University of Cebu

Banilad, Cebu City

College of Law

LABOR LAW I

CASE DIGESTS

Submitted By:
BEA SUAN
JD - 3

Submitted To:
COMMISSIONER JULIE RENDOQUE

AUGUST 2016

FEATI UNIVERSITY VS. JUDGE BAUTISTA

G.R. No.L-21278 December 27, 1966

FACTS:
On January 14, 1963, the President of Feati University Faculty Club (PAFLU) wrote a
letter to Mrs. Victoria L. Araneta, President of Feati University informing her that it registered
as a labor union. Araneta answered the letters, requesting that she be given at least 30 days
to study thoroughly the different phases of the demands. Meanwhile counsel for Feati, wrote
a letter to the President of PAFLU demanding proof of its majority status and designation as a
bargaining representative. The President of PAFLU rejected the extension of time and filed a
notice of strike with the Bureau of Labor due to Featis refusal to bargain collectively. The
Conciliation Division of the Bureau of Labor made efforts to conciliate them but failed.
PAFLU declared a strike and established picket lines in the premises of Feati resulting in the
disruption of classes in the University.
The President of the Philippines certified to the CIR the dispute between Feati and
PAFLU pursuant to the provisions of Section 10 of Republic Act No. 875. On May 10, 1963
Feati filed before the SC a petition for certiorari and prohibition with writ of preliminary
injunction which was issued upon the Feati's filing a bond of P50,000 (increased from
P1,000), ordering CIR Judge Jose S. Bautista to desist and refrain from further proceeding.
On the strength of the presidential certification, Judge Bautista set the case for hearing.
Feati, thru counsel filed a motion to dismiss the case. Judge Bautista denied the motion and
ordered the strikers to return immediately to work and the University to take them back
under the last terms and conditions existing before the dispute arose. Without the motion for
reconsideration having been acted upon by the CIR en banc, Judge Bautista set the case for
hearing on the merits for May 8, 1963 but was cancelled upon Featis petition for certiorari.
Feati claims that it is not an employer within the contemplation of R.A. 875, because it is not
an industrial establishment. Feati also claims that it is only a lessee of the services of its
professors and/or instructors pursuant to a contract of services entered into between them
because the University does not exercise control over their work
ISSUE: Whether or not Feati can be considered an employer and PAFLU as an employee to be
covered by R.A. 875 and have right to unionize
RULING:
The Court ruled on the positive. Section 2(c) of R.A. 875 provides, The term employer
include any person acting in the interest of an employer, directly or indirectly, but shall not
include any labor organization (otherwise than when acting as an employer) or any one acting
in the capacity or agent of such labor organization. Congress did not intend to give a
complete definition of "employer", but rather that such definition should be complementary to
what is commonly understood as employer.
The Act itself specifically enumerated those who are not included in the term
"employer" and educational institutions are not included; hence, they can be included in the
term "employer". However, those educational institutions that are not operated for profit are
not within the purview of Republic Act No. 875.
Feati realizes profits and parts of such earning are distributed as dividends to private
stockholders or individuals. It embraces not only those who are usually and ordinarily
considered employees, but also those who have ceased as employees as a consequence of a
labor dispute. Feati controls the work of the members of its faculty, prescribes the courses or
subjects that professors teach, and when and where to teach, professors' work is

characterized by regularity and continuity for a fixed duration, professors are compensated
for their services by wages and salaries, rather than by profits, professors and/or instructors
cannot substitute others to do their work without the consent of the university, professors
can be laid off if their work is found not satisfactory. Moreover, even if university professors
are considered independent contractors, still they would be covered by Rep. Act No. 875
professors, instructors or teachers of private educational institutions who teach to earn a
living are entitled to the protection of our labor laws and one such law is Republic Act No.
875.
FAR EASTERN UNIVERSITY v. THE COURT OF INDUSTRIAL RELATIONS, PHILIPPINE
ASSOCIATION OF COLLEGES AND UNIVERSITY PROFESSORS (PACUP) and TOMAS N.
AGUIRRE
G.R. No. L-17620 August 31, 1962
FACTS:
Tomas N. Aguirre became a faculty member of the University in 1948, and first
employed at the rate of P6.00 per hour and then at the rate of P30.00 per class, earning an
average of P500.00 to P600.00 a month. Aguirre joined the PACUP, a legitimate labor
organization in June 1953. Upon orders of the president of the PACUP, Aguirre began to
campaign and recruit members for the PACUP. In 1953, the University formed a committee
classifying the faculty members as full-time or not. Aguirre was classified as a full time
instructor with a fixed compensation of P450.00 a month, effective September 1, 1953.
Aguirre was compensated (however decreasing) from 1953-1954. But in June 1954, the
University stopped giving him teaching assignments.
Aguirres claimed that the University no longer gave him teaching assignments due to
his union activities. The University, on the other hand, contend that the not giving him of
teaching assignment was due to the fact that there has been a decrease in the enrolment of
the school. Aguirre brought charges against the University before the Department of
Education when his teaching load was reduced. The Director of Private Schools decided in
favour of Aguirre. The Secretary of Education affirmed the decision and subsequently, the
Executive Secretary, by authority of the President of the Philippines affirmed the decision of
the previous offices.
At the instance of PACUP, and/or Tomas N. Aguirre, on September 28, 1954, an Acting
Prosecutor of the Court of Industrial Relations (CIR) filed a complaint for unfair labor
practice against the University. The CIR ruled that University is guilty of unfair labor practice
and must pay to him his salary differential, back wages and to cease and desist from further
committing unfair labor practice. No reinstatement, since the current employment is
substantial equivalent of his position as full time instructor in said University. The CIR en
banc affirmed the CIR ruling, however, ruled that current employment is not substantial
equivalent to his former position in the University. Hence this present appeal by certiorari
taken by the University.
ISSUE: Whether or not his current employment at Philippine College of Commerce and in the
Central Bank of the Philippines is substantial
RULING:

The Court affirmed the decision of CIR. The Court could not consider the contention of
the University that the laying off was due to decrease enrolment (and income) when the
figures of the school showed that its income was steadily increasing. The Court could only
think that the change of status of Aguirre from a fulltime professor to a reserve instructor
was due to the fact that, based on the evidence, Aguirre campaigned for union membership
among the professors, instructors and teachers of the University, and the further fact, that
other full time instructors similarly situated but are not union members did not suffer the
same facts of abrupt reduction in their teaching load and salary.
Ordinarily, back wages are granted whenever there is a finding of a commission of
unfair labor practices. Although Mr. Aguirre was, not a professor, but a full time instructor in
the University, we agree with the opinion of the lower court, sitting en banc. The fact that
Aguirre was a Tagalog teacher, his position as researcher in the Central Bank has no future
for him. The situation would perhaps have been different had his line been economics.
Inasmuch, however, as Mr. Aguirre has especialized in the Tagalog dialect, his work as a
researcher in the Central Bank is inferior to his job as full time instructor in the University,
not so much because his salary in the latter is substantially bigger, even if we add thereto his
emoluments in the Philippine College of Commerce, but, specially, because of the future his
position as instructor in the University offers him as a career, which is non-existent in the
Central Bank. Petition of the University is DENIED. Decision of CIR en banc affirmed.
PHILIPPINE AIR LINES, INC. v. PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION
G.R. No. L-21120; February 28, 1967
FACTS:
PAL dismissed its four (4) employees who are members of the PALEA. The CIR en
banc passed a resolution directing the reinstatement of said employees to their former or
equivalent position in the company, with back wages from the date of their reinstatement,
and without prejudice to their seniority or other rights and privileges which was affirmed by
the Supreme Court. The employees objected to this deduction which was sustained by the
CIR. However, the same was reversed by the Supreme Court.
Subsequently, PALEA moved for the execution of the CIR resolution (directing the
reinstatement of said employees) as regards the "other rights and privileges" mentioned
therein, referring, more specifically to: Christmas bonus from 1950 to 1958; accumulated
sick leave; transportation allowance during lay-off period; and accumulated free trip passes,
both domestic and international. Although the sick leave of Onofre Grio and Bernardino
Abarrientos, and the transportation allowance were denied, the CIR, nevertheless granted
the motion. PAL contends that the CIR has erred in acting as it did, because the:
aforementioned privileges were not specifically mentioned in the CIR resolution; order of the
CIR had, allegedly, the effect of amending said resolution; and the clause therein "without
prejudice to their seniority or other rights and privileges" should be construed prospectively,
not retroactively.
ISSUES: Whether or not employees are entitled to reinstatement and payment of backwages
even during their lay-off period.
strike.

Whether or not their employment status are affected by the exercise of their right to

RULING:

Yes. Insofar as the Christmas bonus, the accumulated sick leave privileges and the
transportation allowance during the lay-off period, the PAL's contention is clearly devoid of
merit. In ordering therein the "reinstatement" of said employees with "back wages from the
date of their dismissal to the date of their reinstatement, and without prejudice to their seniority
or other rights and privileges," it is obvious that the resolution intended to restore the
employees to their status immediately prior to their dismissal. CIR treated said employees as
if they had not been absent from work and had been uninterruptedly working during the layoff period. Hence, it directed, not only their reinstatement, but, also, the payment of
their back wages during the period of their lay-off thus referring necessarily to a period of
time preceding their reinstatement and the retention of "their seniority or other rights and
privileges".
Thus, in Republic Steel Corporation vs. NLRB (114 F. 2d. 820), it was held that, under a
decree of the Circuit Court of Appeals and Order of the National Labor Relations Board
directing the employer to reinstate the striking employees without prejudice to their seniority
or other rights or privileges, it was the intention of the Board and Court to provide that, upon
reinstatement the employees were to be treated in matters involving seniority and continuity
of employment as though they had not been absent from work, and hence the reinstated
employees were entitled to the benefits of the employer's vacation plan for the year in which
they were reinstated and subsequent years upon the basis of continuity of service
computed as though they had been actually at during the entire period from the date of strike
to the date of reinstatement.
As a consequence, the employees involved in the case at bar are entitled to the
Christmas bonus that PAL had given to all of its employees during said period, for said
bonus, having been paid regularly, has become part of the compensation of the
employees. Said employees are, likewise, entitled to transportation allowance and the
corresponding sick leave privileges.
AURORA LAND PROJECTS CORP. Doing business under the name "AURORA PLAZA" and
TERESITA T. QUAZON, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
and HONORIO DAGUI, respondents.
physical exercise of control
FACTS:
Private respondent Honorio Dagui was hired by Doa Aurora Suntay Tanjangco in
1953 to take charge of the maintenance and repair of the Tanjangco apartments and
residential buildings. He was to perform carpentry, plumbing, electrical and masonry work.
Upon the death of Doa Aurora Tanjangco in 1982, her daughter, petitioner Teresita
Tanjangco Quazon, took over the administration of all the Tanjangco properties. Private
respondent Dagui received the shock of his life when Mrs. Quazon suddenly told him: "Wala
ka nang trabaho mula ngayon,"on the alleged ground that his work was unsatisfactory. On
August 29, 1991, private respondent, who was then already sixty-two (62) years old, filed a
complaint for illegal dismissal with the Labor Arbiter.
Respondent contends that he was an employee for 38 years. Petitioner, however, said
that he was not an employee but a job contractor. On May 25, 1992, Labor Arbiter Ricardo C.
Nora rendered judgment, ordering Aurora Plaza and/or Teresita Tanjangco Quazon to pay the
complainant the total amount of P195,624.00 representing complainant's separation pay and
the ten (10%) percent attorney's fees within ten (10) days from receipt of this Decision.
ISSUE: Whether or not private respondent Honorio Dagui was an employee of petitioners.

RULING:
The Court ruled that he is an employee of the petitioners.
Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (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. It is the so-called "control test," and that
is, whether the employer controls or has reserved the right to control the employee not only as
to the result of the work to be done but also as to the means and methods by which the same is
to be accomplished, which constitute the most important index of the existence of the employeremployee relationship. All these elements are present in the case at bar. Private respondent
was hired in 1953 by Doa Aurora Suntay Tanjangco, who was then the one in charge of the
administration of the Tanjangco's various apartments and other properties. He was employed
as a stay-in worker performing carpentry, plumbing, electrical and necessary work (sic)
needed in the repairs of Tanjangco's properties. Upon the demise of Doa Aurora in 1982
petitioner Teresita Tanjangco-Quazon took over the administration of these properties and
continued to employ the private respondent, until his unceremonious dismissal on June 8,
1991.
Dagui was not compensated in terms of profits for his labor or services like an
independent contractor. Rather, he was paid on a daily wage basis at the rate of P180.00.
Employees are those who are compensated for their labor or services by wages rather than by
profits. Doa Aurora and later her daughter petitioner Teresita Quazon evidently had the
power of dismissal for cause over the private respondent.
Finally, the records unmistakably show that the most important requisite of control is
likewise extant in this case. It should be borne in mind that the power of control refers
merely to the existence of the power and not to the actual exercise thereof. It is not essential
for the employer to actually supervise the performance of duties of the employee; it is
enough that the former has a right to wield the power. The establishment of petitioners is
engaged in the leasing of residential and apartment buildings. Naturally, private respondent's
work therein as a maintenance man had to be performed within the premises of herein
petitioners. In fact, petitioners do not dispute the fact that Dagui reports for work from 7:00
o'clock in the morning until 4:00 o'clock in the afternoon. It is not far-fetched to expect,
therefore, that Dagui had to observe the instructions and specifications given by then Doa
Aurora and later by Mrs. Teresita Quazon as to how his work had to be performed.
Parenthetically, since the job of a maintenance crew is necessarily done within company
premises, it can be inferred that both Doa Aurora and Mrs. Quazon could easily exercise
control on private respondent whenever they please.

ENCYCLOPEDIA BRITANNICA (PHILIPPINES), INC. v.

NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L.
DOGELIO and BENJAMIN LIMJOCO
G.R. No. 87098. November 4, 1996
FACTS:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner
Encyclopaedia Britannica and was in charge of selling petitioners products through some
sales representatives. As compensation, private respondent received commissions from the
products sold by his agents. It was, however, agreed upon that office expenses would be
deducted from private respondents commissions. Petitioner would also be informed about
appointments, promotions, and transfers of employees in private respondents district.

On June 14, 1974, private respondent Limjoco resigned from office to pursue his
private business. He filed a complaint against petitioner Encyclopaedia Britannica with the
DOLE, claiming for non-payment of separation pay and other benefits, and also illegal
deduction from his sales commissions. Labor Arbiter Teodorico Dogelio, in a decision ruled
that Limjoco was an employee of the petitioner company. Petitioner had control over Limjoco
since the latter was required to make periodic reports of his sales activities to the company.
All transactions were subject to the final approval of the petitioner, an evidence that
petitioner company had active control on the sales activities. There was therefore, an
employer-employee relationship and necessarily, Limjoco was entitled to his claims. NLRC
affirmed the assailed decision. The petitioner still exercised control over Limjoco through its
memoranda and guidelines and even prohibitions on the sale of products other than those
authorized by it. In short, the petitioner company dictated how and where to sell its
products. Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica
now comes to us in this petition for certiorari and injunction with prayer for preliminary
injunction.
ISSUE: Whether or not there was an employer-employee relationship between Encyclopaedia
Britannica (Philippines), Inc. and Benjamin Limjoco.
RULING:
The Court ruled that there was no employer-employee relationship between petitioner
and respondent. Private respondent was merely an agent or an independent dealer of the
petitioner. In determining the existence of an employer-employee relationship the following
elements must be present: 1) selection and engagement of the employee; 2) payment of wages;
3) power of dismissal; and 4) the power to control the employees conduct. Of the above,
control of employees conduct is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship.
Under the control test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the end to be
achieved, but also the manner and means to be used in reaching that end. Here, private
respondent was free to conduct his work and he was free to engage in other means of
livelihood. The fact that petitioner issued memoranda to private respondents and to other
division sales managers did not prove that petitioner had actual control over them. The
different memoranda were merely guidelines on company policies which the sales managers
follow and impose on their respective agents. Private respondent Limjoco and the other
agents were free to conduct and promote their sales operations.
The element of control is absent; where a person who works for another does so more
or less at his own pleasure and is not subject to definite hours or conditions of work, and in
turn is compensated according to the result of his efforts and not the amount thereof, we
should not find that the relationship of employer and employee exists. In fine, there is
nothing in the records to show or would indicate that complainant was under the control of
the petitioner in respect of the means and methods in the performance of complainants work.

DR. CARLOS L. SEVILLA and LINA O. SEVILLA v.

THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S. CANILAO, and
SEGUNDINA NOGUERA
G.R.No. L-41182-3, April 16, 1988

FACTS:
On Oct. 19, 1960, Mrs. Segundina Noguera and Tourist World Service, Inc. entered
into a contract wherein Tourist World leased the premises of Noguera to be used as a branch
office. Lina Sevilla, who was to run the office, was to be solidarily liable for the payment of
the monthly rental.
Around Nov. 24, 1961, Tourist World was informed that Lina Sevilla was connected
with a rival firm (Philippine Travel Bureau). Tourist World then issued two resolutions by its
BOD, abolishing the office of manager and VP of the branch and authorizing the corporate
secretary to receive the properties of said branch. The contract for the use of the branch
office was terminated despite the effectivity lasting up to Jan. 31. The corporate secretary
found the premises locked. Unable to contact Sevilla, he padlocked the premises to protect
the interests of Tourist World. Sevilla nor any of her employees could enter the premises.
Sevilla filed a complaint against respondents with a prayer for issuance of mandatory
preliminary injunction. The trial court dismissed the case without prejudice on the ground
of interest of the parties.
In June 1963, Sevilla refiled her case and the case was jointly heard with Nogueras
counterclaim. Sevilla claims that she was not an employee of TWS but was a party to a joint
business venture with the latter. She alleges that she is also engaged in the travel business,
she did not receive salary from TWS but received 7% commissions from airline companies in
booking passengers and that she shared 3% with TWS and kept the 4% for herself. She also
claims that she shared in the expenses in maintaining the office and even paid the salaries
of the employee. Sevilla contends that it was agreed that she would be given title of branch
managers for appearances sake only. On the other hand, TWS contends that Sevilla was an
employee (manager). The trial court ruled that Sevilla was an employee, that TWS was the
true lessee and it was thin its prerogative to terminate the lease and lock the premises and
that, as an employee, Sevilla was bound by the acts of her employer. The CA Affirmed the
trial courts ruling.
ISSUE: Whether or not Sevilla was an employee of Tourist World Service
RULING:
No. If the relationship between the parties was that of employer and employee, the
regular courts would be without jurisdiction to try the case. There is no uniform test to
determine the evidence of employee-employer relation. Generally, the control test is
applied (employer has right of control not only the end to be achieved but the means to be
used). The Court also considers the economic conditions between the parties (e.g.
inclusion in payroll) in determining the existence of an employer-employee relationship.
The records show Sevilla was NOT subject to control by TWS. First, in the contract,
she had bound herself solidarily and true employees cannot be made to part with their
own money or assume liability in relation to the employers business. Second,
circumstances show that Sevilla relied on her own capabilities to bring in commissions
(hence, no control over the means used). Sevilla was also not in the companys payroll. She
also earned compensation in fluctuating amounts (4% of whatever commission gained)
rather than in a fixed amount like an employee. The designation (branch manager) does
not automatically make her an employee.
The relationship could not have been a joint venture or partnership since these
presuppose an equal proprietary interest in the property. In a letter, Sevilla expressly
conceded TWS right to stop business operations. The SC opines that the relationship is
that of agent and principal since it appears Sevilla operated the office in representation of

TWS. Being a contract of agency coupled with an interest (assumed a personal obligation
for the operation and was involved as a travel agent in a travel business), the agency here
cannot be revoked at will.
SAN MIGUEL CORPORATION vs. MAERC INTEGRATED SERVICES, INC., ET AL.
GR No. 144672 July 10, 2003
FACTS:
Brought before this court is a petition seeking for a review of the Court of Appeals'
judgment. The facts are as follows: 291 workers filed complaints against San Miguel
Corporation and Maerc Integrated Services, Inc. for illegal dismissal, underpayment of wages,
non-payment of service incentive leave pays and other labor standards benefits, and for
separation pays from 25 June to 24 October 1991. The complainants alleged that they were
hired by SMC through its agent or intermediary Maerc. They were paid on a per piece or
pakiao basis except for a few who worked as checkers and were paid on daily wage basis.
SMC denied liability for the claims and averred that the complainants were not its
employees but of MAERC. When the service contract was terminated, complainants claimed
that SMC stopped them from performing their jobs; that this was tantamount to their being
illegally dismissed by SMC who was their real employer; and, that MAERC was merely made a
tool or a shield by SMC to avoid its liability under the Labor Code.
On 31 January 1995 the Labor Arbiter rendered a decision holding that MAERC was
an independent contractor. He dismissed the complaints for illegal dismissal but held that
MAERC and SMC were jointly and severally liable to pay complainants their wage
differentials. The National Labor Relations Commission (NLRC) ruled in its 7 January 1997
decision that MAERC was a labor-only contractor and that complainants were employees of
SMC but still held SMC to be jointly and severally liable with MAERC for complainants'
separation benefits. On 28 April 2000 the Court of Appeals denied the petition and affirmed
the decision of the NLRC.
ISSUE: Whether or not the complainants are employees of petitioner SMC or of respondent
MAERC.
RULING:
Evidence discloses that petitioner played a large and indispensable part in the hiring
of MAERC's workers. It also appears that majority of the complainants had already been
working for SMC long before the signing of the service contract between SMC and MAERC in
1988.
In labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is
considered merely an agent of the principal employer and the latter is responsible to the
employees of the labor-only contractor as if such employees had been directly employed by
the principal employer. The principal employer therefore becomes solidarily liable with the
labor-only contractor for all the rightful claims of the employees.
This distinction between job contractor and labor-only contractor, however, will not
discharge SMC from paying the separation benefits of the workers, inasmuch as MAERC was
shown to be a labor-only contractor; in which case, petitioner's liability is that of a direct
employer and thus solidarily liable with MAERC.
Respondent Maerc Integrated Services, Inc. is declared to be a labor-only contractor.
Accordingly, both petitioner San Miguel Corporation and respondent Maerc Integrated

Services, Inc., are ordered to jointly and severally pay complainants (private respondents
herein) separation benefits and wage differentials as may be finally recomputed by the Labor
Arbiter as herein directed, plus attorney's fees to be computed on the basis of ten percent
(10%) of the amounts which complainants may recover pursuant to Art. 111 of the Labor
Code, as well as an indemnity fee of P2,000.00 to each complainant.

EMELITA LEONARDO ET AL. vs. COURT OF APPEALS, DIGITAL

TELECOMMUNICATIONS PHILIPPINES, INC.
G.R. No. 152459, June 15, 2006
FACTS:
Balagtas
Telephone
Company
(BALTEL)
holds
the
franchise
from
the Municipality of Balagtas, Bulacan to operate a telephone service in the
municipality. BALTEL also has authority from the National Telecommunications Commission
(NTC) to operate in the municipality. BALTEL hired Emelita Leonardo, et al. (petitioners) for
various positions in the company. BALTEL and DIGITEL entered into a management
contract. Under the terms of the contract, DIGITEL was to provide personnel, consultancy
and technical expertise in
the management, administration, and operation
of BALTELs telephone service in Balagtas, Bulacan. DIGITEL also undertook to improve the
internal and external plants of BALTELs telephone system and to handle customer relations
and such other matters necessary for the efficient management and operation of the
telephone system.
In a letter, BALTEL informed the NTC that it would cease to operate because it was no
longer in a financial position to continue its operations. BALTEL assigned to DIGITEL its
buildings and other improvements on a parcel of land in Balagtas, Bulacan covered by OCT,
where BALTEL conducted its business operations.
Petitioners, employment ceased. They executed separate, undated and similarly
worded quitclaims acknowledging receipt of various amounts representing their claims from
BALTEL. In their quitclaims, petitioners absolved and released BALTEL from all monetary
claims that arose out of their employer-employee relationship with the company. Petitioners
also acknowledged that BALTEL closed its operations due to serious business losses.
Petitioners filed a complaint against BALTEL and Domingo De Asis( Baltels proprietor)
for recovery of salary differential and attorneys fees. Petitioners later filed a supplemental
complaint to include illegal dismissal as additional cause of action and to implead DIGITEL
as additional respondent. DIGITEL denied having any liability on the ground that it was not
petitioners employer.
ISSUE: Whether an employer-employee relationship exists between petitioners and DIGITEL.
RULING:
There is no employer- employee relationship between DIGITEL and petitioners. To
determine the existence of an employer-employee relationship, the Court has to resolve who
has the a. power to select the employees, b. who pays for their wages; c.who has the power to
dismiss them, and d. who exercises control in the methods and the results by which the work
is accomplished. The most important element of an employer-employee relationship is the
control test. Under the control test, there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control not only the end
achieved but also the manner and means used to achieve that end.

In

this

case,

DIGITEL

undoubtedly

has

the

power

of

control. However, DIGITELs exercise of the power of control necessarily flows from the
exercise of its responsibilities under the management contract which includes providing for
personnel, consultancy and technical expertise in the management, administration, and
operation of the telephone system. Thus, the control test has no application in this case.
The Court notes that DIGITEL did not hire petitioners. BALTEL had already employed
petitioners when BALTEL entered into the management contract with DIGITEL.

The

management contract provides that BALTEL shall reimburse DIGITEL for all expenses
incurred in the performance of its services and this includes reimbursement of whatever
amount DIGITEL paid or advanced to BALTELs employees.
Finally, DIGITEL has no power to dismiss BALTELs employees. When DIGITEL wanted
to

dismiss

Roberto

Graban

for

habitual

tardiness,

BALTEL

did

not

approve DIGITELs recommendation. In the end, Roberto Graban was just suspended from
work.

In

sum,

no

employer-employee

relationship

exists

between

petitioners

and

DIGITEL. Hence, DIGITEL is not solidarily liable with BALTEL and Domingo de Asis to
petitioners.

R TRANSPORT CORPORATION vs. ROGELIO EJANDRA

G.R. No. 148508 May 20, 2004
FACTS:
Private respondent Rogelio Ejandra worked as a bus driver of petitioner Bus
Corporation for almost six years. One day, he was apprehended by an LTO officer for
obstruction of traffic for which his license was confiscated. Ejandra immediately reported the
incident to his manager, Mr. Oscar Pasquin, who gave him P500 to redeem his license but
was able to retrieve his license only after a week. Later on, when Ejandra informed his
manager that he was ready to report for work, he was told that the company was still
studying whether to allow him to drive again. Private respondent was likewise accused of
causing damage to the bus he used to drive. Petitioner claimed that private respondent, a
habitual absentee, abandoned his job. Petitioner further argued that private respondent was
not an employee because theirs was a contract of lease and not of employment, with
petitioner being paid on commission basis.
ISSUE: Whether or not respondent was dismissed with just cause.
RULING:
The Court ruled on the negative. According to petitioner, private respondent
abandoned his job and lied about the confiscation of his license. To constitute abandonment,
two elements must concur: (1) the failure to report for work or absence without valid or
justifiable reason and (2) a clear intention to sever the employer-employee relationship. Of the
two, the second element is the more determinative factor and should be manifested by some

overt acts. Mere absence is not sufficient. It is the employer who has the burden of proof to
show a deliberate and unjustified refusal of the employee to resume his employment without
any intention of returning.
In the instant case, petitioner fell short of proving the requisites. To begin with,
petitioners absence was justified because the LTO, Guadalupe Branch, did not release his
license until after a week. This was the unanimous factual finding of the labor tribunals and
the Court of Appeals. In addition to the fact that petitioner had no valid cause to terminate
private respondent from work, it violated the latters right to procedural due process by not
giving him the required notice and hearing. Section 2, Rule XXIII, Book V of Department
Order No. 9 provides for the procedure for dismissal for just or authorized cause:
SEC. 2. Standards of due process; requirement of notice. In all cases of termination of
employment, the following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and kapisanan ng mga kargador sa
pier 14
(c ) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination. In case of termination, the foregoing notices shall be served on the employees
last known address.

CRYSTAL SHIPPING, INC. and/or A/S STEIN LINE BERGEN vs. DEO P. NATIVIDAD
G.R. No. 154798, October 20, 2005

FACTS:
Petitioner A/S Stein Line Bergen, through its local manning agent, petitioner Crystal
Shipping, Inc., employed respondent Deo P. Natividad as Chief Mate of M/V Steinfighter for a
period of ten months. Within the contract period, respondent complained of coughing and
hoarseness and was brought to shore for examination. He was diagnosed with swelling neck
and lymphatic glands right side in neck, declared unfit for duty, and advised to see an earnose-throat specialist. He was repatriated to Manila on August 18, 1998.
Shortly after his arrival, respondent was referred the company-designated clinic, for
check-up and later thoroughly examined at the Manila Doctors Hospital. He was diagnosed
with papillary carcinoma, metastatic to lymphoid tissue consistent with thyroid primary and
reactive hyperplasis, lymph node. He underwent a total thyroidectomy with radial neck
dissection. After the operation, respondent developed chest complications and pleural
effusion, and had to undergo a thoracenthesis operation. On the basis of all these, his
attending physician diagnosed him permanently disabled with a grade 9 impediment, with
grade 1 as the most serious. The same opinions were made of by Dr. Robert D. Lim and Dr.
Efren R. Vicaldo. All expenses incurred in respondents examination and treatments were

shouldered by the petitioners. Respondent was also paid the allowable illness allowances,
commensurate to a grade 9 impediment.
On June 25, 1999, petitioners offered US$13,060 as disability benefits which
respondent rejected. Respondent claimed that he deserves to be paid US$60,000 for a grade
1 impediment. Failing to reach an agreement, respondent filed, with the Regional Arbitration
Branch (RAB), a complaint for disability benefits, illness allowance, damages and attorneys
fees.The Labor Arbiter ruled for respondent and ordered petitioners to pay respondent
US$60,000 as disability benefits, P100,000 as moral damages, and ten percent of the total
monetary award as attorneys fees.
ISSUE: Whether or not respondent was entitled to the proper disability benefits.
RULING:
Yes. In resolving the merits of the case, we find pertinent Section 30 of the POEA
Memorandum Circular No. 55, Series of 1996, which provides the schedule of disability or
impediment for injuries suffered and illness contracted. The particular illness of the
respondent is not within those enumerated. But, the same provision supplies us with the
guideline that any item in the schedule classified under grade 1 constitutes total and
permanent disability.
Permanent disability is the inability of a worker to perform his job for more than 120
days, regardless of whether or not he loses the use of any part of his body. As gleaned from
the records, respondent was unable to work from August 18, 1998 to February 22, 1999, at
the least, or more than 120 days, due to his medical treatment. This clearly shows that his
disability was permanent. Total disability, on the other hand, means the disablement of an
employee to earn wages in the same kind of work of similar nature that he was trained for, or
accustomed to perform, or any kind of work which a person of his mentality and attainments
could do. It does not mean absolute helplessness. In disability compensation, it is not the
injury which is compensated, but rather it is the incapacity to work resulting in the
impairment of ones earning capacity.
Although the company-designated doctors and respondents physician differ in their
assessments of the degree of respondents disability, both found that respondent was unfit for
sea-duty due to respondents need for regular medical check-ups and treatment which would
not be available if he were at sea. There is no question in our mind that respondents
disability was total.
It is of no consequence that respondent was cured after a couple of years. The law
does not require that the illness should be incurable. What is important is that he was
unable to perform his customary work for more than 120 days which constitutes permanent
total disability. An award of a total and permanent disability benefit would be germane to the
purpose of the benefit, which is to help the employee in making ends meet at the time when
he is unable to work.