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Cases on labor law Essay

In May 1994, ABS-CBN” signed an Agreement with the Mel and Jay Management and Development Corporation. ABS-CBN was represented by its corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco , as EVP and Treasurer. Referred to in the Agreement as “AGENT,” MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the first year and P317,000 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. On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (“ESOP”). On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties.

ISSUE: Whether or not there is employer-employee relationship that existed between them,

HELD: Although Philippine labor laws and jurisprudence define clearly the elements of an employer-employee relationship, this is the first time that the Court will resolve the nature of the relationship between a television and radio station and one of its “talents.” There is no case law stating that a radio and television program host is an employee of the broadcast station.

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. 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 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.

ADJUDICATION: The petition is denied.

CONSULTA vs CA Case Digest
[G.R. No. 145443. March 18, 2005]

FACTS: Consulta was Managing Associate of Pamana. On 1987 she was issued a certification authorizing her to negotiate for and in behalf of PAMANA with the Federation of Filipino Civilian Employees Association. Consulta was able to secure an account with FFCEA in behalf of PAMANA. However, Consulta claimed that PAMANA did not pay her commission for the PPCEA account and filed a complaint for unpaid wages or commission.

ISSUE: Whether or not Consulta was an employee of PAMANA.

HELD: The SC held that Pamana was an independent agent and not an employee.

The power of control in the four fold test is missing. The manner in which Consulta was to pursue her tasked activities was not subject to the control
of PAMANA. Consulta failed to show that she worked definite hours. The amount of time, the methods and means, the management and maintenance of her sales division were left to her sound judgment.

Finally, Pamana paid Consulta not for labor she performed but only for the results of her labor. Without results, Consulta’s labor was her own burden and loss. Her right to compensation, or to commission, depended on the tangible results of her work – whether she brought in paying recruits.

The fact that the appointment required Consulta to solicit business exclusively for Pamana did not mean Pamana exercised control over the means and methods of Consulta’s work as the term control is understood in labor jurisprudence. Neither did it make Consulta an employee of Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being connected with any other company, for as long as the business or company did not compete with Pamana’s business.

The exclusivity clause was a reasonable restriction to prevent similar acts prejudicial to Pamana’s business interest. Article 1306 of the Civil Code provides that “[t]he contracting parties may establish such stipulation, clauses, terms and conditions as they may deem convenient, provided that they are not contrary to law, morals, good customs, public order, or public policy.

There being no employer-employee relationship between Pamana and Consulta, the Labor Arbiter and the NLRC had no jurisdiction to entertain and rule on Consulta’s money claim. Consulta’s remedy is to file an ordinary civil action to litigate her claim

Petition is dismissed.



In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary.

However, on some occasions, she was prevailed upon to sign documentation for the company. In 1996, petitioner was designated Acting Manager. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. For five years, petitioner performed the duties of Acting Manager and as of December 31, 2000 her salary was P27,500.00 plus P3,000.00. In January 2001, petitioner was replaced by Liza R. Fuentes as Manager.

Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary from the company.

She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. On October 15, 2001, petitioner asked for her salary but she was informed that she is no longer connected with the company. On the other hand, the Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary.

As technical consultant, petitioner performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted. She also did not go through the usual procedure of selection of employees. Also, the private respondents submitted a list of employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR. Issues:

(1) Whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed. Ruling:

Yes. The court adopts a two-tiered test involving: (1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. Thus, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant.

She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Respondent corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause.

More importantly, respondent corporation had the power to control petitioner with the means and methods by which the work is to be accomplished. The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages.

Thus this petition is GRANTED and is REMANDED to the Labor Arbiter for the recomputation of petitioner Angelina Francisco’s full backwages from the time she was illegally terminated until the date of finality of this decision, and separation pay representing one-half month pay for every year of service, where a fraction of at least six months shall be considered as one whole year. ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.) respondents. G.R. No. 119268. February 23, 2000

Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of “Goodman Taxi.” Petitioners used to drive private respondent’s taxicabs every other day on a 24-hour work schedule under the boundary system.

Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.

Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision, dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter.

The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. Private respondent’s first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. Issue:

Was there a grave abuse of discretion amounting to lack or excess of jurisdiction?
Was there an employer-employee relationship?
Yes. The phrase “grave abuse of discretion amounting to lack or excess of jurisdiction” means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power. In this case, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent’s decision dated April 28, 1994, which public respondent denied. Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party.

The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry.

The second motion for reconsideration filed by private respondent is indubitably a prohibited pleading which should have not been entertained at all. Thus, the public respondent gravely abused its discretion in taking cognizance and granting private respondent’s second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases. Yes also for the second issue. Under the boundary system which is observed in the relationship of the petitioners and the private respondent, it is that of employer-employee and not of lessor-lessee. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter.

The management of the business is in the owner’s hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called “boundary” they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee.

Thus, the employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. Thereby, instant petition is GRANTED. Private respondent is directed to reinstate petitioners to their positions held at the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their actual reinstatement.

However, the order of public respondent that petitioners be reimbursed the amount paid as washing charges is deleted.

[G.R. No. 121605. February 2, 2000]
Private respondent Peter Mejila worked as barber on a piece rate basis at Dina’s Barber Shop. The owners and the barbers shared in the earnings of the barber shop. In 1977, petitioners designated private respondent as caretaker of the shop.

In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The bickerings, characterized by constant exchange of personal insults during working hours, became serious so that private respondent reported the matter to Atty. Allan Macaraya of the labor department. Meanwhile, private respondent continued reporting for work at the barbershop. But, on January 2, 1993, he turned over the duplicate keys of the shop to the cashier and took away all his belongings therefrom.

On January 8, 1993, he began working as a regular barber at the newly opened Goldilocks Barbershop also in Iligan City. On January 12, 1993, private respondent filed a complaint for illegal dismissal with prayer for payment of separation pay, other monetary benefits, attorney’s fees and damages. Significantly, the complaint did not seek reinstatement as a positive relief. ISSUES:

Is there an employer-employee relationship between petitioners and private respondent? Was the private respondent dismissed from his employment?

YES. In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker’s conduct, with the latter assuming primacy in the overall consideration. Absent a clear showing that petitioners and private respondent had intended to pursue a relationship of industrial partnership, we entertain no doubt that private respondent was employed by petitioners as caretaker-barber.

No. The labor arbiter was convinced that private respondent was not dismissed but left his work on his own volition because he could no longer bear the incessant squabbles with his co-worker. Nevertheless, public respondent did not give credence to petitioners’ claim that private respondent abandoned his job. On this score, public respondent gravely erred as hereunder discussed.

G.R. No. 151966 July 8, 2005

FACTS: JPL Marketing and Promotions is a domestic corporation engaged in the business of recruitment and placement of workers. On the other hand, private respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate dates and assigned at different establishments in Naga City and Daet, Camarines Norte as attendants to the display of California Marketing Corporation , one of petitioner’s clients.

On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising activity in the Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996. they were advised to wait for further notice as they would be transferred to other clients. However, on 17 October 1996, private respondents Abesa and Gonzales filed before the
National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and payment for moral damages. Aninipot filed a similar case thereafter.

Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of merit. The Labor Arbiter found that Gonzales and Abesa applied with and were employed by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period given by law to JPL to provide private respondents a new assignment. Thus, they may be considered to have unilaterally severed their relation with JPL, and cannot charge JPL with illegal dismissal. The Labor Arbiter held that it was incumbent upon private respondents to wait until they were reassigned by JPL, and if after six months they were not reassigned, they can file an action for separation pay but not for illegal dismissal.

The claims for 13th month pay and service incentive leave pay was also denied since private respondents were paid way above the applicable minimum wage during their employment.

NLRC. agreed with the Labor Arbiter’s finding that when private respondents filed their complaints, the six-month period had not yet expired, and that CMC’s decision to stop its operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed. However, it found that despite JPL’s effort to look for clients to which private respondents may be reassigned it was unable to do so, and hence they are entitled to separation pay.

The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there was no illegal dismissal, it justified the award of separation pay on the grounds of equity and social justice.

ISSUE: Whether or not the respondents are entitled to separation pay?

HELD: Under Arts. 283 and 284 of the Labor Code, separation pay is authorized
only in cases of dismissals due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer’s business; and (e) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees.

However, separation pay shall be allowed as a measure of social justice in those cases where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character, but only when he was illegally dismissed.

In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code provides for the payment of separation pay to an employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has ceased operations or his present position no longer exists at the time of reinstatement for reasons not attributable to the employer.

The common denominator of the instances where payment of separation pay is warranted is that the employee was dismissed by the employer. In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally or illegally. What they received from JPL was not a notice of termination of employment, but a memo informing them of the termination of CMC’s contract with JPL. More importantly, they were advised that they were to be reassigned. At that time, there was no severance of employment to speak of.

Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, wherein an employee/employees are placed on the so-called “floating status.” When that “floating status” of an employee lasts for more than six months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation, and this would apply to suspension either of the entire business or of a specific component thereof.

As clearly borne out by the records of this case, private respondents sought employment from other establishments even before the expiration of the six (6)-month period provided by law. As they admitted in their comment, all three of them applied for and were employed by another establishment after they received the notice from JPL. JPL did not terminate their employment; they themselves severed their relations with JPL. Thus, they are not entitled to separation pay.

Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to private respondents. Said benefits are mandated by law and should be given to employees as a matter of right.

LABOR ARBITER ADRIAN N. PAGALILAUAN and the NATIONAL LABOR RELATIONS COMMISSION, public respondents, and ROGELIO A. ABAN, private respondent G.R. No. L-62909 April 18, 1989

Petitioner corporation hired the private respondent Aban as its “Legal Assistant” and received basic monthly salary of P 1,500.00 plus an initial living allowance of P 50.00 which gradually increased to P 320.00. On September 4, 1980, Aban received a letter from the corporation informing him that he would be considered terminated effective October 4, 1980 because of his alleged failure to perform his duties well. Aban filed a complaint against the petitioner for illegal dismissal. The labor arbiter ruled that Aban was illegally dismissed.

This ruling was affirmed by the NLRC on appeal. Hence, this present petition. ISSUE: Whether or not there was an employer-employee relationship between the petitioner Corporation and Aban. HELD: The Supreme Court dismissed the petition for lack of merit, and reinstate Aban to his former or a similar position without loss of seniority rights and to pay three (3) years back wages without qualification or deduction and P5,000.00 in attorney’s fees. Should reinstatement not be feasible, the petitioner shall pay the private respondent termination benefits in addition to the above stated three years back pay and P5,000.00 attorney’s fees. A lawyer, like any other professional, may very well be an employee of a private corporation or even of the government.

This Court has consistently ruled that the determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the putative employee’s conduct.

Of the four, the right-of-control test has been held to be the decisive factor. In this case, Aban received basic salary plus living allowance, worked solely for the petitioner, dealt only with legal matters involving the said corporation and its employees and also assisted the Personnel Officer in processing appointment papers of employees which is not act of a lawyer in the exercise of his profession. These facts showed that petitioner has the power to hire and fire the respondent employee and more important, exercised control over Aban by defining the duties and functions of his work which met the four standards in determining whether or not there is an employee-employer relationship.

Duncan Association of Detailman-PTGWO v. Glaxo WellcomePhilippines G.R. No. 162994
September 17, 20004
Tinga, J.

Glaxo Wellcome Philippines Inc. hired Pedro A. Tecson as medical representative on October 24, 1995. In Tecson’s contract of employment, it was stipulated, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. Glaxo’s Employee Code of Conduct also contains provisions to the same effect. Said contract was signed by Tecson and hence commenced his employ with the company. He was assigned to cover the Camarines Sur-Camarines Nortesales area.

Tecson met Bettsy, a branch coordinator of Astra Pharma, a competitor of Glaxo. As fate would have it, they eventually fell in love and got married in September 1998. Tecson’s superiors were worried since the marriage gave rise to a conflict of interest and hence, gave him the option to choose whether to stay with the company and let his wife resign from her job or Tecson himself will resign so that his wife may continue working with her company.

Tecson never made a decision hence Glaxo moved to transfer Tecson to the Butuan-Surigao-Agusan del Sur sales area considering that he was from said area. But then, Tecson brought the matter to Glaxo’s Grievance Committee. During the pendency of the grievance proceedings, Tecson was paid his salary. However, he was not issued samples of products which were competing with similar products manufactured by Astra. They failed to resolve the conflict hence they submitted the matter for voluntary arbitration.

The company offered Tecson a separation pay of one-half month pay for every year of service, but he declined the offer. The National Conciliation and Mediation Board decided in favor of Glaxo. The Board declared Glaxo’s policy on relationships between its employees and person employed with competitor companies as valid, and affirmed Glaxo’s right to transfer Tecson to another sales territory. Upon appeal, the Cour of Appeal affirmed the NCMB decision. It reasoned that the company’s policy is a valid exercise of its management prerogatives. Tecson filed for reconsideration but was denied hence the case was brought to the Supreme Court.

1. Whether the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company valid? 2. Whether said policy violates the equal protection clause of the Constitution? 3. Whether Tecson was constructively dismissed?

1. Yes. Glaxo has a right to guard its secrets, manufacturing formula, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. The said prohibition only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures.

No. the policy does not violate the equal protection clause of the Constitution. Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. It is not a policy against marriage. An employee can still marry anyone of his/her own choosing. However, the company still has the right from exercising management prerogatives to ensure maximum profit and business success. It was also stressed that Tecson was aware of the restriction when he signed his employment contract and when he married Betssy. Hence, he is stopped from questioning said policy. 3. No. the Supreme Court ruled that Tecson’s reassignment to another area was not equivalent to his employment termination.

Tecson was not demoted nor unduly discriminated upon by reason of such transfer. It must be noted that Glaxo even considered the welfare of Tecson’s family. The reassignment was merely on keeping with the policy of the company in avoidance of conflict of interest, and thus valid.



Reynaldo Mercado owned the fishing boat “F/B Saint Theresa. On September 11, 1877, said boat sank off Isla Binatikan, Taytay, Palawan. One of the casualties in said incident was Arturo Villavilla, son of petitioners. He was employed as “tripulante” (crew member). The parents of Arturo filed a petition with the Social Security Commission against Reynaldo Mercado for death compensation benefits of Arturo whom Reynaldo failed to register as their employee.

The Social Security System (SSS) filed a petition in intervention alleging that petitioners must prove that Arturo was an employee of Reynaldo. If said employment was proven, then Reynaldo should be held liable in damages equivalent to the benefits due the petitioners for failure to report Arturo for coverage pursuant to Sec. 24 (a) of the Social Security Act, as amended. 6On November 28, 1984, respondent Social Security Commission issued an Order dismissing the petition for lack of cause of action. 9 The parents of Arturo then brought their case to the Court of Appeals. On appeal, the CA affirmed the questioned Order of the Social Security Commission there being no reversible error. Hence, they elevated their case to the Supreme Court. ISSUES:

1. Whether there was an employer – employee relationship between Arturo Villavilla and Reynaldo Mercado? 2. Whether Reynaldo Mercado is liable for death compensation benefits of Arturo Villavilla? 3. Whether there was a violation of the Social Security Act, as amended ,by Reynaldo Mercado for not registering Arturo Villavilla with the System as his employee as mandated by law.

1) None. The arrangement between the boat owner and the crewmembers partook of the nature of a joint venture. The fundamental bases for the existence of an employer – employee relationship were not present. a) Reynaldo Mercado had no connection with the selection and engagement of Arturo. The boat owner did not hire them but they simply joined the fishing expedition upon invitation of the ship master, even without the knowledge of the boat owner. b) Reynaldo likewise exercised no power of dismissal over Arturo c) There was no such uniform salary involved.

The crew members did not receive fixed compensation as they only shared in their catch. d) Reynaldo had no power of control or had reserved the right to control as to the result of the work to be done as well as the means and methods by which the same is to be accomplished. They ventured to the sea irrespective of the instructions of the boat owner. Upon their own best judgment as to when, how long, and where to go fishing. 2) No. Since there was no employer – employee relationship, then Mercado is not obliged to remit any employer’s contributions to the SSS accounts of said fishermen. Hence they cannot compel him to pay for any death compensation benefits. 3) None. Since it is impossible to determine the monthly wage or earning of the fishermen for the purpose of fixing the amount of their and the supposed employer’s contributions, there is every reason to exempt the parties to this kind of undertaking from compulsory registration with the Social Security System.

*** the Supreme Court stated:
For, we are not unaware that in this jurisdiction all doubts in the implementation and interpretation of provisions of social legislations should be resolved in favor of the working class. But, alas, justice is not fully served by sustaining the contention of the poor simply because he is poor. Justice is done by properly applying the law regardless of the station in life of the contending parties.


EUGENIA C. CREDO, petitioner,

PONENTE: Padilla, J.
Eugenia Credo was an employee of the National Service Corporation. She was terminated from office for the commission of offenses against company policies, public moral, and authority. A particular situation asserted by NASECO was Credo’s non-compliance with another NASECO officer’s memorandum regarding the entry procedures in the company’s Statement of Billings Adjustment. This was in lieu with the findings of NASECO’s Committee on Personnel Affairs.

Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28 November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former position, or substantially equivalent position, with six (6) months’ backwages and without loss of seniority rights and other privileges appertaining thereto, and 2) dismissing Credo’s claim for attorney’s fees, moral and exemplary damages. As a consequence, both parties filed their respective motions for reconsideration, which the NLRC denied in a resolution of 16 January 1985.

In the case at bar, the court found that NASECO did not comply with these guidelines in effecting Credo’s dismissal. Although she was apprised and “given the chance to explain her side” of the charges filed against her, this chance was given so perfunctorily, thus rendering illusory Credo’s right to security of tenure. That Credo was not given ample opportunity to be heard and to defend herself is evident from the fact that the compliance with the injunction to apprise her of the charges filed against her and to afford her a chance to prepare for her defense was dispensed in only a day.

This is not effective compliance with the legal requirements. Furth, Credo’s mere non-compliance with Lorens memorandum regarding the entry procedures in the company’s Statement of Billings Adjustment did not warrant the severe penalty of dismissal

NLRC ruled ordering her reinstatement. NASECO argues that NLRC has no jurisdiction to order her reinstatement. NASECO as a government corporation by virtue of its being a subsidiary of the NIDC, which is wholly owned by the Phil. National Bank which is in turn a GOCC, the terms and conditions of employment of its employees are governed by the Civil Service Law citing National Housing v Juco. ISSUE: Whether or not employees of NASECO, a GOCC without original charter, are governed by the Civil Service Law. HELD: NO.

The holding in NHC v Juco should not be given retroactive effect, that is to cases that arose before its promulgation of January 17, 1985. To do otherwise would be oppressive to Credo and other employees similarly situated because under the 1973 Constitution prior to the ruling in NHC v Juco, this court recognized the applicability of the Labor jurisdiction over disputes involving terms and conditions of employment in GOCC’s, among them NASECO. In the matter of coverage by the civil service of GOCC, the 1987 Constitution starkly differs from the 1973 Constitution where NHC v Juco was based.

It provides that the “civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government including government owned or controlled corporation with original charter.” Therefore by clear implication, the civil service does not include GOCC which are organized as subsidiaries of GOCC under the general corporation law.

ADJUDICATION: WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of her termination, or if such reinstatement is not possible, to place her in a substantially equivalent position, with three (3) years backwages, from 1 December 1983, without qualification or deduction, and without loss of seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney’s fees.

G.R. No. 78090 July 26, 1991
PACIFIC MILLS, INC., petitioner,
ZENAIDA ALONZO, respondent.
From July 30, 1973, Zenaida Alonzo was employed as a ring frame operator in the Pacific Mills, Inc. until September 30, 1982 when she was discharged by Management. The record shows that in the early afternoon of September 22, 1982, Zenaida challenged Company Inspector Ernesto Tamondong to a fight, saying: “Putang Ina mo, lumabas ka, tarantado, kalalaki mong tao, duwag ka . .

Ipagugulpi kita sa labas at kaya kitang ipakaladkad dito sa loob ng compound palabas ng gate sa mga kamag-anak ko.” And suiting action to the word, she thereupon boxed Tamondong in the stomach.

The motive for the assault was Zenaida’s resentment at having been reprimanded, together with other employees, two days earlier by Tamondong for wasting time by engaging in Idle chatter. 1 Tamondong forthwith reported the incident to the firm’s Administrative Manager 2 as well as the Chairman of Barangay Balombato, Quezon City. 3 On September 30, 1982, Zenaida Alonzo was given a Memorandum by the company’s Executive Vice President & General Manager terminating her employment as of October 1, 1982 on various grounds: poor work, habitual absences and tardiness, wasting time, insubordination and gross disrespect. The service of that memorandum of dismissal on her was not preceded by any complaint, hearing or other formality.

These were apparently considered unnecessary by Management 4 in view of the provision in the Company Rules and Regulations (embodied in the Collective Bargaining Agreement between the company and the union representing the employees) that: Fighting or attempting to inflict harm to another employee, will render (sic) the aggressor to outright dismissal. It was only at the hearing of the complaint for illegal dismissal (and non-payment of proportionate 13th month pay) instituted by Zenaida on October 4, 1982 in the NCR Arbitration Branch, that evidence was presented by the company not only of the assault by Zenaida on her superior but also of many other violations by her of company rules and regulations, in an attempt to substantiate the validity of her dismissal from work. The Labor

Arbiter found that Alonzo had indeed verbally abused and struck her superior, Tamondong, and rejected her contention that the assault was not punishable since it was “not work-connected and was provoked/instigated by Ernesto Tamondong.” 5 The Arbiter also declared as “fully established the previous infractions of complainant,” these being “a matter of record and not denied by complainant (Zenaida).” The Arbiter was of the view, however, that Alonzo was entitled to relief, because (a) the penalty imposed was “harsh and severe and not commensurate with the offense, . . . suspension of three (3) months . . (being) the proper, just and reasonable penalty . . .;” and because (b) the company had failed “to investigate complainant before she was dismissed.”

Acting on the employer’s appeal, the National Labor Relations Commission rendered judgment on March 23, 1987, sustaining the Labor Arbiter’s findings Pacific Mills Inc. has instituted in this Court the special civil action of certiorari at bar praying for nullification of the judgment of the NLRC for having been rendered with grave abuse of discretion.

In the comment thereon, 7 required of him by the Court, the Solicitor General opined that: . . . both the Labor Arbiter and the NLRC apparently failed to take into consideration the fact that Zenaida Alonzo was dismissed not because of this isolated act (of assault against her superior) but rather because of numerous and repeated violations of company rules and regulations. It was only this last incident which compelled Pacific Mills, Inc. to finally terminate her services. It is the totality of the infractions committed by the employee which should have been considered in determining whether or not there is just cause for her dismissal. Issue: whether or not there is just cause for her dismissal
Decisive of this controversy is the judgment of the Court en banc in Wenphil Corporation v. NLRC, promulgated on February 8, 1989, 10 in which the following policy pronouncements were made: Thus in the present case, where the private respondent, who appears to be of violent temper, caused trouble during office hours and even defied his superiors as they tried to pacify him, should not be rewarded with reemployment and back wages. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe.

Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employer.However, the petitioner (employer) must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process (Section 1, Rule XIV, Implementing Regulations of the Labor Code).

While it is true that Pacific Mills, Inc. had not complied with the requirements of due process prior to removing Zenaida Alonzo from employment, it is also true that subsequently, in the proceedings before the Labor Arbiter in which Zenaida Alonzo had of course taken active part, it had succeeded in satisfactorily proving the commission by Zenaida of many violations of company rules and regulations justifying termination of her employment.

Under the circumstances, it is clear that, as the Solicitor General has pointed out, the continuance in the service of the latter is patently inimical to her employer’s interests and that, citing San Miguel Corporation v. NLRC, 11 the law, in protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. And it was oppressive and unjust in the premises to require reinstatement of the employee. WHEREFORE, the petition is granted and the challenged decision of the respondent Commission dated March 23, 1987 and that of the Labor Arbiter thereby affirmed, are NULLIFIED AND SET ASIDE. However, the petitioner is ordered to pay private respondent a proportionate part of the 13th month pay due her, amounting to P351.00 as well as to indemnify her in the sum of P1,000.00. No costs.

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID, President, respondents. [G.R. No. 159890 May 28, 2004]

FACTS: Petitioner was a salesman of respondent company earning a commission of 3% of the total paid up sales covering the whole area of Mindanao. Aside from selling, he was also tasked with collection. Respondent corporation through its president, often required Abante to report to a particular area and occasionally required him to go to Manila to attend conferences.

Later on, bad blood ensued between the parties due to some bad accounts that Lamadrid forced petitioner to cover. Later petitioner found out that respondent had informed his customers not to deal with petitioner since it no longer recognized him as a commission salesman. Petitioner filed a complaint for illegal dismissal with money claims against respondent company and its president, Jose Lamadrid.

By way of defense, respondents countered that petitioner was not its employee but a freelance salesman on commission basis.

ISSUE: Whether or not petitioner, as a commission salesman, is an employee of respondent corporation.

HELD: To determine the existence of an employee-employer relationship, the SC applied the four fold test: 1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control.

Applying the aforementioned test, an employer-employee relationship is notably absent in this case. It is true that he was paid in commission yet no quota was imposed therefore a dismal performance would not warrant a ground for dismissal. There was no specific office hours he was required to observe. He was not designated to conduct services at a particular area or time. He pursued his selling without interference or supervision from the company. The company did not prescribe the manner of selling merchandise. While he was sometimes required to report to Manila, these were only intended to guide him. Moreover, petitioner was free to offer his services to other companies.

Art. 280 is not a crucial factor because it only determines two kinds of employees. It doen;t apply where there is no employer-employee relationship. While the term commission under Article 96 of the LC was construed as being included in the term “wage”, there is no categorical pronouncement that the payment of commission is conclusive proof of the existence of an employee-employer relationship.

G.R. No. 148508 May 20, 2004

Rogelio Ejandra worked as a bus driver of R Transport Corporation and was paid on a 10% commission basis. He informed R Transport’s general manager that his license was confiscated after he was apprehended for a traffic violation. The manager gave him money to redeem his license. Ejandra went to the LTO office everyday but it was only after a week that he was able to get back his license. When he reported back to work, the manager told him to wait until his services were needed again. When asked how long he had to rest, the manager did not give a definite time. Considering himself dismissed, Ejandra filed a complaint for illegal dismissal against R Transport.

R Transport denied Ejandra’s allegations and claimed that he abandoned his job; that he lied about his license being confiscated; and that he was not an employee because theirs was a contract of lease and not of employment, being paid on commission basis.

The labor arbiter rendered his decision in favor of Ejandra, finding his dismissal to be without just cause and ORDERING R-Transport to REINSTATE him
to his former position without loss of seniority and other benefits and to pay him backwages from the time of his dismissal until actual reinstatement. The NLRC affirmed this decision. R Transport filed in the Court of Appeals a petition for certiorari on the ground that the NLRC committed grave abuse of discretion in affirming the decision of the labor arbiter. The CA denied the petition.

1. Did Ejandra abandon his job?
2. Is there an employer-employee relationship between R Transport and Ejandra? 3. Was private respondent dismissed for just cause?

1. No. R Transport failed to prove the requisites constituting abandonment. Ejandra’s absence was justified because the LTO did not release his license until after a week. He never intended to sever his employment as he reported for work as soon as he got his license back. If he abandoned his work, R Transport should have reported such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997.

2. Yes. R Transport invoked the Supreme Court’s rulings on the right of an employer to dismiss an employee. By adopting said rulings, R Transport impliedly admitted that it was the employer of Ejandra. The fact that Ejandra was paid on commission basis did not rule out the presence of an employee-employer relationship (Article 97(f), Labor Code).

3. No. It also violated Ejandra’s right to procedural due process by not giving him the required notice and hearing provided for in Section 2, Rule XXIII, Book V of Department Order No. 9., series of 1997 (Rules Implementing Book V of the Labor Code).

Ramos vs Court of Appeals () 380 SCRA 467
Labor Standards
Case Digests
Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gallbladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The operation wasscheduled on June 17, 1985 in the De los Santos Medical Center.

Erlinda was admitted to the medicalcenter the day before the operation. On the following day, she was ready for operation as early as 7:30am.Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from theoperating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the scheduled operation.Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left hand.At 3 pm,Erlinda was being wheeled to the Intensive care Unit and stayed there for a month.Since theill-fated operation,Erlinda remained in comatose condition until she died.The family of Ramos sued them for damages. Issue:

WON there was an employee-employer relationship that existed between the Medical Center and Drs.Hosaka and Guiterrez. Held:
No employer-employee between the doctors and hospital.Private Hospitals hire, fire and exercise real control over their attending and visiting consultant staff.While consultants are not technically employees, the control exercised, the hiring and the right toterminate consultants fulfill the hallmarks of an employer-employee relationship with the exception of payment of wages.

The control test is determining.In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors.Ithas been consistently held that in determining whether an employer- employee relationship existsbetween the parties, the following elements must be present: (1) selection and engagement of services;(2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only the end to beachieved, but the means to be used in reaching such an end.The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinicand/or admitting patients.It is the patient who pays the consultants.

The hospital cannot dismiss theconsultant but he may lose his privileges granted by the hospital. The hospitals obligation is limited
toproviding the patient with the preferred room accommodation and other things that will ensure that thedoctors orders are carried out.The court finds that there is no employer-employee relationship between the doctors and the hospital

August 17, 1992
Funtecha was a working student, being a part-time janitor and scholar of Filamer Christian Institute. One day, Funtecha, who already had a student’s driver’s license, requested Masa, the school driver and son of the school president, to allow him to drive the school vehicle. Assenting to the request, Masastopped the vehicle he was driving and allowed Funtecha to take over behind the wheel. However, after negotiating a sharp dangerous curb, Funtecha came upon a fast moving truck so that hehad to swerve to the right to avoid a collision. Upon swerving, they bumped a pedestrian walking in hislane. The pedestrian died due to the accident. ISSUE:

Won Filamer Christian Institute should be held liable
First it should be noted that driving the vehicle to and from the house of the school president were bothAllan and Funtecha reside is an act in furtherance of the interest of the petitioner-school.

The school jeep had to be brought home so that the school driver can use it to fetch students in the morning of thenext school day. Thus, in learning how to drive while taking the vehicle home in the direction of Allan’s home, Funtechadefinitely was not having a joy ride or for enjoyment, but ultimately, for the service for which the jeepwas intended by the petitioner school.(School president had knowledge of Funtecha’s desire to learn how to drive.) Court is thus constrained to conclude that the act of Funtecha in taking over the steering wheel was onedone for and in behalf of his employer for which act the school cannot deny any responsibility byarguing that it was done beyond the scope of his janitorial duties.

The fact that Funtecha was not the school driver does not relieve the school from the burden of rebutting the presumption of negligence on its part. It is sufficient that the act of driving at the time of theincident was for the benefit of the school.

Petitioner school has failed to show that it exercised diligence of a good father of a family.Petitioner has not shown that it has set forth rules and guidelines as would prohibit any one of itsemployees from taking control over its vehicles if one is not the official driver or prohibiting theauthorized driver from letting anyone than him to drive the vehicle. Furthermore, school had failed toshow that it impose sanctions or warned its employees against the use of its vehicles by persons other than the driver. Thus, Filamer has an obligation to pay damages for injury arising from the unskilled manner by whichFuntecha drove the vehicle since the law imposes upon the employers vicarious liability for acts or omissions of its employees.

The liability of the employer, under Article 2180, is primary and solidary. However, the employer shallhave recourse against the negligent employee for whatever damages are paid to the heirs of theplaintiff. On Labor Code’s Rule X

The clause “within the scope of their assigned tasks” (found in CC) for purposes of raising thepresumption of liability of an employer, includes any act done by an employee, in furtherance of theinterests of the employer or for the account of the employe at the time of the infliction of the injury or damage Even if somehow, the employee driving the vehicle derived some benefit from the act, the existence of a presumptive liability of the employer is determined by answering the question of whether or not theservant was at the time of the accident performing any act in furtherance of his master’s business. Rule X, which provides for the exclusion of working scholars in the employment coverage and on whichthe petitioner is anchoring its defense, is merely a guide to the enforcement of the substantive law onlabor.

It is not the decisive law in a civil suit for damage instituted by an injured person during avehicular accident against a working student of a school and against the school itself. Present casedoes not involve a labor dispute.An implementing rule on labor cannot be used by an employer s a shield to avoid liability under thesubstantive provisions of the CC.

Motion granted

G.R. No. 75112 August 17, 1992
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P. SUPLICO, in his capacity as Judge of the Regional Trial Court, Branch XIV, Roxas City and POTENCIANO KAPUNAN, SR., respondents. GUTIERREZ, JR., J.:

Funtecha was a working student, being a part-time janitor and a scholar of petitioner Filamer. He was, in relation to the school, an employee even if he was assigned to clean the school premises for only two (2) hours in the morning of each school day. Having a student driver’s license, Funtecha requested the driver, Allan Masa, and was allowed, to take over the vehicle while the latter was on his way home one late afternoon. It is significant to note that the place where Allan lives is also the house of his father, the school president.

Allan Masa turned over the vehicle to Funtecha only after driving down a road, a fast moving truck with glaring lights nearly hit them so that they had to swerve to the right to avoid a collision. Upon swerving, they heard a sound as if something had bumped against the vehicle, but they did not stop to check. Actually, the Pinoy jeep swerved towards the pedestrian, Potenciano Kapunan who was walking in his lane in the direction against vehicular traffic, and hit him. ISSUE:

WON there exists an employer-employee relationship between the petitioner and its co-defendant Funtecha. HELD:Yes. Funtecha is an employee of petitioner Filamer.

He need not have an official appointment for a driver’s position in order that the petitioner may be held responsible for his grossly negligent act, it being sufficient that the act of driving at the time of the incident was for the benefit of the petitioner. Hence, the fact that Funtecha was not the school driver or was not acting within the scope of his janitorial duties does not relieve the petitioner of the burden of rebutting the presumption juris tantum that there was negligence on its part either in the selection of a servant or employee, or in the supervision over him.

The petitioner has failed to show proof of its having exercised the required diligence of a good father of a family over its employees Funtecha and Allan.

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