dealer shall not receive any commission but shall be given a discount for all sales and said
discount shall be decided by the factory from time to time (par. 4).

It also provides that the dealer alone shall be responsible for any violation of any law (par. 5); that the dealer shall be assigned to a particular territory which the factory may decide from time to time (par. 6);
that the dealer shall sell the products at the price to be agreed upon between the parties (par. 7); and that the dealer shall post a surety bond of not less than P10,000.00 to guarantee and secure complete
and faithful performance (par. 8).

Either party may terminate the contract without cause by giving 15 days notice in writing; however, in the event of breach or failure to comply with any of the conditions, the factory may terminate or rescind
the contract immediately (par. 9 and 10).

The Dealership Supplementary Agreement reiterates that the Company "hereby constitute and appoints the DEALER as its authorized dealer for the sale and distribution of the COMPANY products" and "the
DEALER hereby accepts such appointment" (par. 1). It also provides that the geographical area in which the dealer shall undertake his responsibilities is Greater Manila and Suburbs. However, the Company
may change or subdivide the territory as the business exigencies and the policy of the Company will dictate (par. 2).

Under said supplementary agreement, the dealer undertakes to: (a) diligently canvass for buyers of the Company's products; (b) refrain from selling or distributing goods of similar nature; (c) furnish the
Company every 3 months a list of buyers/customers, specifying their addresses and individual daily supply; (d) abide by the Company policy, particularly with respect to pricing; (e) keep account of all his
dealings and promptly liquidate his accounts; (f) refrain from engaging in any activity which will prejudice the Company from withdrawing cigarettes beyond the maximum volume allotted to him (par. 3.)

In case of incapacity of the dealer, the Company may designate a substitute (par. 6). The Company also reserves the right to determine, from time to time, the amount of credit granted or to be granted to the
dealer (par. 7).

It is likewise immediately noticeable that no such words as "to hire and employ" are present. The Dealership Agreement uses the words "the factory has accepted the application of (name of applicant) and
therefore has appointed him as one of its dealers"; whereas the Dealership Supplementary Agreement is prefaced with the statement: "For and in consideration of the mutual covenants and agreements
made herein, by one to the other, the COMPANY and the DEALER by these presents, enter into this Supplementary Agreement whereby the COMPANY will avail of the services of the DEALER to handle the
sale and distribution of the cigarette products". Nothing in the terms and conditions likewise reveals that the dealers were engaged as employees.

Again, on the basis of the clear terms of the dealership agreements, no mention is made of the wages of the dealers. In fact, it specifies that the dealer shall not receive any commission from the factory
but the latter shall give the dealer a discount for all sales either on consignment or in cash (par. 4).

20. Insular life vs. NLRC

Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered into a contract by which:
1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of Commissions" of the contract to "constitute a part of the consideration of ... (said) agreement;" and
3. he "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those which may from time to time be promulgated by it, ..." were made part of said contract.

The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement.

Some four years later, in April 1972, the parties entered into another contract — an Agency Manager's Contract — and to implement his end of it Basiao organized an agency or office to which he gave the
name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract with the Company.

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted the latter to
terminate also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980.

Basiao thereafter filed with the then Ministry of Labor a complaint against the Company and its president. Without contesting the termination of the first contract, the complaint sought to recover
commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an
independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract.

The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had established an employer-employee relationship between him and the Company, and this
conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions "... equivalent to the balance of the first year's premium remaining
unpaid, at the time of his termination, of all the insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees. 6

This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission. 7 Hence, the present petition for certiorari and prohibition.

ISSUE:

whether, as Basiao asserts, he had become the Company's employee by virtue of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of
the Labor Arbiter under the provisions of Section 217 of the Labor Code, 8 or, contrarily, as the Company would have it, that under said contract Basiao's status was that of an independent contractor whose
claim was thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil action.
RULING:
... In determining the existence of employer-employee relationship, the following elements are generally considered, 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 the employees' conduct — although the latter is the most important element (35 Am. Jur. 445). ... has been followed and applied in later cases, some fairly
recent.

The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. No
showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods — or the
methods themselves — of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "...
free to exercise his own judgment as to the time, place and means of soliciting insurance."

The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is
germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship with the Company.

The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions
should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming
the Arbiter's decision.
 21. Sonza vs. ABS-CBN

Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("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.

The Agreement listed the services SONZA would render to ABS-CBN, as follows:

a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;

b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays. 3

ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of ₱310,000 for the first year and ₱317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th
and 25th days of the month. Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career.

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").

ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996.

The Court of Appeals affirmed the NLRC’s finding that no employer-employee relationship existed between SONZA and ABS-CBN.

ISSUE:

Whether or not there is an employer-employee relationship between the parties.

RULING:

The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by
substantial evidence. Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 16 A party cannot prove the absence of substantial evidence by
simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies
or what evidence is credible.

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.

Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. 29 This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker
is deemed an employee. The converse holds true as well – the less control the hirer exercises, the more likely the worker is considered an independent contractor. 30

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. 31 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.

We find that ABS-CBN 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.

SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power over the means and methods of the performance of his 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. 35

Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was by the obligation to continue paying in full SONZA’s talent fees, did not amount to control over the means and methods of the
performance of SONZA’s work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and appeared on television - did not
meet ABS-CBN’s approval. This proves that ABS-CBN’s control was limited only to the result of SONZA’s work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZA’s
talent fees in full until the expiry of the Agreement.

In Vaughan, et al. v. Warner, et al.,36 the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete
objectionable features in their shows. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting
objectionable features.37

SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel &
Jay" programs. However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to perform his job. What SONZA principally needed were his talent or skills and the
costumes necessary for his appearance. 38Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not
supervise and control his work. ABS-CBN’s sole concern was for SONZA to display his talent during the airing of the programs. 39

A radio broadcast specialist who works under minimal supervision is an independent contractor. SONZA’s work as television and radio program host required special skills and talent, which SONZA admittedly
possesses. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows.

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" 41 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." 42 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. 43 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.
We have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining
it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike
the second, which address both the result and the means used to achieve it. 44

The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not
deprive the one hired from performing his services according to his own initiative. 45

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. 46 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." 47 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.