Beruflich Dokumente
Kultur Dokumente
On their part, respondents moved for the dismissal of the complaint on the
grounds that the complainants are not and have never been employees of
respondent company but employees of the independent contractor; that
respondent company has never had control over the means and methods
followed by the independent contractor who enjoyed full authority to hire
and control said employees; and that the individual complainants are
barred by estoppel from asserting that they are employees of respondent
company.
While pending with the Court of Industrial Relations CIR pleadings and
testimonial and documentary evidences were duly presented, although the
actual hearing was delayed by several postponements. The dispute was
taken over by the National Labor Relations Commission (NLRC) with the
decreed abolition of the CIR and the hearing of the case intransferably
commenced on September 8, 1975.
On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants
which was concurred in by the NLRC in a decision dated June 28, 1976.
The amount of backwages awarded, however, was reduced by NLRC to
the equivalent of one (1) year salary.
On appeal, the Secretary in a decision dated June 1, 1977, set aside the
NLRC ruling, stressing the absence of an employer-mployee relationship
as borne out by the records of the case. ...
The petitioners strongly argue that there exists an employer-employee
relationship between them and the respondent company and that they were
dismissed for unionism, an act constituting unfair labor practice "for which
respondents must be made to answer."
Unrebutted evidence and testimony on record establish that the petitioners are
workers who have been employed at the San Miguel Parola Glass Factory
since 1961, averaging about seven (7) years of service at the time of their
termination. They worked as "cargadores" or "pahinante" at the SMC Plant
loading, unloading, piling or palleting empty bottles and woosen shells to and
LABOR LAW I |1
LABOR LAW I |2
Uncontroverted is the fact that for an average of seven (7) years, each of the
petitioners had worked continuously and exclusively for the respondent
company's shipping and warehousing department. Considering the length of
time that the petitioners have worked with the respondent company, there is
justification to conclude that they were engaged to perform activities necessary
or desirable in the usual business or trade of the respondent, and the
petitioners are, therefore regular employees (Phil. Fishing Boat Officers and
Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and RJL
Martinez Fishing Corporation v. National Labor Relations Commission, 127
SCRA 454).
As we have found in RJL Martinez Fishing Corporation v. National Labor
Relations Commission (supra):
... [T]he employer-employee relationship between the parties herein is not
coterminous with each loading and unloading job. As earlier shown,
respondents are engaged in the business of fishing. For this purpose, they
have a fleet of fishing vessels. Under this situation, respondents' activity of
catching fish is a continuous process and could hardly be considered as
seasonal in nature. So that the activities performed by herein
complainants, i.e. unloading the catch of tuna fish from respondents'
vessels and then loading the same to refrigerated vans, are necessary or
desirable in the business of respondents. This circumstance makes the
employment of complainants a regular one, in the sense that it does not
depend on any specific project or seasonable activity. (NLRC Decision, p.
94, Rollo).lwphl@it
so as it with petitioners in the case at bar. In fact, despite past shutdowns of the
glass plant for repairs, the petitioners, thereafter, promptly returned to their
jobs, never having been replaced, or assigned elsewhere until the present
controversy arose. The term of the petitioners' employment appears indefinite.
The continuity and habituality of petitioners' work bolsters their claim of
employee status vis-a-vis respondent company,
Even under the assumption that a contract of employment had indeed been
executed between respondent SMC and the alleged labor contractor,
respondent's case will, nevertheless, fail.
Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code
provides:
LABOR LAW I |3
nil. For, how many ways are there to load and unload bottles and wooden
shells? The mere concern of both respondent SMC and the alleged contractor
is that the job of having the bottles and wooden shells brought to and from the
warehouse be done. More evident and pronounced is respondent company's
right to control in the discipline of petitioners. Documentary evidence presented
by the petitioners establish respondent SMC's right to impose disciplinary
measures for violations or infractions of its rules and regulations as well as its
right to recommend transfers and dismissals of the piece workers. The interoffice memoranda submitted in evidence prove the company's control over the
petitioners. That respondent SMC has the power to recommend penalties or
dismissal of the piece workers, even as to Abner Bungay who is alleged by
SMC to be a representative of the alleged labor contractor, is the strongest
indication of respondent company's right of control over the petitioners as direct
employer. There is no evidence to show that the alleged labor contractor had
such right of control or much less had been there to supervise or deal with the
petitioners.
The petitioners were dismissed allegedly because of the shutdown of the glass
manufacturing plant. Respondent company would have us believe that this was
a case of retrenchment due to the closure or cessation of operations of the
establishment or undertaking. But such is not the case here. The respondent's
shutdown was merely temporary, one of its furnaces needing repair. Operations
continued after such repairs, but the petitioners had already been refused entry
to the premises and dismissed from respondent's service. New workers
manned their positions. It is apparent that the closure of respondent's
warehouse was merely a ploy to get rid of the petitioners, who were then
agitating the respondent company for benefits, reforms and collective
bargaining as a union. There is no showing that petitioners had been remiss in
their obligations and inefficient in their jobs to warrant their separation.
As to the charge of unfair labor practice because of SMC's refusal to bargain
with the petitioners, it is clear that the respondent company had an existing
collective bargaining agreement with the IBM union which is the recognized
collective bargaining representative at the respondent's glass plant.
There being a recognized bargaining representative of all employees at the
company's glass plant, the petitioners cannot merely form a union and demand
bargaining. The Labor Code provides the proper procedure for the recognition
of unions as sole bargaining representatives. This must be followed.
LABOR LAW I |5
SECOND DIVISION
G.R. No. L-80680 January 26, 1989
DANILO B. TABAS, EDUARDO BONDOC, RAMON M. BRIONES,
EDUARDO R. ERISPE, JOEL MADRIAGA, ARTHUR M. ESPINO, AMARO
BONA, FERDINAND CRUZ, FEDERICO A. BELITA, ROBERTO P. ISLES,
ELMER ARMADA, EDUARDO UDOG, PETER TIANSING, MIGUELITA
QUIAMBOA, NOMER MATAGA, VIOLY ESTEBAN and LYDIA
ORTEGA, petitioners,
vs.
CALIFORNIA MANUFACTURING COMPANY, INC., LILY-VICTORIA A.
AZARCON, NATIONAL LABOR RELATIONS COMMISSION, and HON.
EMERSON C. TUMANON, respondents.
SARMIENTO, J.:
On July 21, 1986, July 23, 1986, and July 28, 1986, the petitioners petitioned
the National Labor Relations Commission for reinstatement and payment of
various benefits, including minimum wage, overtime pay, holiday pay, thirteenmonth pay, and emergency cost of living allowance pay, against the
respondent, the California Manufacturing Company. 1
On October 7, 1986, after the cases had been consolidated, the California
Manufacturing Company (California) filed a motion to dismiss as well as a
position paper denying the existence of an employer-employee relation
between the petitioners and the company and, consequently, any liability for
payment of money claims. 2 On motion of the petitioners, Livi Manpower
Services, Inc. was impleaded as a party-respondent.
It appears that the petitioners were, prior to their stint with California,
employees of Livi Manpower Services, Inc. (Livi), which subsequently assigned
them to work as "promotional merchandisers" 3 for the former firm pursuant to a
manpower supply agreement. Among other things, the agreement provided
that California "has no control or supervisions whatsoever over [Livi's] workers
with respect to how they accomplish their work or perform [Californias]
obligation"; 4 the Livi "is an independent contractor and nothing herein
contained shall be construed as creating between [California] and [Livi] . . . the
relationship of principal[-]agent or employer[-]employee'; 5 that "it is hereby
agreed that it is the sole responsibility of [Livi] to comply with all existing as well
as future laws, rules and regulations pertinent to employment of labor" 6 and
that "[California] is free and harmless from any liability arising from such laws
or from any accident that may befall workers and employees of [Livi] while in
the performance of their duties for [California]. 7
It was further expressly stipulated that the assignment of workers to California
shall be on a "seasonal and contractual basis"; that "[c]ost of living allowance
and the 10 legal holidays will be charged directly to [California] at cost "; and
that "[p]ayroll for the preceeding [sic] week [shall] be delivered by [Livi] at
[California's] premises." 8
The petitioners were then made to sign employment contracts with durations of
six months, upon the expiration of which they signed new agreements with the
same period, and so on. Unlike regular California employees, who received not
less than P2,823.00 a month in addition to a host of fringe benefits and
bonuses, they received P38.56 plus P15.00 in allowance daily.
The petitioners now allege that they had become regular California employees
and demand, as a consequence whereof, similar benefits. They likewise claim
that pending further proceedings below, they were notified by California that
they would not be rehired. As a result, they filed an amended complaint
charging California with illegal dismissal.
California admits having refused to accept the petitioners back to work but
deny liability therefor for the reason that it is not, to begin with, the petitioners'
employer and that the "retrenchment" had been forced by business losses as
well as expiration of contracts. 9 It appears that thereafter, Livi re-absorbed
them into its labor pool on a "wait-in or standby" status. 10
Amid these factual antecedents, the Court finds the single most important issue
to be: Whether the petitioners are California's or Livi's employees.
The labor arbiter's decision, 11 a decision affirmed on appeal, 12 ruled against
the existence of any employer-employee relation between the petitioners and
California ostensibly in the light of the manpower supply contract, supra, and
consequently, against the latter's liability as and for the money claims
demanded. In the same breath, however, the labor arbiter absolved Livi from
any obligation because the "retrenchment" in question was allegedly "beyond
LABOR LAW I |6
its control ." 13 He assessed against the firm, nevertheless, separation pay and
attorney's fees.
We reverse.
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. 14 Of the four, the right-of-control test has been held to be the decisive
factor. 15
On the other hand, we have likewise held, based on Article 106 of the Labor
Code, hereinbelow reproduced:
LABOR LAW I |7
not have itself done; Livi, as a placement agency, had simply supplied it with
the manpower necessary to carry out its (California's) merchandising activities,
using its (California's) premises and equipment. 25
Neither Livi nor California can therefore escape liability, that is, assuming one
exists.
The fact that the petitioners have allegedly admitted being Livi's "direct
employees" 26 in their complaints is nothing conclusive. For one thing, the fact
that the petitioners were (are), will not absolve California since liability has
been imposed by legal operation. For another, and as we indicated, the
relations of parties must be judged from case to case and the decree of law,
and not by declarations of parties.
The fact that the petitioners have been hired on a "temporary or seasonal"
basis merely is no argument either. As we held in Philippine Bank of
Communications v. NLRC, 27 a temporary or casual employee, under Article
218 of the Labor Code, becomes regular after service of one year, unless he
has been contracted for a specific project. And we cannot say that
merchandising is a specific project for the obvious reason that it is an activity
related to the day-to-day operations of California.
It would have been different, we believe, had Livi been discretely a promotions
firm, and that California had hired it to perform the latter's merchandising
activities. For then, Livi would have been truly the employer of its employees,
and California, its client. The client, in that case, would have been a mere
patron, and not an employer. The employees would not in that event be unlike
waiters, who, although at the service of customers, are not the latter's
employees, but of the restaurant. As we pointed out in the Philippine Bank of
Communicationscase:
xxx xxx xxx
... The undertaking given by CESI in favor of the bank was not the
performance of a specific job for instance, the carriage and delivery of
documents and parcels to the addresses thereof. There appear to be many
companies today which perform this discrete service, companies with their
own personnel who pick up documents and packages from the offices of a
client or customer, and who deliver such materials utilizing their own
delivery vans or motorcycles to the addressees. In the present case, the
undertaking of CESI was to provide its client the bank with a certain
number of persons able to carry out the work of messengers. Such
undertaking of CESI was complied with when the requisite number of
persons were assigned or seconded to the petitioner bank. Orpiada utilized
the premises and office equipment of the bank and not those of CESI.
Messengerial work the delivery of documents to designated persons
whether within or without the bank premises-is of course directly related to
the day-to-day operations of the bank. Section 9(2) quoted above does not
require for its applicability that the petitioner must be engaged in the
delivery of items as a distinct and separate line of business.
Succinctly put, CESI is not a parcel delivery company: as its name
indicates, it is a recruitment and placement corporation placing bodies, as it
were, in different client companies for longer or shorter periods of time, ... 28
In the case at bar, Livi is admittedly an "independent contractor providing
temporary services of manpower to its client. " 29 When it thus provided
California with manpower, it supplied California with personnel, as if such
personnel had been directly hired by California. Hence, Article 106 of the Code
applies.
The Court need not therefore consider whether it is Livi or California which
exercises control over the petitioner vis-a-vis the four barometers referred to
earlier, since by fiction of law, either or both shoulder responsibility.
It is not that by dismissing the terms and conditions of the manpower supply
agreement, we have, hence, considered it illegal. Under the Labor Code,
genuine job contracts are permissible, provided they are genuine job contracts.
But, as we held in Philippine Bank of Communications, supra, when such
arrangements are resorted to "in anticipation of, and for the very purpose of
making possible, the secondment" 30 of the employees from the true employer,
the Court will be justified in expressing its concern. For then that would
compromise the rights of the workers, especially their right to security of
tenure.
This brings us to the question: What is the liability of either Livi or California?
The records show that the petitioners bad been given an initial six-month
contract, renewed for another six months. Accordingly, under Article 281 of the
LABOR LAW I |8
SECOND DIVISION
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO
S.CANILAO, and SEGUNDINA NOGUERA, respondents-appellees.
SARMIENTO , J.:
The petitioners invoke the provisions on human relations of the Civil Code in
this appeal by certiorari. The facts are beyond dispute:
xxx xxx xxx
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the
appellees) entered into on Oct. 19, 1960 by and between Mrs. Segundina
Noguera, party of the first part; the Tourist World Service, Inc., represented
by Mr. Eliseo Canilao as party of the second part, and hereinafter referred to
as appellants, the Tourist World Service, Inc. leased the premises belonging
to the party of the first part at Mabini St., Manila for the former-s use as a
branch office. In the said contract the party of the third part held herself
solidarily liable with the party of the part for the prompt payment of the
monthly rental agreed on. When the branch office was opened, the same
was run by the herein appellant Una 0. Sevilla payable to Tourist World
Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina
Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld by the
Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc.
appears to have been informed that Lina Sevilla was connected with a rival
firm, the Philippine Travel Bureau, and, since the branch office was anyhow
losing, the Tourist World Service considered closing down its office. This was
firmed up by two resolutions of the board of directors of Tourist World
Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing the
office of the manager and vice-president of the Tourist World Service, Inc.,
III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFFAPPELLANT MRS. LINA O. SEVILLA IS ESTOPPED FROM DENYING
THAT SHE WAS A MERE EMPLOYEE OF DEFENDANT-APPELLEE
TOURIST WORLD SERVICE, INC. EVEN AS AGAINST THE LATTER.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES
HAD NO RIGHT TO EVICT APPELLANT MRS. LINA O. SEVILLA FROM
THE A. MABINI OFFICE BY TAKING THE LAW INTO THEIR OWN HANDS.
V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL
APPELLEE NOGUERA'S RESPONSIBILITY FOR APPELLANT LINA O.
SEVILLA'S FORCIBLE DISPOSSESSION OF THE A. MABINI PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT
APPELLANT MRS. LINA O. SEVILLA SIGNED MERELY AS GUARANTOR
FOR RENTALS.
On the foregoing facts and in the light of the errors asigned the issues to be
resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone
line at the branch office on Ermita;
2. Whether or not the padlocking of the office by the Tourist World Service was
actionable or not; and
3. Whether or not the lessee to the office premises belonging to the appellee
Noguera was appellees TWS or TWS and the appellant.
clientele, coming mostly from her own social circle (pp. 3-6 tsn. February
16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease agreement dated 19
October 1960 (Exh. 'A') covering the premises at A. Mabini St., she expressly
warranting and holding [sic] herself 'solidarily' liable with appellee Tourist
World Service, Inc. for the prompt payment of the monthly rentals thereof to
other appellee Mrs. Noguera (pp. 14-15, tsn. Jan. 18,1964).
3. Appellant Mrs. Sevilla did not receive any salary from appellee Tourist
World Service, Inc., which had its own, separate office located at the Trade &
Commerce Building; nor was she an employee thereof, having no
participation in nor connection with said business at the Trade & Commerce
Building (pp. 16-18 tsn Id.).
4. Appellant Mrs. Sevilla earned commissions for her own passengers, her
own bookings her own business (and not for any of the business of appellee
Tourist World Service, Inc.) obtained from the airline companies. She shared
the 7% commissions given by the airline companies giving appellee Tourist
World Service, Lic. 3% thereof aid retaining 4% for herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the expenses of maintaining the
A. Mabini St. office, paying for the salary of an office secretary, Miss Obieta,
and other sundry expenses, aside from desicion the office furniture and
supplying some of fice furnishings (pp. 15,18 tsn. April 6,1965), appellee
Tourist World Service, Inc. shouldering the rental and other expenses in
consideration for the 3% split in the co procured by appellant Mrs. Sevilla (p.
35 tsn Feb. 16,1965).
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was
entered into by and between her and appellee TWS with offices at the Ermita
branch office and that she was not an employee of the TWS to the end that her
relationship with TWS was one of a joint business venture appellant made
declarations showing:
6. It was the understanding between them that appellant Mrs. Sevilla would
be given the title of branch manager for appearance's sake only (p. 31 tsn.
Id.), appellee Eliseo Canilao admit that it was just a title for dignity (p. 36 tsn.
June 18, 1965- testimony of appellee Eliseo Canilao pp. 38-39 tsn April
61965-testimony of corporate secretary Gabino Canilao (pp- 2-5, Appellants'
Reply Brief)
Upon the other hand, appellee TWS contend that the appellant was an
employee of the appellee Tourist World Service, Inc. and as such was
designated manager. 1
SEVILLA RELIEF YET NOT RESOLVING HER CLAIM THAT SHE WAS IN
JOINT VENTURE WITH TOURIST WORLD SERVICE INC. OR AT LEAST ITS
AGENT COUPLED WITH AN INTEREST WHICH COULD NOT BE
TERMINATED OR REVOKED UNILATERALLY BY TOURIST WORLD
SERVICE INC. 6
As a preliminary inquiry, the Court is asked to declare the true nature of the
relation between Lina Sevilla and Tourist World Service, Inc. The respondent
Court of see fit to rule on the question, the crucial issue, in its opinion being
"whether or not the padlocking of the premises by the Tourist World Service,
Inc. without the knowledge and consent of the appellant Lina Sevilla entitled
the latter to the relief of damages prayed for and whether or not the evidence
for the said appellant supports the contention that the appellee Tourist World
Service, Inc. unilaterally and without the consent of the appellant disconnected
the telephone lines of the Ermita branch office of the appellee Tourist World
Service, Inc. 7 Tourist World Service, Inc., insists, on the other hand, that Lina
SEVILLA was a mere employee, being "branch manager" of its Ermita "branch"
office and that inferentially, she had no say on the lease executed with the
private respondent, Segundina Noguera. The petitioners contend, however,
that relation between the between parties was one of joint venture, but
concede that "whatever might have been the true relationship between Sevilla
and Tourist World Service," the Rule of Law enjoined Tourist World Service and
Canilao from taking the law into their own hands, 8 in reference to the
padlocking now questioned.
The Court finds the resolution of the issue material, for if, as the private
respondent, Tourist World Service, Inc., maintains, that the relation between
the parties was in the character of employer and employee, the courts would
have been without jurisdiction to try the case, labor disputes being the
exclusive domain of the Court of Industrial Relations, later, the Bureau Of
Labor Relations, pursuant to statutes then in force. 9
In this jurisdiction, there has been no uniform test to determine the evidence of
an employer-employee relation. In general, we have relied on the so-called
right of control test, "where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end." 10 Subsequently, however, we have
considered, in addition to the standard of right-of control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in
Inc.'s] right to stop the operation of your branch office 14 in effect, accepting
Tourist World Service, Inc.'s control over the manner in which the business was
run. A joint venture, including a partnership, presupposes generally a of
standing between the joint co-venturers or partners, in which each party has an
equal proprietary interest in the capital or property contributed 15 and where
each party exercises equal rights in the conduct of the business. 16 furthermore,
the parties did not hold themselves out as partners, and the building itself was
embellished with the electric sign "Tourist World Service, Inc. 17in lieu of a
distinct partnership name.
It is the Court's considered opinion, that when the petitioner, Lina Sevilla,
agreed to (wo)man the private respondent, Tourist World Service, Inc.'s Ermita
office, she must have done so pursuant to a contract of agency. It is the
essence of this contract that the agent renders services "in representation or
on behalf of another. 18 In the case at bar, Sevilla solicited airline fares, but she
did so for and on behalf of her principal, Tourist World Service, Inc. As
compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself based on her letter of November
28, 1961, pre-assumed her principal's authority as owner of the business
undertaking. We are convinced, considering the circumstances and from the
respondent Court's recital of facts, that the ties had contemplated a principal
agent relationship, rather than a joint managament or a partnership..
But unlike simple grants of a power of attorney, the agency that we hereby
declare to be compatible with the intent of the parties, cannot be revoked at
will. The reason is that it is one coupled with an interest, the agency having
been created for mutual interest, of the agent and the principal. 19 It appears
that Lina Sevilla is a bona fidetravel agent herself, and as such, she had
acquired an interest in the business entrusted to her. Moreover, she had
assumed a personal obligation for the operation thereof, holding herself
solidarily liable for the payment of rentals. She continued the business, using
her own name, after Tourist World had stopped further operations. Her interest,
obviously, is not to the commissions she earned as a result of her business
transactions, but one that extends to the very subject matter of the power of
management delegated to her. It is an agency that, as we said, cannot be
revoked at the pleasure of the principal. Accordingly, the revocation complained
of should entitle the petitioner, Lina Sevilla, to damages.
As we have stated, the respondent Court avoided this issue, confining itself to
the telephone disconnection and padlocking incidents. Anent the disconnection
LABOR LAW I |13
issue, it is the holding of the Court of Appeals that there is 'no evidence
showing that the Tourist World Service, Inc. disconnected the telephone lines at
the branch office. 20Yet, what cannot be denied is the fact that Tourist World
Service, Inc. did not take pains to have them reconnected. Assuming,
therefore, that it had no hand in the disconnection now complained of, it had
clearly condoned it, and as owner of the telephone lines, it must shoulder
responsibility therefor.
near the premises. Capping these series of "offensives," it cut the office's
telephone lines, paralyzing completely its business operations, and in the
process, depriving Sevilla articipation therein.
The Court of Appeals must likewise be held to be in error with respect to the
padlocking incident. For the fact that Tourist World Service, Inc. was the lessee
named in the lease con-tract did not accord it any authority to terminate that
contract without notice to its actual occupant, and to padlock the premises in
such fashion. As this Court has ruled, the petitioner, Lina Sevilla, had acquired
a personal stake in the business itself, and necessarily, in the equipment
pertaining thereto. Furthermore, Sevilla was not a stranger to that contract
having been explicitly named therein as a third party in charge of rental
payments (solidarily with Tourist World, Inc.). She could not be ousted from
possession as summarily as one would eject an interloper.
We rule therefore, that for its unwarranted revocation of the contract of agency,
the private respondent, Tourist World Service, Inc., should be sentenced to pay
damages. Under the Civil Code, moral damages may be awarded for
"breaches of contract where the defendant acted ... in bad faith. 23
The Court is satisfied that from the chronicle of events, there was indeed some
malevolent design to put the petitioner, Lina Sevilla, in a bad light following
disclosures that she had worked for a rival firm. To be sure, the respondent
court speaks of alleged business losses to justify the closure '21 but there is no
clear showing that Tourist World Ermita Branch had in fact sustained such
reverses, let alone, the fact that Sevilla had moonlit for another company. What
the evidence discloses, on the other hand, is that following such an information
(that Sevilla was working for another company), Tourist World's board of
directors adopted two resolutions abolishing the office of 'manager" and
authorizing the corporate secretary, the respondent Eliseo Canilao, to effect the
takeover of its branch office properties. On January 3, 1962, the private
respondents ended the lease over the branch office premises, incidentally,
without notice to her.
It was only on June 4, 1962, and after office hours significantly, that the Ermita
office was padlocked, personally by the respondent Canilao, on the pretext that
it was necessary to Protect the interests of the Tourist World Service. " 22 It is
strange indeed that Tourist World Service, Inc. did not find such a need when it
cancelled the lease five months earlier. While Tourist World Service, Inc. would
not pretend that it sought to locate Sevilla to inform her of the closure, but
surely, it was aware that after office hours, she could not have been anywhere
This conduct on the part of Tourist World Service, Inc. betrays a sinister effort
to punish Sevillsa it had perceived to be disloyalty on her part. It is offensive, in
any event, to elementary norms of justice and fair play.
We likewise condemn Tourist World Service, Inc. to pay further damages for
the moral injury done to Lina Sevilla from its brazen conduct subsequent to the
cancellation of the power of attorney granted to her on the authority of Article
21 of the Civil Code, in relation to Article 2219 (10) thereof
ART. 21. Any person who wilfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate
the latter for the damage. 24
ART. 2219. Moral damages 25 may be recovered in the following and
analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and
35.
The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered
to respond for the same damages in a solidary capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned,
no evidence has been shown that she had connived with Tourist World Service,
Inc. in the disconnection and padlocking incidents. She cannot therefore be
held liable as a cotortfeasor.
The Court considers the sums of P25,000.00 as and for moral damages,24
P10,000.00 as exemplary damages,25 and P5,000.00 as nominal 26 and/or
temperate 27 damages, to be just, fair, and reasonable under the circumstances.
WHEREFORE, the Decision promulgated on January 23, 1975 as well as the
Resolution issued on July 31, 1975, by the respondent Court of Appeals is
hereby REVERSED and SET ASIDE. The private respondent, Tourist World
Service, Inc., and Eliseo Canilao, are ORDERED jointly and severally to
indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral
damages, the sum of P10,000.00, as and for exemplary damages, and the sum
of P5,000.00, as and for nominal and/or temperate damages.
Costs against said private respondents.
SO ORDERED.
SECOND DIVISION
G.R. No. L-43825 May 9, 1988
CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC); ARBITRATOR
JOSE T. COLLADO and RODITO NASAYAO, respondents.
PADILLA, J.:
In this petition for mandamus, prohibition and certiorari with preliminary
injunction, petitioners seek to annul and set aside the decision rendered by the
respondent Arbitrator Jose T. Collado, dated 29 December 1975, in NLRC
Case No. LR-6151, entitled: "Rodito Nasayao, complainant, versus Continental
Marble Corp. and Felipe David, respondents," and the resolution issued by the
respondent Commission, dated 7 May 1976, which dismissed herein
petitioners' appeal from said decision.
In his complaint before the NLRC, herein private respondent Rodito Nasayao
claimed that sometime in May 1974, he was appointed plant manager of the
petitioner corporation, with an alleged compensation of P3,000.00, a month, or
25% of the monthly net income of the company, whichever is greater, and when
the company failed to pay his salary for the months of May, June, and July
1974, Rodito Nasayao filed a complaint with the National Labor Relations
Commission, Branch IV, for the recovery of said unpaid varies. The case was
docketed therein as NLRC Case No. LR-6151.
Answering, the herein petitioners denied that Rodito Nasayao was employed in
the company as plant manager with a fixed monthly salary of P3,000.00. They
claimed that the undertaking agreed upon by the parties was a joint venture, a
sort of partnership, wherein Rodito Nasayao was to keep the machinery in
good working condition and, in return, he would get the contracts from endusers for the installation of marble products, in which the company would not
interfere. In addition, private respondent Nasayao was to receive an amount
equivalent to 25% of the net profits that the petitioner corporation would realize,
should there be any. Petitioners alleged that since there had been no profits
during said period, private respondent was not entitled to any amount.
The case was submitted for voluntary arbitration and the parties selected the
herein respondent Jose T. Collado as voluntary arbitrator. In the course of the
proceedings, however, the herein petitioners challenged the arbitrator's
capacity to try and decide the case fairly and judiciously and asked him to
desist from further hearing the case. But, the respondent arbitrator refused. In
due time, or on 29 December 1975, he rendered judgment in favor of the
complainant, ordering the herein petitioners to pay Rodito Nasayao the amount
of P9,000.00, within 10 days from notice. 1
Upon receipt of the decision, the herein petitioners appealed to the National
Labor Relations Commission on grounds that the labor arbiter gravely abused
his discretion in persisting to hear and decide the case notwithstanding
petitioners' request for him to desist therefrom: and that the appealed decision
is not supported by evidence. 2
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the
ground that the decision of the voluntary arbitrator is final, unappealable, and
immediately executory; 3 and, on 23 March 1976, he filed a motion for the
issuance of a writ of execution. 4
Acting on the motions, the respondent Commission, in a resolution dated 7
May 1976, dismissed the appeal on the ground that the decision appealed from
is final, unappealable and immediately executory, and ordered the herein
petitioners to comply with the decision of the voluntary arbitrator within 10 days
from receipt of the resolution. 5
The petitioners are before the Court in the present recourse. As prayed for, the
Court issued a temporary restraining order, restraining herein respondents from
enforcing and/or carrying out the questioned decision and resolution. 6
The issue for resolution is whether or not the private respondent Rodito
Nasayao was employed as plant manager of petitioner Continental Marble
Corporation with a monthly salary of P3,000.00 or 25% of its monthly income,
whichever is greater, as claimed by said respondent, or entitled to receive only
an amount equivalent to 25% of net profits, if any, that the company would
realize, as contended by the petitioners.
The respondent arbitrator found that the agreement between the parties was
for the petitioner company to pay the private respondent, Rodito Nasayao, a
LABOR LAW I |16
element (Investment Planning Corp. of the Phils. vs. The Social Security
System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario
Brothers, Inc. v. Ople, 131 SCRA 72).<re||an1w>
We also find no merit in the contention of Rodito Nasayao that only questions
of law, and not findings of fact of a voluntary arbitrator may be reviewed by the
Court, since the findings of fact of the voluntary arbitrator are conclusive upon
the Court.
In the instant case, it appears that the petitioners had no control over the
conduct of Rodito Nasayao in the performance of his work. He decided for
himself on what was to be done and worked at his own pleasure. He was not
subject to definite hours or conditions of work and, in turn, was compensated
according to the results of his own effort. He had a free hand in running the
company and its business, so much so, that the petitioner Felipe David did not
know, until very much later, that Rodito Nasayao had collected old accounts
receivables, not covered by their agreement, which he converted to his own
personal use. It was only after Rodito Nasayao had abandoned the plant
following discovery of his wrong- doings, that Felipe David assumed
management of the plant.
While the Court has accorded great respect for, and finality to, findings of fact
of a voluntary arbitrator 11 and administrative agencies which have acquired
expertise in their respective fields, like the Labor Department and the National
Labor Relations Commission, 12 their findings of fact and the conclusions drawn
therefrom have to be supported by substantial evidence. ln that instant case,
the finding of the voluntary arbitrator that Rodito Nasayao was an employee of
the petitioner corporation is not supported by the evidence or by the law.
On the other hand, we find the version of the petitioners to be more plausible
and in accord with human nature and the ordinary course of things. As pointed
out by the petitioners, it was illogical for them to hire the private respondent
Rodito Nasayao as plant manager with a monthly salary of P3,000.00, an
amount which they could ill-afford to pay, considering that the business was
losing, at the time he was hired, and that they were about to close shop in a
few months' time.
Besides, there is nothing in the record which would support the claim of Rodito
Nasayao that he was an employee of the petitioner corporation. He was not
included in the company payroll, nor in the list of company employees
furnished the Social Security System.
Most of all, the element of control is lacking. In Brotherhood Labor Unity
Movement in the Philippines vs. Zamora,13 the Court enumerated the factors in
determining whether or not an employer-employee relationship exists, to wit:
Absent the power to control the employee with respect to the means and
methods by which his work was to be accomplished, there was no employeremployee relationship between the parties. Hence, there is no basis for an
award of unpaid salaries or wages to Rodito Nasayao.
WHEREFORE, the decision rendered by the respondent Jose T. Collado in
NLRC
Case
No.
LR-6151,
entitled:
"Rodito
Nasayao,
complainant, versus Continental Marble Corp. and Felipe David, respondents,"
on 29 December 1975, and the resolution issued by the respondent National
Labor Relations Commission in said case on 7 May 1976, are REVERSED and
SET ASIDE and another one entered DISMISSING private respondent's
complaints. The temporary restraning order heretofore isued by the Court is
made permanent. Without costs.
SO ORDERED.
SECOND DIVISION
operations. He selected his own personnel and the only reason why he had to
notify the petitioner about such appointments was for purpose of deducting the
employees' salaries from his commissions. This he admitted in his testimonies,
thus:
Q. Yes, in other words you were on what is known as P&L basis or profit
and loss basis?
Q. In effect you were telling Britannica that you have hired this person and
"you should charge her salary to me," is that right?
A. That is right.
A. Yes, sir. 5
A. Yes, sir.
Re: Resignation
Q. In fact whenever you hire a secretary or trainer you merely hire that
person and notify Britannica so that Encyclopaedia Britannica will give the
salaries and deduct it from your earnings, isn't that so?
A. In certain cases I just hired people previously employed by
Encyclopaedia Britannica.
xxx xxx xxx
Q. In this Exhibit "2" you were informing Encyclopaedia Britannica that you
have hired a certain person and you were telling Britannica how her salary
was going to be taken cared of, is it not?
A. Yes, sir.
Q. You said here, "please be informed that we have appointed Miss Luz
Villan as division trainer effective May 1, 1971 at P550.00 per month her
FIRST DIVISION
G.R. No. L-32245 May 25, 1979
DY KEH BENG, petitioner,
vs.
INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET
AL., respondents.
DE CASTRO, J.:
Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court
of Industrial Relations dated March 23, 1970 in Case No. 3019-ULP and the
Court's Resolution en banc of June 10, 1970 affirming said decision. The Court
of Industrial Relations in that case found Dy Keh Beng guilty of the unfair labor
practice acts alleged and order him to
reinstate Carlos Solano and Ricardo Tudla to their former jobs with
backwages from their respective dates of dismissal until fully reinstated
without loss to their right of seniority and of such other rights already
acquired by them and/or allowed by law. 1
Now, Dy Keh Beng assigns the following errors 2 as having been committed by
the Court of Industrial Relations:
I RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS
SOLANO AND TUDLA WERE EMPLOYEES OF PETITIONERS.
II RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS
SOLANO AND TUDLA WERE DISMISSED FROM THEIR EMPLOYMENT BY
PETITIONER.
III RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES
ADDUCED BY COMPLAINANT ARE CONVINCING AND DISCLOSES (SIC) A
PATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN.
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a
basket factory, for discriminatory acts within the meaning of Section 4(a), subparagraph (1) and (4). Republic Act No. 875, 3 by dismissing on September 28
and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union
activities. After preliminary investigation was conducted, a case was filed in the
Court of Industrial Relations for in behalf of the International Labor and Marine
Union of the Philippines and two of its members, Solano and Tudla In his
answer, Dy Keh Beng contended that he did not know Tudla and that Solano
was not his employee because the latter came to the establishment only when
there was work which he did on pakiaw basis, each piece of work being done
under a separate contract. Moreover, Dy Keh Beng countered with a special
defense of simple extortion committed by the head of the labor union,
Bienvenido Onayan.
After trial, the Hearing Examiner prepared a report which was subsequently
adopted in toto by the Court of Industrial Relations. An employee-employer
relationship was found to have existed between Dy Keh Beng and
complainants Tudla and Solano, although Solano was admitted to have worked
on piece basis. 4 The issue therefore centered on whether there existed an
employee employer relation between petitioner Dy Keh Beng and the
respondents Solano and Tudla .
According to the Hearing Examiner, the evidence for the complainant Union
tended to show that Solano and Tudla became employees of Dy Keh Beng
from May 2, 1953 and July 15, 1955, 5 respectively, and that except in the
event of illness, their work with the establishment was continuous although
their services were compensated on piece basis. Evidence likewise showed
LABOR LAW I |23
that at times the establishment had eight (8) workers and never less than five
(5); including the complainants, and that complainants used to receive ?5.00 a
day. sometimes less. 6
According to Dy Keh Beng, however, Solano was not his employee for the
following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the
(3) order given him by Dy;
(4) When there were no orders needing his services there was nothing for
him to do;
(5) When orders came to the shop that his regular workers could not fill it
was then that Dy went to his address in Caloocan and fetched him for
these orders; and
(6) Solano's work with Dy's establishment was not continuous. ,
According to petitioner, these facts show that respondents Solano and Tudla
are only piece workers, not employees under Republic Act 875, where an
employee 8 is referred to as
shall include any employee and shag not be limited to the employee of a
particular employer unless the Act explicitly states otherwise and shall
include any individual whose work has ceased as a consequence of, or in
connection with any current labor dispute or because of any unfair labor
practice and who has not obtained any other substantially equivalent and
regular employment.
while an employer 9
includes 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 anyone acting in the capacity of officer or agent
of such labor organization.
Petitioner really anchors his contention of the non-existence of employeeemployer relationship on the control test. He points to the case of Madrigal
Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130, October 31,
1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is
whether there is an understanding between the parties that one is to render
personal services to or for the benefit of the other and recognition by them
of the right of one to order and control the other in the performance of the
work and to direct the manner and method of its performance.
Petitioner contends that the private respondents "did not meet the control test
in the fight of the ... definition of the terms employer and employee, because
there was no evidence to show that petitioner had the right to direct the manner
and method of respondent's work. 10 Moreover, it is argued that petitioner's
evidence showed that "Solano worked on a pakiaw basis" and that he stayed in
the establishment only when there was work.
While this Court upholds the control test 11 under which an employer-employee
relationship exists "where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means
to be used in reaching such end, " it finds no merit with petitioner's arguments
as stated above. It should be borne in mind that the control test calls merely for
the existence of the right to control the manner of doing the work, not the actual
exercise of the right. 12 Considering the finding by the Hearing Examiner that
the establishment of Dy Keh Beng is "engaged in the manufacture of baskets
known as kaing, 13 it is natural to expect that those working under Dy would
have to observe, among others, Dy's requirements of size and quality of
the kaing. Some control would necessarily be exercised by Dy as the making of
the kaing would be subject to Dy's specifications. Parenthetically, since the
work on the baskets is done at Dy's establishments, it can be inferred that the
proprietor Dy could easily exercise control on the men he employed.
As to the contention that Solano was not an employee because he worked on
piece basis, this Court agrees with the Hearing Examiner that
circumstances must be construed to determine indeed if payment by the
piece is just a method of compensation and does not define the essence of
the relation. Units of time ... and units of work are in establishments like
respondent (sic) just yardsticks whereby to determine rate of
LABOR LAW I |24
At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief
Justice Ricardo Paras who penned the decision in "Sunrise Coconut Products
Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined that
judicial notice of the fact that the so-called "pakyaw" system mentioned in
this case as generally practiced in our country, is, in fact, a labor contract
-between employers and employees, between capitalists and laborers.
Insofar as the other assignments of errors are concerned, there is no showing
that the Court of Industrial Relations abused its discretion when it concluded
that the findings of fact made by the Hearing Examiner were supported by
evidence on the record. Section 6, Republic Act 875 provides that in unfair
labor practice cases, the factual findings of the Court of Industrial Relations are
conclusive on the Supreme Court, if supported by substantial evidence. This
provision has been put into effect in a long line of decisions where the Supreme
Court did not reverse the findings of fact of the Court of Industrial Relations
when they were supported by substantial evidence. 14
Nevertheless, considering that about eighteen (18) years have already elapsed
from the time the complainants were dismissed, 15 and that the decision being
appealed ordered the payment of backwages to the employees from their
respective dates of dismissal until finally reinstated, it is fitting to apply in this
connection the formula for backwages worked out by Justice Claudio
Teehankee in "cases not terminated sooner." 16 The formula cans for fixing the
award of backwages without qualification and deduction to three years,
"subject to deduction where there are mitigating circumstances in favor of the
employer but subject to increase by way of exemplary damages where there
are aggravating circumstances. 17Considering there are no such circumstances
in this case, there is no reason why the Court should not apply the
abovementioned formula in this instance.
WHEREFORE; the award of backwages granted by the Court of Industrial
Relations is herein modified to an award of backwages for three years without
qualification and deduction at the respective rates of compensation the
employees concerned were receiving at the time of dismissal. The execution of
LABOR LAW I |25
THIRD DIVISION
VITUG, J.:
This petition for certiorari assails the 24th April 1991 resolution of respondent
National Labor Relations Commission ("NLRC"), as well as its resolution of 30
May 1991 denying a motion for reconsideration, which has dismissed herein
petitioners' appeal of the 16th October 1989 decision of Labor Arbiter Benigno
C. Villarente, Jr.
Private respondents filed a complaint for illegal dismissal and for various
monetary claims, including the recovery of damages and attorney's fees,
against petitioners. In their supplemental position paper, the complainants
subsequently confined themselves to the illegal dismissal charge and
abandoned the monetary claims. One of the original eight complainants,
Virgilio Alcunaba, decided to resume his work with petitioners, thus leaving the
rest to pursue the case. Private respondents averred that they started to work
for petitioners on, respectively, the following dates:
that they worked for a minimum of twelve hours daily, including Sundays and
holidays when needed; that they were paid on piece-work basis; that it
"angered" petitioner Lorenzo when they requested to be made members of the
Social Security System ("SSS"); and that, when they demanded an increase in
their pay rates, they were prevented (starting 24 October 1988) from entering
the work premises.
Petitioners, in turn, claimed that their business operations were only seasonal,
normally twice a year, one in June (coinciding with the opening of school
classes) and another in December (during the Christmas holidays), when
heavy job orders would come in. Private respondents, according to petitioners,
were engaged on purely contractual basis and paid the rates conformably with
their respective agreements.
On 16 October 1989, Labor Arbiter Benigno C. Villarente, Jr., rendered
judgment in favor of the complainants, thus:
WHEREFORE, judgment is hereby rendered declaring that there was an
employer-employee relationship between complainants and respondents
and that the former were regular employees of the latter. Accordingly,
respondents are hereby directed to pay all complainants their respective
separation pay based on their one-half month's earnings per year of
service, a fraction of at least six months to be considered one whole year,
or the following amounts:
1
Joseph Lluz
P 7,488.00
Noel Adarayan
12,636.00
Rogelio Sira
8,828.00
8,828.00
NAME
DATE
Lolito Lluz
Joseph Lluz
March, 1985
(1 year)
Noel Adarayan
Rogelio Sira
January, 1982
Lolito Lluz
March, 1982
Virginia Heresano
May, 1987
Genelito Heresano
20-Oct-87
Carmelita de Dios
January, 1975 1
Total
P 59,515.002
SO ORDERED. 3
An appeal was interposed by petitioners. The NLRC, on 24 April 1991,
sustained the findings of the Labor Arbiter and dismissed the appeal. On 30
May 1991, the NLRC denied petitioners' motion for reconsideration.
Hence, the instant petition.
In his comment, dated 14 October 1991, the Solicitor General moved for the
modification of NLRC's resolution of 24 April 1991. While conceding that an
employer-employee relationship existed between petitioners and private
respondents, the Solicitor General, nevertheless, expressed strong
reservations on the award of separation pay in view of the findings by both the
Labor Arbiter and the NLRC that there was neither dismissal nor abandonment
in the case at bench. The NLRC submitted its own comment on 11 February
1992.
Well-settled is the rule that factual findings of the NLRC, particularly when they
coincide with that of the Labor Arbiter, are accorded respect, if not finality, and
will not be disturbed absent any showing that substantial evidence which might
otherwise affect the result of the case has been discarded. We see no reason,
in this case at bench, for disturbing the findings of the Labor Arbiter and the
NLRC on the existence of an employer-employee relationship between herein
private parties. The work of private respondents is clearly related to, and in the
pursuit of, the principal business activity of petitioners. The indicia used for
determining the existence of an employer-employee relationship, all extant in
the case at bench, include (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employer's
power to control the employee with respect to the result of the work to be done
and to the means and methods by which the work to be done and to the means
and methods by which the work is to be accomplished. The requirement, so
herein posed as an issue, refers to the existence of the right to control and not
necessarily to the actual exercise of the right. In Dy Keh Beng v. International
Labor and Marine Union of the Philippines, et al., 4 the Court has held:
While this Court up holds the control test under which an employeremployee relationship exists "where the person for whom the services are
performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end," it finds no merit with
petitioner's arguments as stated above. It should be borne in mind that the
control test calls merely for the existence of the right to control the manner
of doing the work, not the actual exercise of the right. Considering the
finding by the Hearing Examiner that the establishment of Dy Keh Beng is
FIRST DIVISION
On January 9, 1990, the petitioner issued another order reminding Salas of the
approaching termination of his legal services under their contract. This
prompted Salas to lodge a complaint against AMWSLAI for separation pay,
vacation and sick leave benefits, cost of living allowances, refund of SSS
premiums, moral and exemplary damages, payment of notarial services
rendered from February 1, 1980 to March 2, 1990, and attorney's fees.
Aside from notarization of loan & other legal documents, your duties and
responsibilities are hereby enumerated in the attached sheet, per Articles
IX, Section 1-d of the by-laws and those approved by the Board en banc.
The threshold issue in this case is whether or not Salas can be considered an
employee of the petitioner company.
BOARD:
LUVIN
S.
MANAY
We have held in a long line of decisions that the elements of an employeremployee relationship are: (1) selection and engagement of the employee; (2)
payment of wages; (3) power of dismissal; and (4) employer's own power to
control employee's conduct. 3
LABOR LAW I |29
Contractors
We must disagree with the NLRC, however, on Salas' claims for notarial fees.
The petitioner contends that the public respondents are not empowered to
adjudicate claims for notarial fees. On the other hand, the Solicitor General
believes that the NLRC acted correctly when it took cognizance of the claim
because it arose out of Salas' employment contract with the petitioner which
assigned him the duty to notarize loan agreements and other legal documents.
Moreover, Section 9 of Rule 141 of the Rules of Court does not restrict or
prevent the labor arbiter and the NLRC from determining claims for notarial
fees.
Labor arbiters have the original and exclusive jurisdiction over money claims of
workers when such claims have some reasonable connection with the
employer-employee relationship. The money claims of workers referred to in
paragraph 3 of Article 217 of the Labor Code are those arising out of or in
connection with the employer-employee relationship or some aspect or incident
of such relationship.
Salas' claim for notarial fees is based on his employment as a notarial officer of
the petitioner and thus comes under the jurisdiction of the labor arbiter.
Corp.
v.
The public respondents agreed that Salas was entitled to collect notarial fees
from 1987 to 1990 by virtue of his having been assigned as notarial officer. We
feel, however, that there is no substantial evidence to support this finding.
The letter-contract of January 23, 1987, does not contain any stipulation for the
separate payment of notarial fees to Salas in addition to his basic salary. On
the contrary, it would appear that his notarial services were part of his regular
functions and were thus already covered by his monthly compensation. It is
true that the notarial fees were paid by members-borrowers of the petitioner for
its own account and not of Salas. However, this is not a sufficient basis for his
claim to such fees in the absence of any agreement to that effect.
ACCORDINGLY, the appealed judgment of the NLRC is AFFIRMED, with the
modification that the award of notarial fees and attorney's fees is disallowed. It
is so ordered.
THIRD DIVISION
HYDRO
RESOURCES
CONTRACTORS
CORPORATION, petitioner,
vs.
LABOR ARBITER ADRIAN N. PAGALILAUAN and the NATIONAL LABOR
RELATIONS
COMMISSION, public
respondents, and
ROGELIO
A.
ABAN, private respondent,
On October 24, 1978, petitioner corporation hired the private respondent Aban
as its "Legal Assistant." He received a basic monthly salary of Pl,500.00 plus
an initial living allowance of P50.00 which gradually increased to P320.00.
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.
On October 6, 1980, 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.
The only issue raised by the petitioner is whether or not there was an
employer-employee relationship between the petitioner corporation and Aban.
The petitioner questions the jurisdiction of the public respondents considering
This Court is not without a guide in deciding whether or not an employeremployee relation exists between the contending parties or whether or not the
private respondent was hired on a retainer basis.
As stated in the case of Tabas v. California Manufacturing Co., (G.R. No.
80680, January 26, 1989):
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.
Aban was employed by the petitioner to be its Legal Assistant as evidenced by
his appointment paper (Exhibit "A"). The petitioner paid him a basic salary plus
LABOR LAW I |31
reinstatement. (City Trust Finance Corp. v. NLRC, 157 SCRA 87; Santos v.
NLRC, 154 SCRA 166; Metro Drug v. NLRC, et al., 143 SCRA 132; Luzon
Brokerage v. Luzon Labor Union, 7 SCRA 116). The amount of such separation
pay as may be provided by law or the collective bargaining agreement is to be
computed based on the period from 24 October 1978 (date of first
employment) to 4 October 1983 (three years after date of illegal dismissal).
[Manila Midtown Commercial Corporation v. Nuwhrain 159 SCRA 212 (1988)].
WHEREFORE, the petition is hereby DISMISSED for lack of merit. The
petitioner is ordered to reinstate the private respondent to his former or a
similar position without loss of seniority rights and to pay three (3) years
backwages 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
backpay and P5,000.00 attorney's fees.
SO ORDERED.
The petitioner presented documents (Exhibits "2" to "19") before the Labor
Arbiter to prove that Aban was a managerial employee. Now, it is disclaiming
that Aban was ever its employee. The proper procedure was for the petitioner
to prove its allegations that Aban drank heavily, violated company policies,
spent company funds and properties for personal ends, and otherwise led the
employer to lose trust and confidence in him. The real issue was due process,
not the specious argument raised in this petition.
The new theory presented before this Court is a last-ditch effort by the
petitioner to cover up for the unwarranted dismissal of its employee. This Court
frowns upon such delaying tactics.
The findings of fact of the Labor Arbiter being supported by substantial
evidence are binding on this Court. (See Industrial limber Corp. v. National
Labor Relations Commission, G.R. No. 83616, January 20, 1989).
Considering that the private respondent was illegally dismissed from his
employment in 1980, he is entitled to reinstatement to his former or similar
position without loss of seniority rights, if it is still feasible, to backwages
without qualification or deduction for three years, (D.M. Consunji, Inc. v. Pucan
159 SCRA 107 (1988); Flores v. Nuestro, G.R. No. 66890, April 15, 1988), and
to reasonable attorney's fees in the amount of P5,000.00. Should reinstatement
prove no longer feasible, the petitioner will pay him separation pay in lieu of
LABOR LAW I |32
FIRST DIVISION
BELLOSILLO, J.:
On 17 June 1994 respondent Labor Arbiter dismissed for lack of jurisdiction
NLRC RAB-VII Case No. 03-0309-94 filed by private respondent Pantaleon de
los Reyes against petitioner Insular Life Assurance Co., Ltd. (INSULAR LIFE),
for illegal dismissal and nonpayment of salaries and back wages after finding
no employer-employee relationship between De los Reyes and petitioner
INSULAR LIFE. 1 On appeal by private respondent, the order of dismissal was
reversed by the National Labor Relations Commission (NLRC) which ruled that
respondent De los Reyes was an employee of petitioner. 2 Petitioner's motion
for reconsideration having been denied, the NLRC remanded the case to the
Labor Arbiter for hearing on the merits.
Seeking relief through this special civil action for certiorari with prayer for a
restraining order and/or preliminary injunction, petitioner now comes to us
praying for annulment of the decision of respondent NLRC dated 3 March 1995
and its Order dated 6 April 1995 denying the motion for reconsideration of the
decision. It faults NLRC for acting without jurisdiction and/or with grave abuse
of discretion when, contrary to established facts and pertinent law and
jurisprudence, it reversed the decision of the Labor Arbiter and held instead
that the complaint was properly filed as an employer-employee relationship
existed between petitioner and private respondent.
Petitioner reprises the stand it assumed below that it never had any employeremployee relationship with private respondent, this being an express
agreement between them in the agency contracts, particularly reinforced by the
stipulation therein that De los Reyes was allowed discretion to devise ways and
means to fulfill his obligations as agent and would be paid commission fees
based on his actual output. It further insists that the nature of this work status
as described in the contracts had already been squarely resolved by the Court
in the earlier case ofInsular Life Assurance Co., Ltd. v. NLRC and
Basiao 3 where the complainant therein, Melecio Basiao, was similarly situated
as respondent De los Reyes in that he was appointed first as an agent and
then promoted as agency manager, and the contracts under which he was
appointed contained terms and conditions identical to those of Delos Reyes.
Petitioner concludes that since Basiao was declared by the Court to be an
independent contractor and not an employee of petitioner, there should be no
reason why the status of De los Reyes hereinvis-a-vis petitioner should not be
similarly determined.
We reject the submissions of petitioner and hold that respondent NLRC acted
appropriately within the bounds of the law. The records of the case are replete
with telltale indicators of an existing employer-employee relationship between
the two parties despite written contractual disavowals.
These facts are undisputed: on 21 August 1992 petitioner entered into an
agency contract with respondent Pantaleon de los Reyes 4 authorizing the latter
to solicit within the Philippines applications for life insurance and annuities for
which he would be paid compensation in the form of commissions. The
contract was prepared by petitioner in its entirety and De los Reyes merely
signed his conformity thereto. It contained the stipulation that no employeremployee relationship shall be created between the parties and that the agent
shall be free to exercise his own judgment as to time, place and means of
soliciting insurance. De los Reyes however was prohibited by petitioner from
working for any other life insurance company, and violation of this stipulation
was sufficient ground for termination of the contract. Aside from soliciting
insurance for the petitioner, private respondent was required to submit to the
former all completed applications for insurance within ninety (90) consecutive
days, deliver policies, receive and collect initial premiums and balances of first
year premiums, renewal premiums, deposits on applications and payments on
policy loans. Private respondent was also bound to turn over to the company
immediately any and all sums of money collected by him. In a written
communication by petitioner to respondent De los Reyes, the latter was urged
to register with the Social Security System as a self-employed individual as
provided under PD No. 1636. 5
On 1 March 1993 petitioner and private respondent entered into another
contract 6 where the latter was appointed as Acting Unit Manager under its
office the Cebu DSO V (157). As such, the duties and responsibilities of De
los Reyes included the recruitment, training, organization and development
within his designated territory of a sufficient number of qualified, competent and
trustworthy underwriters, and to supervise and coordinate the sales efforts of
the underwriters in the active solicitation of new business and in the
LABOR LAW I |33
On 17 June 1994 the motion of petitioner was granted by the Labor Arbiter and
the case was dismissed on the ground that the element of control was not
sufficiently established since the rules and guidelines set by petitioner in its
agency agreement with respondent Delos Reyes were formulated only to
achieve the desired result without dictating the means or methods of attaining
it.
Respondent NLRC however appreciated the evidence from a different
perspective. It determined that respondent De los Reyes was under the
effective control of petitioner in the critical and most important aspects of his
work as Unit Manager. This conclusion was derived from the provisions in the
contract which appointed private respondent as Acting Unit Manager, to wit: (a)
De los Reyes was to serve exclusively the company, therefore, he was not an
independent contractor; (b) he was required to meet certain manpower and
production quota; and, (c) petitioner controlled the assignment to and removal
of soliciting agents from his unit.
The NLRC also took into account other circumstances showing that petitioner
exercised employer's prerogatives over De los Reyes, e.g., (a) limiting the work
of respondent De los Reyes to selling a life insurance policy known as "Salary
Deduction Insurance" only to members of the Philippine National Police, public
and private school teachers and other employees of private companies; (b)
assigning private respondent to a particular place and table where he worked
whenever he was not in the field; (c) paying private respondent during the
period of twelve (12) months of his appointment as Acting Unit Manager the
amount of P1,500.00 as Unit Development Financing of which 20% formed his
salary and the rest, i.e., 80%, as advance of his expected commissions; and,
(d) promising that upon completion of certain requirements, he would be
promoted to Unit Manager with the right of petitioner to revert him to agent
status when warranted.
Parenthetically, both petitioner and respondent NLRC treated the agency
contract and the management contract entered into between petitioner and De
los Reyes as contracts of agency. We however hold otherwise. Unquestionably
there exist major distinctions between the two agreements. While the first has
the earmarks of an agency contract, the second is far removed from the
concept of agency in that provided therein are conditionalities that indicate an
employer-employee relationship. The NLRC therefore was correct in finding
that private respondent was an employee of petitioner, but this holds true only
insofar as the management contract is concerned. In view thereof, the Labor
Arbiter has jurisdiction over the case..
3rd 4 375,000
4th 5 500,000
5.4. Unit Development Financing (UDF). As an Acting Unit Manager you
shall be given during the first 12 months of your appointment a financial
assistance which is composed of two parts:
5.4.1. Free Portion amounting to P300 per month, subject to your
meeting prescribed minimum performance requirement on manpower
and premium production. The free portion is not payable by you.
5.4.2. Validate Portion amounting to P1,200 per month, also subject to
meeting the same prescribed minimum performance requirements on
manpower and premium production. The validated portion is an advance
against expected compensation during the UDF period and thereafter as
may be necessary.
The above provisions unquestionably demonstrate that the performance
requirement imposed on De los Reyes was applicable quarterly while his
entitlement to the free portion (P300) and the validated portion (P1,200)
wasmonthly starting on the first month of the twelve (12) months of the
appointment. Thus, it has to be admitted that even before the end of the first
quarter and prior to the so-called quarterly performance evaluation, private
respondent was already entitled to be paid both the free and validated portions
of the UDF every month because his production performance could not be
determined until after the lapse of the quarter involved. This indicates quite
clearly that the unit manager's quarterly performance had no bearing at all on
his entitlement at least to the free portion of the UDF which for all intents and
purposes comprised the salary regularly paid to him by petitioner. Thus it
cannot be validly claimed that the financial assistance consisting of the free
portion of the UDF was purely dependent on the premium production of the
agent. Be that as it may, it is worth considering that the payment of
compensation by way of commission does not militate against the conclusion
that private respondent was an employee of petitioner. Under Art. 97 of the
Labor Code, "wage" shall mean "however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task,
price or commission basis . . . ."10
As to the matter involving the power of dismissal and control by the employer,
the latter of which is the most important of the test, petitioner asserts that its
termination of De los Reyes was but an exercise of its inherent right as
principal under the contracts and that the rules and guidelines it set forth in the
contract cannot, by any stretch of the imagination, be deemed as an exercise
LABOR LAW I |35
of control over the private respondent as these were merely directives that
fixed the desired result without dictating the means or method to be employed
in attaining it. The following factual findings of the NLRC 11 however contradict
such claims:
A perusal of the appointment of complainant as Acting Unit
Manager reveals that:
1. Complainant was to "exclusively" serve respondent company. Thus it is
provided:
.
.
.
7..7
Other
causes
of
Termination:
This appointment may likewise be terminated for any of the following
causes: . . . 7..7..2. Your entering the service of the government or another
life insurance company; 7..7..3. Your accepting a managerial or supervisory
position in any firm doing business in the Philippines without the written
consent of the Company; . . .
2. Complainant was required to meet certain manpower and production
quotas.
3. Respondent (herein petitioner) controlled the assignment and removal of
soliciting agents to and from complainant's unit, thus: . . . 7..2. Assignment
of Agents: Agents recruited and trained by you shall be attached to your
unit unless for reasons of Company policy, no such assignment should be
made. The Company retains the exclusive right to assign new soliciting
agents to the unit. It is agreed that the Company may remove or transfer
any soliciting agents appointed and assigned to the said unit. . . .
It would not be amiss to state that respondent's duty to collect the company's
premiums using company receipts under Sec. 7.4 of the management contract
is further evidence of petitioner's control over respondent, thus:
xxx
xxx
xxx
designated District or Service Office clerk or directly to the Home Office not
later than the next working day from receipt thereof . . . .
Petitioner would have us apply our ruling in Insular Life Assurance
Co., Ltd. v. NLRC and Basiao12 to the instant case under the doctrine of stare
decisis, postulating that both cases involve parties similarly situated and facts
which are almost identical.
But we are not convinced that the cited case is on all fours with the case at bar.
In Basiao, the agent was appointed Agency Manager under an Agency
Manager Contract. To implement his end of the agreement, Melecio Basiao
organized an agency office to which he gave the name M. Basiao and
Associates. The Agency Manager Contract practically contained the same
terms and conditions as the Agency Contract earlier entered into, and the Court
observed that, "drawn from the terms of the contract they had entered into,
(which) either expressly or by necessary implication, Basiao (was) made the
master of his own time and selling methods, left to his own judgment the time,
place and means of soliciting insurance, set no accomplishment quotas and
compensated him on the bases of results obtained. He was not bound to
observe any schedule of working hours or report to any regular station; he
could seek and work on his prospects anywhere and at anytime he chose to
and was free to adopt the selling methods he deemed most effective." Upon
these premises, Basiao was considered as agent an independent contractor
of petitioner INSULAR LIFE.
Unlike Basiao, herein respondent De los Reyes was appointed Acting Unit
Manager, not agency manager. There is no evidence that to implement his
obligations under the management contract, De los Reyes had organized an
office. Petitioner in fact has admitted that it provided De los Reyes a place and
a table at its office where he reported for and worked whenever he was not out
in the field. Placed under petitioner's Cebu District Service Office, the unit was
given a name by petitioner De los Reyes and Associates and assigned
Code No. 11753 and Recruitment No. 109398. Under the managership
contract, De los Reyes was obliged to work exclusively for petitioner in life
insurance solicitation and was imposed premium production quotas. Of course,
the acting unit manager could not underwrite other lines of insurance because
his Permanent Certificate of Authority was for life insurance only and for no
other. He was proscribed from accepting a managerial or supervisory position
in any other office including the government without the written consent of
petitioner. De los Reyes could only be promoted to permanent unit manager if
he met certain requirements and his promotion was recommended by the
petitioner's District Manager and Regional Manager and approved by its
LABOR LAW I |36
FIRST DIVISION
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents.
DECISION
In 1996, petitioner was designated Acting Manager. The corporation also hired
Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner
was assigned to handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with
government agencies, especially with the Bureau of Internal Revenue (BIR),
Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant
which is owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting Manager. As of
December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing
allowance and a 10% share in the profit of Kasei Corporation. 8
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks
to annul and set aside the Decision and Resolution of the Court of Appeals
dated October 29, 2004 1 and October 7, 2005, 2 respectively, in CA-G.R. SP
No. 78515 dismissing the complaint for constructive dismissal filed by herein
petitioner Angelina Francisco. The appellate court reversed and set aside the
Decision of the National Labor Relations Commission (NLRC) dated April 15,
2003, 3 in NLRC NCR CA No. 032766-02 which affirmed with modification the
decision of the Labor Arbiter dated July 31, 2002, 4 in NLRC-NCR Case No. 3010-0-489-01, finding that private respondents were liable for constructive
dismissal.
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. 5
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. 6
16
The appellate court denied petitioners motion for reconsideration, hence, the
present recourse.
The core issues to be resolved in this case are (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.
Considering the conflicting findings by the Labor Arbiter and the National Labor
Relations Commission on one hand, and the Court of Appeals on the other,
there is a need to reexamine the records to determine which of the propositions
espoused by the contending parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been
no uniform test to determine the existence of an employer-employee relation.
Generally, courts have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of an employer-employee
relationship.
However, in certain cases the control test is not sufficient to give a complete
picture of the relationship between the parties, owing to the complexity of such
a relationship where several positions have been held by the worker. There are
instances when, aside from the employers power to control the employee with
respect to the means and methods by which the work is to be accomplished,
economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1)
the putative employers 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.
This two-tiered test would provide us with a framework of analysis, which would
take into consideration the totality of circumstances surrounding the true nature
of the relationship between the parties. This is especially appropriate in this
case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the
various positions and responsibilities given to the worker over the period of the
latters employment.
The control test initially found application in the case of Viaa v. Al-Lagadan
and Piga, 19 and lately in Leonardo v. Court of Appeals, 20 where we held that
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 Sevilla v. Court of Appeals, 21 we observed the need to consider the existing
economic conditions prevailing between the parties, in addition to the standard
of right-of-control like the inclusion of the employee in the payrolls, to give a
clearer picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic circumstances of
the worker.
Thus, the determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity, 22 such as: (1)
the extent to which the services performed are an integral part of the
employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer;
(4) the workers opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent
LABOR LAW I |40
enterprise; (6) the permanency and duration of the relationship between the
worker and the employer; and (7) the degree of dependency of the worker
upon the employer for his continued employment in that line of business. 23
The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of
business. 24 In the United States, the touchstone of economic reality in
analyzing possible employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25By analogy, the benchmark of economic reality
in analyzing possible employment relationships for purposes of the Labor Code
ought to be the economic dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of
Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporations Technical Consultant. She reported for work
regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for
the proper operation of the corporation such as securing business permits and
other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to
be an employee of respondent corporation because she had served the
company for six years before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from
August 1, 1999 to December 18, 2000. 26 When petitioner was designated
General Manager, respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy
of the SSS specimen signature card which was signed by the President of
Kasei Corporation and the inclusion of her name in the on-line inquiry system
of the SSS evinces the existence of an employer-employee relationship
between petitioner and respondent corporation. 27
It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of
business.
Petitioners deny that Esita is an employee. They claim that Esita could not
have been employed in 1980 because the Tanauan ice plant was not in
operation due to low voltage of electricity and that Esita was merely a
helper/peon of one of the contractors they had engaged to do major repairs
and renovation of the Tanauan ice plant in 1986. Petitioners further allege that
when they had the Calamba ice plant repaired and expanded, Esita likewise
rendered services in a similar capacity, and thus admitting that he worked as a
helper/peon in the repair or remodeling of Dr. Opulencia's residence in
Tanauan.
Opulencia likewise maintains that while he refused the insistent pleas of Esita
for employment in the ice plants due to lack of vacancy, he nonetheless
allowed him to stay in the premises of the ice plant for free and to collect fees
for crushing or loading ice of the customers and dealers of the ice plant.
Opulencia claims that in addition, Esita enjoyed free electricity and water, and
was allowed to cultivate crops within the premises of the ice plant to augment
his income. Petitioners however admit that "following the tradition of
'pakikisama' and as a token of gratitude of the part of the complainant (Esita),
he helps in the cleaning of the ice plant premises and engine room whenever
he is requested to do so, and this happens only (at) twice a month."
On 8 December 1989, Labor Arbiter Nemeriano D. Villena rendered a
decision 1 finding the existence of an employer-employee relationship between
petitioners and Esita and accordingly directed them to pay him P33,518.02
representing separation pay, underpayment of wages, allowances, 13th month,
holiday, premium for holiday, and rest day pays. The claim for overtime pay
was however dismissed for lack of basis, i.e., Esita failed to prove that overtime
services were actually rendered.
On 29 November 1990, the Third Division of the National Labor Relations
Commission, in Case No. RAB-IV-2-2206-89, affirmed the decision of Labor
Arbiter Villena but reduced the monetary award to P28,344.60 as it was not
proven that Esita worked every day including rest days and on the days before
the legal holidays. On 26 March 1991, petitioners' motion for reconsideration
was denied.
In this present recourse, petitioners seek reversal of the ruling of public
respondents Labor Arbiter and NLRC, raising the following arguments: that
public respondents have no jurisdiction over the instant case; that Esita's work
in the repair and construction of Dr. Opulencia's residence could not have
FIRST DIVISION
G.R. No. 118101 September 16, 1996
EDDIE DOMASIG, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), CATA
GARMENTS CORPORATION and/or OTTO ONG and CATALINA CO.,
respondents.
PADILLA, J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks to nullify
and set aside the Resolution 1 of respondent National Labor Relations
Commission (NLRC) rendered on 20 September 1994 remanding the records
of the case to the arbitration branch of origin for further proceedings.
The antecedent facts as narrated by public respondent in the assailed
resolution are as follows:
The complaint was instituted by Eddie Domasig against respondent Cata
Garments Corporation, a company engaged in garments business and its
owner/manager Otto Ong and Catalina Co for illegal dismissal, unpaid
commission and other monetary claim[s]. Complainant alleged that he
started working with the respondent on July 6, 1986 as Salesman when the
company was still named Cato Garments Corporation; that three (3) years
ago, because of a complaint against respondent by its workers, its
changed its name to Cata Garments Corporation; and that on August 29,
1992, he was dismissed when respondent learned that he was being
pirated by a rival corporation which offer he refused. Prior to his dismissal,
complainant alleged that he was receiving a salary of P1,500.00 a month
plus commission. On September 3, 1992 he filed the instant complaint.
Respondent denied complainant's claim that he is a regular employee
contending that he is a mere commission agent who receives a
commission of P5.00 per piece of article sold at regular price and P2.50
per piece sold in [sic] bargain price; that in addition to commission,
complainant received a fixed allowance of P1,500.00 a month; that he had
no regular time schedule; and that the company come [sic] into existence
In their comment on the petition at bar, private respondents agree with the
finding of the NLRC that the nature of petitioner's employment with private
respondents is vital to the case as it will determine the monetary benefits to
which he is entitled. They further aver that the evidence presented upon which
the labor arbiter based her decision is insufficient, so that the NLRC did not
commit grave abuse of discretion in remanding the case to the arbitration
branch of origin for further proceedings.
The only issue to be resolved in this petition is whether or not the NLRC
gravely abused its discretion in vacating and setting aside the decision of the
labor arbiter and remanding the case to the arbitration branch of origin for
further proceedings.
In essence, respondent NLRC was not convinced that the evidence presented
by the petitioner, consisting of the identification card issued to him by private
respondent corporation and the cash vouchers reflecting his monthly salaries
covering the months stated therein, settled the issue of employer-employee
relationship between private respondents and petitioner.
It has long been established that in administrative and quasi-judicial
proceedings, substantial evidence is sufficient as a basis for judgment on the
existence of employer-employee relationship. No particular form of evidence is
required is required to prove the existence of such employer-employee
relationship. Any competent and relevant evidence to prove the relationship
may be admitted. 4
entitled, within thirty (30) days from the submission by the partied of all
necessary documents.
WHEREFORE, the resolutions of the public respondent dated 20 September
1994 and 9 November 1994 are SET ASIDE. The decision of the labor arbiter
dated 19 may 1993 us REINSTATED and AFFIRMED subject to the
modification above-stated as regards a re-computation by the labor arbiter of
the commissions to which petitioner maybe actually entitled.
SO ORDERED.
It was error and grave abuse of discretion for the NLRC to remand the case for
further proceedings to determine whether or not petitioner was private
respondents' employee. This would only prolong the final disposition of the
complaint. It is stressed that, in labor cases, simplification of procedures,
without regard to technicalities and without sacrificing the fundamental
requisites of due process, is mandated to ensure the speedy administration of
justice. 8
After all, Article 218 of the Labor Code grants the Commission and the labor
arbiter broad powers, including issuance of subpoena, requiring the attendance
and testimony of witnesses or the production of such documentary evidence as
may be material to a just determination of the matter under investigation.
Additionally, the National Labor Relations Commission and the labor arbiter
have authority under the Labor Code to decide a case based on the position
papers and documents submitted without resorting to the technical rules of
evidence. 9
However, in view of the need for further and correct computation of the
petitioner's commissions in the light of the exhibits presented and the dismissal
of the criminal cases filed against petitioner, the labor arbiter is required to
undertake a new computation of the commissions to which petitioner may be
FIRST DIVISION
Takes charge of all Bank cases arising from bank transactions and rendering
opinions on legal questions in connection therewith.
Insures effective conduct of litigation, collection of past due accounts, and
investigation of irregularities and other legal matters affecting the interest of the
Bank.
Participates in action of major character, financing, amendments to the
Articles of Incorporation and By-laws of the Bank, changes in corporate
structures acquisition and disposal of important segments of enterprises or real
estate, determination of action to comply with statutory and other government
requirements.
Directs, plans, coordinates and maintains supervision and control over the
staff of the Legal Department.
Provides for and insures proper documentation and notarization of all Bank
transactions.
Assumes primary responsibility in the account of continuing research and
studies on questions of law affecting the Bank and its subsidiary corporations
and the formulation and development of legal opinions.
Recommends appointments, promotions, transfers and disciplinary actions
involving Legal Department personnel.
Establishes and maintains effective discipline, work performances, high level
of morale and cooperation among the staff.
Performs such other duties as may be assigned from time to time by the
President and the Board of Directors. 2
The turning point in the relationship among the parties surfaced, when, on 26
June 1989, nine lawyers 3 of the bank's Legal Department, who were all under
LABOR LAW I |49
b. MISMANAGEMENT
In my study and investigation, I found abundant evidence to support a
finding of mismanagement of the Legal Department by Atty. Sadac.
c. INEFFICIENCY, INEFFECTIVENESS, AND INDECISIVENESS
The above specific charges are each proven and/or established by the
same nature of evidence. 6
Two days later, or on 10 August 1989, Mr. Morales issued a memorandum to
private respondent which, among other things, pertinently stated:
. . . The Board, however, feels that because during all its existence of
almost forty (40) years, the Bank never had in its employ any senior officer
who had compelled it to resort to the unfortunate, sorry and nasty
spectacle of conducting a formal hearing (which of course is distasteful to
all parties concerned) of whatever charge such as the one lodged against
you just to terminate your services, consonant with the due process
requirements of the Constitution, the Labor Code, the Implementing
Regulations thereof and other pertinent laws, it has chosen the more
compassionate option of waiting for your voluntary resignation from your
employ with the Bank.
In the meantime, since all the lawyers under you, by petitioning for a
change in leadership of the department despite the fact that all these
lawyers have all been hired and promoted to their positions upon your
recommendation, have thus shown lack of confidence in you, the Board
feels it has no reason to continue reposing confidence in you and therefore
elected to exercise its prerogative as your client, under the rules of client
and lawyer relationship to direct Atty. William R. Veto, Legal Counsel of the
Bank these many years to appear in substitution of you in all the cases in
which you are presently appearing as counsel of record for the Bank. For
this purpose, the Bank as your client, therefore, instructs you to deliver the
folders of pleadings and documents of all cases you are now personally
handling and submit a list of all the cases where you appear as the counsel
of record for the bank and the corresponding titles thereof not later than the
close of office hours on Tuesday, August 15, 1989 so that the Legal
Counsel of the Bank, Atty. William R. Veto, could file his substitution of
appearance in all said cases where you are counsel of record. Atty. Veto
LABOR LAW I |50
has already been instructed and authorized by the Board to take over from
you the functions that you are now performing in the Legal Department. 7
Reacting to the above memorandum, private respondent, on 14 August 1989
addressed a letter to Board Chairman Morales, furnishing the other members
of the Board, to the effect that the report of Mr. Banico contained libelous
statements and that the implementation of the chairman's memorandum would
lead to an illegal dismissal. Pointing out that he could not now in conscience
resign in the face of Mr. Banico's "baseless and libelous findings," private
respondent requested for a full hearing by the Board of Directors so that he
could clear his name. 8
On 17 August 1989, petitioner Ricardo J. Romulo, Board Vice-Chairman,
answered private respondent. Mr. Romulo stressed that private respondent's
services were not terminated by the Board which, instead, was merely
exercising its managerial prerogative "to control, conduct (its) business in the
manner (it) deems fit and to regulate the same." In reply to private respondent's
request for a formal hearing, Mr. Romulo reiterated the Board's decision that it
would be to the best interest of all concerned if the "distasteful spectacle" of a
hearing would not be resorted to "in order to adhere to (the bank's) long
standing compassionate policy." 9 Mr. Romulo also said:
We would like to emphasize that our decision as a Board did not dismiss
you from the service of the Bank. All that the Board is saying to you is that
it has lost its confidence in you and therefore it is patiently awaiting your
resignation of course with your right of retirement pay in accordance with
the policy adopted by the Bank under these situations. Trust or confidence
like love are feelings which emanate from the heart and, as the song goes,
"once a heart is torn apart it is never the same again." So also confidence
like a tooth once pulled can never be restored. 10
In his memorandum of 28 August 1989 to the members of the Board, private
respondent again made a request for a full hearing and cautioned that, under
Section 31 of the Corporation Code, individual members of the Board could be
held accountable for voting or assenting to patently unlawful acts of the
corporation.
On 31 August 1989, Mr. Romulo wrote back expressing, in part, as follows:
Resources that
distinguished
between
an in-house counsel
and
an outside counsel hired on a retainer basis. Certain other circumstances that
likewise did not escape NLRC's attention were that petitioner George L. Go,
the bank's president, had enjoined private respondent to attend a banksponsored symposium on Japanese investment on 08 September 1989 at the
Hotel Intercontinental; that in petitioners' letter of 31 August 1989, private
respondent was referred to as an employee; that in another letter, dated 24
November
1989,
petitioner
admitted
having
terminated
private
respondent'semployment and requested the return of the 1988 Mitsubishi
Galant 1800 which he had acquired through the bank's car plan; and that,
through a communication of 02 January 1990 of the Personnel and HRD
Department, the bank announced that private respondent's employment had
been terminated effective 21 November 1989.
Turning to the issue of whether or not the employment of private respondent
was terminated for cause, the NLRC held that because he had not been
afforded a hearing in accordance with law, there was no factual basis to
support the allegation of loss of confidence made by petitioners who, instead,
had relied on the doctrine of res ipsa loquitor.
The NLRC ruled that private respondent was denied the right to due process
with the bank's failure to observe the twin requirements of notice and hearing.
The 10th August 1989 memorandum could not have been a substitute for
notice because it did not manifest petitioners' intention to dismiss him from
employment, and neither the meeting between private respondent and the
complaining lawyers nor those held between private respondent and petitioner
Banico could be considered the "investigations" which private respondent had
consistently sought.
For having been made to undergo unnecessary embarrassment by being
stripped of his functions and made "to undergo the sad and painful experience
of reporting to office every day doing nothing," the NLRC, citing Sibal vs.Notre
Dame of Greater Manila, 27 awarded damages.
The NLRC, thereby concluded:
28
by
private
respondent,
30
for
The motion for reconsideration was still pending when private respondent,
following an exchange of yet additional pleadings, filed an urgent exparte motion for immediate reinstatement grounded on Article 223 of the Labor
Code. 31 On 07 November 1991, NLRC Executive Clerk Pascual Y. Reyes
addressed a communication, with the letterhead of the First Division of the
NLRC, to Attys. Vicente Abad Santos and William R. Veto, counsel for
petitioners, which read:
G R E E T I N G S:
Consistent with the NLRC New Rules and Procedure on Appeal under
Republic Act 6715, amending Article 223 of the Labor Code,
RESPONDENT(s) is/are hereby directed within ten (10) calendar days
from receipt of this Order:
To immediately reinstate complainant under the same terms and
conditions prevailing prior to his dismissal or separation or, at
RESPONDENT(s) option to reinstate him in the payroll, and to submit
proof of compliance thereof, otherwise, a Writ of Execution shall issue. 32
prematurity notwithstanding, the instant petition for certiorari was given due
course in order not to unduly delay the final disposition of the case considering
that the issues involved 41 have heretofore been ventilated practically to the
limit by the parties.
While the Court agrees with private respondent that execution pending appeal
may be ordered by the NLRC, 42 it is equally true, however, that where the
dismissed employee's reinstatement would lead to a strained relation between
the employer and the employee or to an atmosphere of antipathy and
antagonism, the exception to the twin remedies of reinstatement and payment
of backwages can be invoked and reinstatement, which might become
anathema to industrial peace, could be held back pending
appeal. 43 Nevertheless, the Court is not prepared to preempt the NLRC and
conclude that the directive for reinstatement is of "dubious" character. 44 It can
be assumed that had petitioners waited for NLRC's resolution on the motion for
reconsideration, the question on the regularity in the issuance of the directive
for reinstatement could have perhaps properly been delved into.
The existence of an employer-employee relationship is, itself, a factual
question 45 well within the province of the NLRC. Considering, nevertheless,
that its findings are at odds with the Labor Arbiter, the Court sees it fit to dwell a
bit into the issue. 46
In determining the existence of an employer-employee relationship, the
following elements are considered: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal, and (4) the
power to control the employee's conduct, with the control test generally
assuming primacy in the overall consideration. The power of control refers to
the existence of the power and not necessarily to the actual exercise thereof. It
is not essential, in other words, for the employer to actually supervise the
performance of duties of the employee; it is enough that the former has the
right to wield the power. 47
The NLRC, in the instant case, based its finding that there existed an
employer-employee relationship between petitioner bank and private
respondent on these factual settings:
It was complainant's understanding with respondent Morales that he would
be appointed and assigned to the Legal Department as vice President with
the same salary, privileges and benefits granted by the respondent bank to
The Deputy Minister found that the evidence satisfactorily established that
the Central's suspension of the petitioner's and others' monthly ration of
gasoline and LPG, had been caused by unavoidable financial constraints;
that such a suspension, in line with its conservation and cost-saving policy,
did not in truth effect any significant diminution of said benefits, since the
petitioner was nevertheless entitled to reimbursement of the actual amount
of gas consumed; that petitioner had encouraged his co-employees to file
complaints against the Central over the rations issue, and this, as well as
his institution of his own actions, had created an atmosphere of enmity in
the Central, and caused the loss by the Central of that trust and confidence
in him so essential in a lawyer-client relationship as that theretofore
existing between them; and that under the circumstances, petitioner's
discharge as the Central's Legal Counsel and Head of the Manpower &
Services Department was justified. The Deputy Minister's order of
dismissal was however subsequently modified, at the petitioner's instance,
by decreeing the payment to the latter of separation pay equivalent to one
month's salary for every year of service rendered. 51
It was, in fact, Hydro Resources which directly confronted the issue; there, the
Court ruled:
A lawyer, like any other professional, may very well be an employee of a
private corporation or even of the government. It is not unusual for a big
corporation to hire a staff of lawyers as its in-house counsel, pay them
regular salaries, rank them in its table of organization, and otherwise treat
them like its other officers and employees At the same time, it may also
contract with a law firm to act as outside counsel on a retainer basis. The
two classes of lawyers often work closely together but one group is made
up of employees while the other is not. A similar arrangement may exist as
to doctors, nurses, dentists, public relations practitioners, and other
professionals. 52
The existence of an employer-employee relationship, between the bank and
private respondent brings the case within the coverage of the Labor Code.
Under the Code, an employee may be validly dismissed if these requisites are
attendant: (1) the dismissal is grounded on any of the causes stated in Article
282 of Labor Code, and (2) the employee has been notified in writing and given
the opportunity to be heard and to defend himself as so required by Section 2
and Section 5, Rule XIV, Book V, of the Implementing Rules of the Labor
Code. 53
Article 282(c) of the Labor Code provides that "willful breach by the employee
of the trust reposed in him by his employer" is a cause for the termination of
employment by an employer. Ordinary breach of trust will not suffice, it must be
willful and without justifiable excuse. 54 This ground must be founded on facts
established by the employer who must clearly and convincingly prove by
substantial evidence 55 the facts and incidents upon which loss of confidence in
the employee may fairly be made to rest; otherwise, the dismissal will be
rendered illegal. 56
Petitioners' stated loss of trust and confidence on private respondent was
spawned by the complaints leveled against him by the lawyers in his
department. The letter-complaint signed by the nine lawyers read: June 26,
1989
Mr. Manuel L. Morales
Chairman, Board of Directors
Equitable Banking Corporation
S i r:
With utmost respect, we have taken the liberty of seeking your intercession on
the problems besetting the Legal Department.
For a long time, we have kept silent, containing within us the abusive conduct
and inefficiency of our department head, Atty. Ricardo L. Sadac, if only to
preserve cohesion among us. But we have reached the breaking point where
we could endure no more except to speak out. We realize the gravity of our
action and its possible repercussions but we only have ourselves to blame if
we remained silent.
Atty. Sadac's insults to the lawyers which are totally uncalled for and made
even in the presence of clients are simply too much for a fellow lawyer. His
outburst of temper on inconsequential matters have now become
commonplace in the department. His mismanagement, ineffectiveness as a
head and indecisiveness on basic legal questions have adversely affected the
smooth operation of the department and the output of the lawyers. He berates
rather than inspires, delays rather than facilitates. Each lawyer's complaint are
(sic) attached hereto attached (sic) as Annexes "A", "A-1" to "A-8".
At present, we are disgruntled on how he runs the department and our morale
is at its ebb. While our only desire is to work under an auspicious environment
and under an effective head, we could not do so because of the General
Counsel.
We, therefore, respectfully pray for an immediate change in the department
leadership in order to pave the way for a more effective system, a new image
for the department, and restore professionalism and the dignity of the lawyers.
Please accept our assurances that the interest of the bank is primordial to us
as we pledge our total commitment and unflinching loyalty to this institution.
Thank you. 57
Concededly, a wide latitude of discretion is given an employer in terminating
the employment of managerial employees on the ground of breach of trust and
confidence. 58 In order to constitute a "just cause" for dismissal, however, the
act complained of must be related to the performance of the duties of the
employee such as would show him to be thereby unfit to continue working for
the employer. 59 Here, the grievances of the lawyers, in main, refer to what are
perceived to be certain objectionable character traits of private respondent.
Although petitioners have charged private respondent with allegedly
mishandling two cases in his long service with the bank, it is quite apparent
that private respondent would not have been asked to resign had it not been
for the letter-complaint of his associates in the Legal Department.
Confident that no employer-employee existed between the bank and private
respondent, petitioners have put aside the procedural requirements for
terminating one's employment, i.e., (a) a notice apprising the employee of the
particular acts or omissions for which his dismissal is sought, and (b) another
notice informing the employee of the employer's decision to dismiss
him. 60 Failure to comply with these requirements taints the dismissal with
illegality. This procedure is mandatory, any judgment reached by management
without that compliance can be considered void and inexistent. 61 While it is
true that the essence of due process is simply an opportunity to be heard or, as
applied in administrative proceedings, an opportunity to explain one's
side, 62 meetings in the nature of consultation and conferences such as the
case here, however, may not be valid substitutes for the proper observance of
notice and hearing. 63
the conflict was between two brothers occupying the highest ranking
positions in the company. There were incontrovertible facts which pointed to
extreme personal animosity that resulted, evidently in bad faith, in the easing
out from the company of one of the brothers by the other.
The basic rule is still that which can be deduced from the Court's
pronouncement in Sunio vs.National Labor Relations Commission [127
SCRA 390]; thus:
We come now to the personal liability of petitioner, Sunio, who was made
jointly and severally responsible with petitioner company and CIPI for the
payment of the backwages of private respondents. This is reversible error.
The Assistant Regional Director's Decision failed to disclose the reason
why he was made personally liable. Respondents, however, alleged as
grounds thereof, his the being owner of one-half (1/2) interest of said
corporation, and his alleged arbitrary dismissal of private respondents.
It is true, there were various cases when corporate officers were themselves
held by the Court to be personally accountable for the payment of wages and
money claims to its employees. In A.C.Ransom Labor Union-CCLU
vs. NLRC [142 SCRA 269] for instance, the Court ruled that under the
Minimum Wage Law, the responsible officer of an employer corporation could
be held personally liable for nonpayment of backwages for "(i)f the policy of
the law were otherwise, the corporation employer (would) have devious ways
for evading payment of back wages." In the absence of a clear identification
of the officer directly responsible for failure to pay the backwages, the Court
considered the President of the corporation as such officer. The case was
cited in Chua vs. NLRC [182 SCRA 353] in holding personally liable the vicepresident of the company, being the highest and most ranking official of the
corporation next to the President who was dismissed, for the latter's claim for
unpaid wages.
FIRST DIVISION
G.R. No. 147816
On 15 August 1992, barely two months after the renewal of his contract,
petitioner received the following notice from respondent firm May 9, 2003
"Dear Mr. Paguio,
That petitioner performed activities which were necessary and desirable to the
business of the employer, and that the same went on for more than a year,
could hardly be denied. Petitioner was an account executive in soliciting
advertisements, clearly necessary and desirable, for the survival and continued
operation of the business of respondent corporation. Robina Gokongwei, its
President, herself admitted that the income generated from paid
advertisements was the lifeblood of the newspaper's existence. Implicitly,
respondent corporation recognized petitioner's invaluable contribution to the
business when it renewed, not just once but five times, its contract with
petitioner.
Respondent company cannot seek refuge under the terms of the agreement it
has entered into with petitioner. The law, in defining their contractual
relationship, does so, not necessarily or exclusively upon the terms of their
written or oral contract, but also on the basis of the nature of the work petitioner
has been called upon to perform. 12 The law affords protection to an employee,
and it will not countenance any attempt to subvert its spirit and intent. A
stipulation in an agreement can be ignored as and when it is utilized to deprive
the employee of his security of tenure. 13 The sheer inequality that characterizes
employer-employee relations, where the scales generally tip against the
employee, often scarcely provides him real and better options.
The real question that should thus be posed is whether or not petitioner has
been justly dismissed from service. A lawful dismissal must meet both
substantive and procedural requirements; in fine, the dismissal must be for a
just or authorized cause and must comply with the rudimentary due process of
notice and hearing. It is not shown that respondent company has fully bothered
itself with either of these requirements in terminating the services of petitioner.
The notice of termination recites no valid or just cause for the dismissal of
petitioner nor does it appear that he has been given an opportunity to be heard
in his defense.
The evidence, however, found by the appellate court is wanting that would
indicate bad faith or malice on the part of respondents, particularly by
respondent Liberato I. Gomez, and the award of moral damages must thus be
deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of
Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations
Commission are hereby SET ASIDE and that of the Labor Arbiter is
LABOR LAW I |62
SECOND DIVISION
Petitioner company moved to reconsider, which was denied, hence this petition
for review raising four legal issues to wit:
but, for unknown reasons, not paid so-called weekly sales reserve of at least P
200.00. Finally on June 28, 1982, complainant was dismissed by way of
termination of his agency contract.
Petitioner assails the findings of the NLRC that private respondent is an
employee of the former. Petitioner argues that Judico's compensation was not
based on any fixed number of hours he was required to devote to the service of
petitioner company but rather it was the production or result of his efforts or his
work that was being compensated and that the so-called allowance for the first
thirteen weeks that Judico worked as debit agent, cannot be construed as
salary but as a subsidy or a way of assistance for transportation and meal
expenses of a new debit agent during the initial period of his training which was
fixed for thirteen (13) weeks. Stated otherwise, petitioner contends that
Judico's compensation, in the form of commissions and bonuses, was based
on actual production, (insurance plans sold and premium collections).
Said contentions of petitioner are strongly rejected by private respondent. He
maintains that he received a definite amount as his Wage known as "sales
reserve" the failure to maintain the same would bring him back to a beginner's
employment with a fixed weekly wage of P 200.00 regardless of production. He
was assigned a definite place in the office to work on when he is not in the
field; and in addition to canvassing and making regular reports, he was
burdened with the job of collection and to make regular weekly report thereto
for which an anemic performance would mean dismissal. He earned out of his
faithful and productive service, a promotion to Zone Supervisor with additional
supervisor's allowance, (a definite or fixed amount of P110.00) that he was
dismissed primarily because of anemic performance and not because of the
termination of the contract of agency substantiate the fact that he was indeed
an employee of the petitioner and not an insurance agent in the ordinary
meaning of the term.
That private respondent Judico was an agent of the petitioner is
unquestionable. But, as We have held in Investment Planning Corp. vs. SSS,
21 SCRA 294, an insurance company may have two classes of agents who sell
its insurance policies: (1) salaried employees who keep definite hours and work
under the control and supervision of the company; and (2) registered
representatives who work on commission basis. The agents who belong to the
second category are not required to report for work at anytime, they do not
have to devote their time exclusively to or work solely for the company since
the time and the effort they spend in their work depend entirely upon their own
will and initiative; they are not required to account for their time nor submit a
report of their activities; they shoulder their own selling expenses as well as
transportation; and they are paid their commission based on a certain
percentage of their sales. One salient point in the determination of employeremployee relationship which cannot be easily ignored is the fact that the
compensation that these agents on commission received is not paid by the
insurance company but by the investor (or the person insured). After
determining the commission earned by an agent on his sales the agent directly
deducts it from the amount he received from the investor or the person insured
and turns over to the insurance company the amount invested after such
deduction is made. The test therefore 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.
Applying the aforementioned test to the case at bar, We can readily see that
the element of control by the petitioner on Judico was very much present. The
record shows that petitioner Judico received a definite minimum amount per
week as his wage known as "sales reserve" wherein the failure to maintain the
same would bring him back to a beginner's employment with a fixed weekly
wage of P 200.00 for thirteen weeks regardless of production. He was assigned
a definite place in the office to work on when he is not in the field; and in
addition to his canvassing work he was burdened with the job of collection. In
both cases he was required to make regular report to the company regarding
these duties, and for which an anemic performance would mean a dismissal.
Conversely faithful and productive service earned him a promotion to Zone
Supervisor with additional supervisor's allowance, a definite amount of P110.00
aside from the regular P 200.00 weekly "allowance". Furthermore, his contract
of services with petitioner is not for a piece of work nor for a definite period.
On the other hand, an ordinary commission insurance agent works at his own
volition or at his own leisure without fear of dismissal from the company and
short of committing acts detrimental to the business interest of the company or
against the latter, whether he produces or not is of no moment as his salary is
based on his production, his anemic performance or even dead result does not
become a ground for dismissal. Whereas, in private respondent's case, the
undisputed facts show that he was controlled by petitioner insurance company
not only as to the kind of work; the amount of results, the kind of performance
but also the power of dismissal. Undoubtedly, private respondent, by nature of
his position and work, had been a regular employee of petitioner and is
LABOR LAW I |64
therefore entitled to the protection of the law and could not just be terminated
without valid and justifiable cause.
Premises considered, the appealed decision is hereby AFFIRMED in toto.
SO ORDERED.
EN BANC
G.R. No. L-21278
receipt thereof. The President of the University answered the two letters,
requesting that she be given at least thirty days to study thoroughly the
different phases of the demands. Meanwhile counsel for the University, to
whom the demands were referred, wrote a letter to the President of the Faculty
Club demanding proof of its majority status and designation as a bargaining
representative. On February 1, 1963, the President of the Faculty Club again
wrote the President of the University rejecting the latter's request for extension
of time, and on the same day he filed a notice of strike with the Bureau of
Labor alleging as reason therefor the refusal of the University to bargain
collectively. The parties were called to conferences at the Conciliation Division
of the Bureau of Labor but efforts to conciliate them failed. On February 18,
1963, the members of the Faculty Club declared a strike and established picket
lines in the premises of the University, resulting in the disruption of classes in
the University. Despite further efforts of the officials from the Department of
Labor to effect a settlement of the differences between the management of the
University and the striking faculty members no satisfactory agreement was
arrived at. On March 21, 1963, the President of the Philippines certified to the
Court of Industrial Relations the dispute between the management of the
University and the Faculty Club pursuant to the provisions of Section 10 of
Republic Act No. 875.
In connection with the dispute between the University and the Faculty Club and
certain incidents related to said dispute, various cases were filed with the Court
of Industrial Relations hereinafter referred to as CIR. The three cases now
before this Court stemmed from those cases that were filed with the CIR.
CASE NO. G.R. NO. L-21278
On May 10, 1963, the University filed before this Court a "petition
for certiorari and prohibition with writ of preliminary injunction", docketed as
G.R. No. L-21278, praying: (1) for the issuance of the writ of preliminary
injunction enjoining respondent Judge Jose S. Bautista of the CIR to desist
from proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the
proceedings in Cases Nos. 41-IPA and 1183-MC be annulled; (3) that the
orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order
dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in
Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered
to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.
On May 10, 1963, this Court issued a writ of preliminary injunction, upon the
University's filing a bond of P1,000.00, ordering respondent Judge Jose S.
Bautista as Presiding Judge of the CIR, until further order from this Court, "to
desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA,
1183-MC and V-30 of the Court of Industrial Relations)." 1 On December 4,
1963, this Court ordered the injunction bond increased to P100,000.00; but on
January 23, 1964, upon a motion for reconsideration by the University, this
Court reduced the bond to P50,000.00.
A brief statement of the three cases CIR Cases 41-IPA, 1183-MC and V-30
involved in the Case G.R. No. L-21278, is here necessary.
CIR Case No. 41-IPA, relates to the case in connection with the strike staged
by the members of the Faculty Club. As we have stated, the dispute between
the University and the Faculty Club was certified on March 21, 1963 by the
President of the Philippines to the CIR. On the strength of the presidential
certification, respondent Judge Bautista set the case for hearing on March 23,
1963. During the hearing, the Judge endeavored to reconcile the part and it
was agreed upon that the striking faculty members would return to work and
the University would readmit them under a status quo arrangement. On that
very same day, however, the University, thru counsel filed a motion to dismiss
the case upon the ground that the CIR has no jurisdiction over the case,
because (1) the Industrial Peace Act is not applicable to the University, it being
an educational institution, nor to the members of the Faculty Club, they being
independent contractors; and (2) the presidential certification is violative of
Section 10 of the Industrial Peace Act, as the University is not an industrial
establishment and there was no industrial dispute which could be certified to
the CIR. On March 30, 1963 the respondent Judge issued an order denying the
motion to dismiss and declaring that the Industrial Peace Act is applicable to
both parties in the case and that the CIR had acquired jurisdiction over the
case by virtue of the presidential certification. In the same order, the
respondent Judge, believing that the dispute could not be decided promptly,
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, as per agreement had during the hearing on March 23, 1963; and
likewise enjoined the University, pending adjudication of the case, from
dismissing any employee or laborer without previous authorization from the
CIR. The University filed on April 1, 1963 a motion for reconsideration of the
order of March 30, 1963 by the CIR en banc, and at the same time asking that
the motion for reconsideration be first heard by the CIR en banc. Without the
motion for reconsideration having been acted upon by the CIR en banc,
respondent Judge set the case for hearing on the merits for May 8, 1963. The
University moved for the cancellation of said hearing upon the ground that the
court en banc should first hear the motion for reconsideration and resolve the
issues raised therein before the case is heard on the merits. This motion for
cancellation of the hearing was denied. The respondent Judge, however,
cancelled the scheduled hearing when counsel for the University manifested
that he would take up before the Supreme Court, by a petition for certiorari, the
matter regarding the actuations of the respondent Judge and the issues raised
in the motion for reconsideration, specially the issue relating to the jurisdiction
of the CIR. The order of March 30, 1963 in Case 41-IPA is one of the orders
sought to be annulled in the case, G.R. No. L-21278.
Before the above-mentioned order of March 30, 1963 was issued by
respondent Judge, the University had employed professors and/or instructors
to take the places of those professors and/or instructors who had struck. On
April 1, 1963, the Faculty Club filed with the CIR in Case 41-IPA a petition to
declare in contempt of court certain parties, alleging that the University refused
to accept back to work the returning strikers, in violation of the return-to-work
order of March 30, 1963. The University filed, on April 5,1963, its opposition to
the petition for contempt, denying the allegations of the Faculty Club and
alleging by way of special defense that there was still the motion for
reconsideration of the order of March 30, 1963 which had not yet been acted
upon by the CIR en banc. On April 6, 1963, the respondent Judge issued an
order stating that "said replacements are hereby warned and cautioned, for the
time being, not to disturb nor in any manner commit any act tending to disrupt
the effectivity of the order of March 30,1963, pending the final resolution of the
same."2 On April 8, 1963, there placing professors and/or instructors concerned
filed, thru counsel, a motion for reconsideration by the CIR en banc of the order
of respondent Judge of April 6, 1963. This order of April 6, 1963 is one of the
orders that are sought to be annulled in case G.R. No. L-21278.
CIR Case No. 1183-MC relates to a petition for certification election filed by the
Faculty Club on March 8, 1963 before the CIR, praying that it be certified as
the sole and exclusive bargaining representative of all the employees of the
University. The University filed an opposition to the petition for certification
election and at the same time a motion to dismiss said petition, raising the very
same issues raised in Case No. 41-IPA, claiming that the petition did not
comply with the rules promulgated by the CIR; that the Faculty Club is not a
legitimate labor union; that the members of the Faculty Club cannot unionize
LABOR LAW I |67
for collective bargaining purposes; that the terms of the individual contracts of
the professors, instructors, and teachers, who are members of the Faculty
Club, would expire on March 25 or 31, 1963; and that the CIR has no
jurisdiction to take cognizance of the petition because the Industrial Peace Act
is not applicable to the members of the Faculty Club nor to the University. This
case was assigned to Judge Baltazar Villanueva of the CIR. Before Judge
Villanueva could act on the motion to dismiss, however, the Faculty Club filed
on April 3, 1963 a motion to withdraw the petition on the ground that the labor
dispute (Case No. 41-IPA) had already been certified by the President to the
CIR and the issues raised in Case No. 1183-MC were absorbed by Case No.
41-IPA. The University opposed the withdrawal, alleging that the issues raised
in Case No. 1183-MC were separate and distinct from the issues raised in
Case No. 41-IPA; that the questions of recognition and majority status in Case
No. 1183-MC were not absorbed by Case No. 41-IPA; and that the CIR could
not exercise its power of compulsory arbitration unless the legal issue
regarding the existence of employer-employee relationship was first resolved.
The University prayed that the motion of the Faculty Club to withdraw the
petition for certification election be denied, and that its motion to dismiss the
petition be heard. Judge Baltazar Villanueva, finding that the reasons stated by
the Faculty Club in the motion to withdraw were well taken, on April 6, 1963,
issued an order granting the withdrawal. The University filed, on April 24, 1963,
a motion for reconsideration of that order of April 6, 1963 by the CIR en banc.
This order of April 6, 1963 in Case No. 1183-MC is one of the orders sought to
be annulled in the case, G.R. No. L-21278, now before Us.
CIR Case No. V-30 relates to a complaint for indirect contempt of court filed
against the administrative officials of the University. The Faculty Club, through
the Acting Chief Prosecutor of the CIR, filed with the CIR a complaint docketed
as Case No. V-30, charging President Victoria L. Araneta, Dean Daniel
Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the
President Jose Segovia, as officials of the University, with indirect contempt of
court, reiterating the same charges filed in Case No. 41-IPA for alleged
violation of the order dated March 30, 1963. Based on the complaint thus filed
by the Acting Chief Prosecutor of the CIR, respondent Judge Bautista issued
on April 29, 1963 an order commanding any officer of the law to arrest the
above named officials of the University so that they may be dealt with in
accordance with law, and the same time fixed the bond for their release at
P500.00 each. This order of April 29, 1963 is also one of the orders sought to
be annulled in the case, G.R. No. L-2l278.
The principal allegation of the University in its petition for certiorari and
prohibition with preliminary injunction in Case G.R. No. L-21278, now before
Us, is that respondent Judge Jose S. Bautista acted without, or in excess of,
jurisdiction, or with grave abuse of discretion, in taking cognizance of, and in
issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30.
Let it be noted that when the petition for certiorari and prohibition with
preliminary injunction was filed on May 10, 1963 in this case, the questioned
order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action
by the CIR en banc upon motions for reconsideration filed by the University.
On June 10, 1963, the Faculty Club filed its answer to the petition
for certiorari and prohibition with preliminary injunction, admitting some
allegations contained in the petition and denying others, and alleging special
defenses which boil down to the contentions that (1) the CIR had acquired
jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential
certification, so that it had jurisdiction to issue the questioned orders in said
Case No. 41-IPA; (2) that the Industrial Peace Act (Republic Act 875) is
applicable to the University as an employer and to the members of the Faculty
Club as employees who are affiliated with a duly registered labor union, so that
the Court of Industrial Relations had jurisdiction to take cognizance of Cases
Nos. 1183-MC and V-30 and to issue the questioned orders in those two cases;
and (3) that the petition for certiorari and prohibition with preliminary injunction
was prematurely filed because the orders of the CIR sought to be annulled
were still the subjects of pending motions for reconsideration before the CIR en
banc when said petition for certiorari and prohibition with preliminary injunction
was filed before this Court.
CASE G.R. NO. L-21462
This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already
stated Case No. 1183-MC relates to a petition for certification election filed by
the Faculty Club as a labor union, praying that it be certified as the sole and
exclusive bargaining representative of all employees of the University. This
petition was opposed by the University, and at the same time it filed a motion to
dismiss said petition. But before Judge Baltazar Villanueva could act on the
petition for certification election and the motion to dismiss the same, Faculty
Club filed a motion to withdraw said petition upon the ground that the issue
raised in Case No. 1183-MC were absorbed by Case No. 41-IPA which was
certified by the President of the Philippines. Judge Baltazar Villanueva, by
order April 6, 1963, granted the motion to withdraw. The University filed a
LABOR LAW I |68
motion for reconsideration of that order of April 6, 1963 by the CIR en banc.
That motion for reconsideration was pending action by the CIR en banc when
the petition forcertiorari and prohibition with preliminary injunction in Case G.R.
no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case
G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963,
ordering respondent Judge Bautista, until further order from this Court, to
desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA,
1183-MC and V-30 of the Court of Industrial Relations).
On June 5, 1963, that is, after this Court has issued the writ of preliminary
injunction in Case G.R. No. L-21278, the CIR en banc issued a resolution
denying the motion for reconsideration of the order of April 6, 1963 in Case No.
1183-MC.
On July 8, 1963, the University filed before this Court a petition for certiorari, by
way of an appeal from the resolution of the CIR en banc, dated June 5, 1963,
denying the motion for reconsideration of the order of April 6, 1963 in Case No.
1183-MC. This petition was docketed as G.R. No. L-21462. In its petition
for certiorari, the University alleges (1) that the resolution of the Court of
Industrial Relations of June 5, 1963 was null and void because it was issued in
violation of the writ of preliminary injunction issued in Case G.R. No. L-21278;
(2) that the issues of employer-employee relationship, the alleged status as a
labor union, majority representation and designation as bargaining
representative in an appropriate unit of the Faculty Club should have been
resolved first in Case No. 1183-MC prior to the determination of the issues in
Case No. 41-IPA and therefore the motion to withdraw the petition for
certification election should not have been granted upon the ground that the
issues in the first case have been absorbed in the second case; and (3) the
lower court acted without or in excess of jurisdiction in taking cognizance of the
petition for certification election and that the same should have been dismissed
instead of having been ordered withdrawn. The University prayed that the
proceedings in Case No. 1183-MC and the order of April 6, 1963 and the
resolution of June 5, 1963 issued therein be annulled, and that the CIR be
ordered to dismiss Case No. 1183-MC on the ground of lack of jurisdiction.
The Faculty Club filed its answer, admitting some, and denying other,
allegations in the petition for certiorari; and specially alleging that the lower
court's order granting the withdrawal of the petition for certification election was
in accordance with law, and that the resolution of the court en banc on June 5,
1963 was not a violation of the writ of preliminary injunction issued in Case
G.R. No. L-21278 because said writ of injunction was issued against Judge
Jose S. Bautista and not against the Court of Industrial Relations, much less
against Judge Baltazar Villanueva who was the trial judge of Case No. 1183MC.
CASE G.R. NO. L-21500
This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier
stated, Case No. 41-IPA relates to the strike staged by the members of the
Faculty Club and the dispute was certified by the President of the Philippines to
the CIR. The University filed a motion to dismiss that case upon the ground that
the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose
S. Bautista issued an order denying the motion to dismiss and declaring that
the Industrial Peace Act is applicable to both parties in the case and that the
CIR had acquired jurisdiction over the case by virtue of the presidential
certification; and in that same order Judge Bautista ordered the strikers to
return to work and the University to take them back under the last terms and
conditions existing before the dispute arose; and enjoined the University from
dismissing any employee or laborer without previous authority from the court.
On April 1, 1963, the University filed a motion for reconsideration of the order of
March 30, 1963 by the CIR en banc. That motion for reconsideration was
pending action by the CIR en banc when the petition for certiorari and
prohibition with preliminary injunction in Case G.R. No. L-21278 was filed on
May 10, 1963. As we have already stated, this Court in said case G.R. No. L21278, issued a writ of preliminary injunction on May 10, 1963 ordering
respondent Judge Jose S. Bautista, until further order from this Court, to desist
and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183MC and V-30 of the Court of Industrial Relations).
On July 2, 1963, the University received a copy of the resolution of the CIR en
banc, dated May 7, 1963 but actually received and stamped at the Office of the
Clerk of the CIR on June 28, 1963, denying the motion for reconsideration of
the order dated March 30, 1963 in Case No. 41-IPA.
On July 23, 1963, the University filed before this Court a petition for certiorari,
by way of an appeal from the resolution of the Court of Industrial Relations en
banc dated May 7, 1963 (but actually received by said petitioner on July 2,
1963) denying the motion for reconsideration of the order of March 30, 1963 in
Case No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its
petition for certiorari the University alleges (1) that the resolution of the CIR en
LABOR LAW I |69
banc, dated May 7, 1963 but filed with the Clerk of the CIR on June 28, 1963,
in Case No. 41-IPA, is null and void because it was issued in violation of the
writ of preliminary injunction issued by this Court in G.R. No. L-21278; (2) that
the CIR, through its Presiding Judge, had no jurisdiction to take cognizance of
Case No. 41-IPA and the order of March 30, 1963 and the resolution dated May
7, 1963 issued therein are null and void; (3) that the certification made by the
President of the Philippines is not authorized by Section 10 of Republic Act
875, but is violative thereof; (4) that the Faculty Club has no right to unionize or
organize as a labor union for collective bargaining purposes and to be certified
as a collective bargaining agent within the purview of the Industrial Peace Act,
and consequently it has no right to strike and picket on the ground of
petitioner's alleged refusal to bargain collectively where such duty does not
exist in law and is not enforceable against an educational institution; and (5)
that the return-to-work order of March 30, 1963 is improper and illegal. The
petition prayed that the proceedings in Case No. 41-IPA be annulled, that the
order dated March 30, 1963 and the resolution dated May 7, 1963 be revoked,
and that the lower court be ordered to dismiss Case 41-IPA on the ground of
lack of jurisdiction.
On September 10, 1963, the Faculty Club, through counsel, filed a motion to
dismiss the petition for certiorari on the ground that the petition being filed by
way of an appeal from the orders of the Court of Industrial Relations denying
the motion to dismiss in Case No. 41-IPA, the petition for certiorari is not proper
because the orders appealed from are interlocutory in nature.
This Court, by resolution of September 26, 1963, ordered that these three
cases (G.R. Nos. L-21278, L-21462 and L-21500) be considered together and
the motion to dismiss in Case G.R. No. L-21500 be taken up when the cases
are decided on the merits after the hearing.
Brushing aside certain technical questions raised by the parties in their
pleadings, We proceed to decide these three cases on the merits of the issues
raised.
The University has raised several issues in the present cases, the pivotal one
being its claim that the Court of Industrial Relations has no jurisdiction over the
parties and the subject matter in CIR Cases 41-IPA, 1183-MC and V-30,
brought before it, upon the ground that Republic Act No. 875 is not applicable
to the University because it is an educational institution and not an industrial
establishment and hence not an "employer" in contemplation of said Act; and
neither is Republic Act No. 875 applicable to the members of the Faculty Club
because the latter are independent contractors and, therefore, not employees
within the purview of the said Act.
In support of the contention that being an educational institution it is beyond the
scope of Republic Act No. 875, the University cites cases decided by this
Court: Boy Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29,
1958; University of San Agustin vs. CIR, et al., L-12222, May 28, 1958; Cebu
Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L12015, April 22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282,
April 22, 1960; University of the Philippines, et al. vs. CIR, et al., L-15416, April
8, 1960; Far Eastern University vs. CIR, L-17620, August 31, 1962. We have
reviewed these cases, and also related cases subsequent thereto, and We find
that they do not sustain the contention of the University. It is true that this Court
has ruled that certain educational institutions, like the University of Santo
Tomas, University of San Agustin, La Consolacion College, and other juridical
entities, like the Boy Scouts of the Philippines and Manila Sanitarium, are
beyond the purview of Republic Act No. 875 in the sense that the Court of
Industrial Relations has no jurisdiction to take cognizance of charges of unfair
labor practice filed against them, but it is nonetheless true that the principal
reason of this Court in ruling in those cases that those institutions are excluded
from the operation of Republic Act 875 is that those entities are not organized,
maintained and operated for profit and do not declare dividends to
stockholders. The decision in the case of University of San Agustin vs. Court of
Industrial Relations, G.R. No. L-12222, May 28, 1958, is very pertinent. We
quote a portion of the decision:
It appears that the University of San Agustin, petitioner herein, is an
educational institution conducted and managed by a "religious nonstock corporation duly organized and existing under the laws of the
Philippines." It was organized not for profit or gain or division of the
dividends among its stockholders, but solely for religious and
educational purposes. It likewise appears that the Philippine
Association of College and University Professors, respondent herein, is
a non-stock association composed of professors and teachers in
different colleges and universities and that since its organization two
years ago, the university has adopted a hostile attitude to its formation
and has tried to discriminate, harass and intimidate its members for
which reason the association and the members affected filed the unfair
labor practice complaint which initiated this proceeding. To the
LABOR LAW I |70
January 29, 1958, this Court, speaking thru Mr. Justice Montemayor,
answered the query in the negative in the following wise:
"The main issue involved in the present case is whether or not
a charitable institution or one organized not for profit but for
more elevated purposes, charitable, humanitarian, etc., like the
Boy Scouts of the Philippines, is included in the definition of
"employer" contained in Republic Act 875, and whether the
employees of said institution fall under the definition of
"employee" also contained in the same Republic Act. If they
are included, then any act which may be considered unfair
labor practice, within the meaning of said Republic Act, would
come under the jurisdiction of the Court of Industrial Relations;
but if they do not fall within the scope of said Republic Act,
particularly, its definitions of employer and employee, then the
Industrial Court would have no jurisdiction at all.
xxx
xxx
xxx
and resolution of the CIR are hereby set aside, with costs
against respondent."
There being a close analogy between the relation and facts involved in
the two cases, we cannot but conclude that the Court of Industrial
Relations has no jurisdiction to entertain the complaint for unfair labor
practice lodged by respondent association against petitioner and,
therefore, we hereby set aside the order and resolution subject to the
present petition, with costs against respondent association.
The same doctrine was confirmed in the case of University of Santo Tomas v.
Hon. Baltazar Villanueva, et al.,G.R. No. L-13748, October 30, 1959, where
this Court ruled that:
In the present case, the record reveals that the petitioner University of
Santo Tomas is not an industry organized for profit but an institution of
learning devoted exclusively to the education of the youth. The Court of
First Instance of Manila in its decision in Civil Case No. 28870, which
has long become final and consequently the settled law in the case,
found as established by the evidence adduced by the parties therein
(herein petitioner and respondent labor union) that while the University
collects fees from its students, all its income is used for the
improvement and enlargement of the institution. The University
declares no dividend, and the members of the corporation who
founded it, as ordained in its articles of incorporation, receive no
material compensation for the time and sacrifice they render to the
University and its students. The respondent union itself in a case
before the Industrial Court (Case No. 314-MC) has averred that "the
University of Santo Tomas, like the San Beda College, is an
educational institution operated not for profit but for the sole purpose of
educating young men." (See Annex "B" to petitioner's motion to
dismiss.). It is apparent, therefore, that on the face of the record the
University of Santo Tomas is not a corporation created for profit but an
educational institution and therefore not an industrial or business
organization.
In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282,
April 22, 1960, this Court repeated the same ruling when it said:
The main issue in this appeal by petitioner is that the industry trial court
committed an error in holding that it has jurisdiction to act in this case
even if it involves unfair labor practice considering that the La
Consolacion College is not a business enterprise but an educational
institution not organized for profit.
If the claim that petitioner is an educational institution not operated for
profit is true, which apparently is the case, because the very court a
quo found that it has no stockholder, nor capital . . . then we are of the
opinion that the same does not come under the jurisdiction of the Court
of Industrial Relations in view of the ruling in the case of Boy Scouts of
the Philippines v. Juliana V. Araos, G.R. No. L-10091, decided on
January 29, 1958.
It is noteworthy that the cases of the University of San Agustin, the University
of Santo Tomas, and La Consolacion College, cited above, all involve charges
of unfair labor practice under Republic Act No. 875, and the uniform rulings of
this Court are that the Court of Industrial Relations has no jurisdiction over the
charges because said Act does not apply to educational institutions that are not
operated or maintained for profit and do not declare dividends. On the other
hand, in the cases of Far Eastern University v. CIR, et al., G.R. No. L-17620,
August 31, 1962, this Court upheld the decision of the Court of Industrial
Relations finding the Far Eastern University, also an educational institution,
guilty of unfair labor practice. Among the findings of fact in said case was that
the Far Eastern University made profits from the school year 1952-1953 to
1958-1959. In affirming the decision of the lower court, this Court had thereby
ratified the ruling of the Court of Industrial Relations which applied the
Industrial Peace Act to educational institutions that are organized, operated
and maintained for profit.
It is also noteworthy that in the decisions in the cases of the Boy Scouts of the
Philippines, the University of San Agustin, the University of Sto. Tomas, and La
Consolacion College, this Court was not unanimous in the view that the
Industrial Peace Act (Republic Act No. 875) is not applicable to charitable,
eleemosynary or non-profit organizations which include educational
institutions not operated for profit. There are members of this Court who hold
the view that the Industrial Peace Act would apply also to non-profit
organizations or entities the only exception being the Government, including
any political subdivision or instrumentality thereof, in so far as governmental
functions are concerned. However, in the Far Eastern University case this
LABOR LAW I |72
The Social Security Act defines employer as "any person, natural or juridical,
domestic or foreign, who carries in the Philippines any trade, business,
industry, undertaking, or activity of any kind and uses the services of another
person who is under his orders as regards the employment, except the
Government and any of its political subdivisions, branches or instrumentalities,
including corporations owned or controlled by the Government." (Rep. Act No.
1161, Sec. 8[c]).
This Court, in the cases of the The Angat River Irrigation System, et al. vs.
Angat River Workers' Union (PLUM), et al., G.R. Nos. L-10934 and L-10944,
December 28, 1957, which cases involve unfair labor practices and hence
within the purview of Republic Act No. 875, defined the term employer as
follows:
An employer is one who employs the services of others; one for whom
employees work and who pays their wages or salaries (Black Law
Dictionary, 4th ed., p. 618).
An employer includes any person acting in the interest of an employer,
directly or indirectly (Sec. 2-c, Rep. Act 875).
Under none of the above definitions may the University be excluded, especially
so if it is considered that every professor, instructor or teacher in the teaching
staff of the University, as per allegation of the University itself, has a contract
with the latter for teaching services, albeit for one semester only. The University
engaged the services of the professors, provided them work, and paid them
compensation or salary for their services. Even if the University may be
considered as a lessee of services under a contract between it and the
members of its Faculty, still it is included in the term "employer". "Running
through the word `employ' is the thought that there has been an agreement on
the part of one person to perform a certain service in return for compensation
to be paid by an employer. When you ask how a man is employed, or what is
his employment, the thought that he is under agreement to perform some
service or services for another is predominant and paramount." (Ballentine Law
Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v.
Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202).
To bolster its claim of exception from the application of Republic Act No. 875,
the University contends that it is not state that the employers included in the
definition of 2 (c) of the Act. This contention can not be sustained. In the first
place, Sec. 2 (c) of Republic Act No. 875 does not state that the employers
included in the definition of the term "employer" are only and exclusively
"industrial establishments"; on the contrary, as stated above, the term
"employer" encompasses all employers except those specifically excluded by
the Act. In the second place, even the Act itself does not refer exclusively to
industrial establishments and does not confine its application thereto. This is
patent inasmuch as several provisions of the Act are applicable to nonindustrial workers, such as Sec. 3, which deals with "employees' right to selforganization"; Sections 4 and 5 which enumerate unfair labor practices;
Section 8 which nullifies private contracts contravening employee's rights;
Section 9 which relates to injunctions in any case involving a labor dispute;
Section 11 which prohibits strikes in the government; Section 12 which
provides for the exclusive collective bargaining representation for labor
organizations; Section 14 which deals with the procedure for collective
bargaining; Section 17 which treats of the rights and conditions of membership
in labor organizations; Sections 18, 19, 20 and 21 which provide respectively
for the establishment of conciliation service, compilation of collective
bargaining contracts, advisory labor-management relations; Section 22 which
empowers the Secretary of Labor to make a study of labor relations; and
Section 24 which enumerates the rights of labor organizations. (See Dissenting
Opinion of Justice Concepcion in Boy Scouts of the Philippines v. Juliana
Araos, G.R. No. L-10091, January 29, 1958.)
This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had
occasion to state that the Industrial Peace Act "refers only to organizations and
entities created and operated for profits, engaged in a profitable trade,
occupation or industry". It cannot be denied that running a university engages
time and attention; that it is an occupation or a business from which the one
engaged in it may derive profit or gain. The University is not an industrial
establishment in the sense that an industrial establishment is one that is
engaged in manufacture or trade where raw materials are changed or
fashioned into finished products for use. But for the purposes of the Industrial
Peace Act the University is an industrial establishment because it is operated
for profit and it employs persons who work to earn a living. The term "industry",
for the purposes of the application of our labor laws should be given a broad
meaning so as to cover all enterprises which are operated for profit and which
engage the services of persons who work to earn a living.
The word "industry" within State Labor Relations Act controlling labor
relations in industry, cover labor conditions in any field of employment
LABOR LAW I |74
where the objective is earning a livelihood on the one side and gaining
of a profit on the other. Labor Law Sec. 700 et seq. State Labor
Relations Board vs. McChesney, 27 N.Y.S. 2d 866, 868." (Words and
Phrases, Permanent Edition, Vol. 21, 1960 edition p. 510).
The University urges that even if it were an employer, still there would be no
employer-employee relationship between it and the striking members of the
Faculty Club because the latter are not employees within the purview of Sec.
2(d) of Republic Act No. 875 but are independent contractors. This claim is
untenable.
That teachers are "employees' has been held in a number of cases (Aebli v.
Board of Education of City and County of San Francisco, 145 P. 2d 601, 62
Col. App 2.d 706; Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish
School Board, La. App., 15 So. 2d 98, 100; Sister Odelia v. Church of St.
Andrew, 263 N. W. 111, 112, 195 Minn. 357, cited in Words and Phrases,
Permanent ed., Vol. 14, pp. 806-807). This Court in the Far Eastern University
case, supra, considered university instructors as employees and declared
Republic Act No. 875 applicable to them in their employment relations with their
school. The professors and/or instructors of the University neither ceased to be
employees when they struck, for Section 2 of Rep. Act 875 includes among
employees any individual whose work has ceased as consequence of, or in
connection with a current labor dispute. Striking employees maintain their
status as employees of the employer. (Western Cartridge Co. v. NLRB, C.C.A.
7, 139 F2d 855, 858).
The contention of the University that the professors and/or instructors are
independent contractors, because the University does not exercise control over
their work, is likewise untenable. This Court takes judicial notice that a
university controls the work of the members of its faculty; that a university
prescribes the courses or subjects that professors teach, and when and where
to teach; that the professors' work is characterized by regularity and continuity
for a fixed duration; that professors are compensated for their services by
wages and salaries, rather than by profits; that the professors and/or
instructors cannot substitute others to do their work without the consent of the
university; and that the professors can be laid off if their work is found not
satisfactory. All these indicate that the university has control over their work;
and professors are, therefore, employees and not independent contractors.
There are authorities in support of this view.
LABOR LAW I |75
Employees are those who are compensated for their labor or services
by wages rather than by profits. (People vs. Distributors Division,
Smoked Fish Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185,
187 in Words and Phrases, loc, cit.)
Services of employee or servant, as distinguished from those of a
contractor, are usually characterized by regularity and continuity of
work for a fixed period or one of indefinite duration, as contrasted with
employment to do a single act or a series of isolated acts; by
compensation on a fixed salary rather than one regulated by value or
amount of work; . . . (Underwood v. Commissioner of Internal Revenue,
C.C.A., 56 F. 2d 67, 71 in Words and Phrases, op. cit., p. 579.)
Independent contractors can employ others to work and accomplish
contemplated result without consent of contractee, while "employee"
cannot substitute another in his place without consent of his employer.
(Luker Sand & Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82
Utah, 188, in Words and Phrases, Vol. 14, p. 576).
Moreover, even if university professors are considered independent
contractors, still they would be covered by Rep. Act No. 875. In the case of the
Boy Scouts of the Philippines v. Juliana Araos, supra, this Court observed that
Republic Act No. 875 was modelled after the Wagner Act, or the National Labor
Relations Act, of the United States, and this Act did not exclude "independent
contractors" from the orbit of "employees". It was in the subsequent legislation
the
Labor
Management
Relation
Act
(Taft-Harley
Act) that "independent contractors" together with agricultural laborers,
It having been shown that the members of the Faculty Club are employees, it
follows that they have a right to unionize in accordance with the provisions of
Section 3 of the Magna Carta of Labor (Republic Act No. 875) which provides
as follows:
We agree with the statement of the lower court, in its order of March 30, 1963
which is sought to be set aside in the instant case, that the right of employees
to self-organization is guaranteed by the Constitution, that said right would
exist even if Republic Act No. 875 is repealed, and that regardless of whether
their employers are engaged in commerce or not. Indeed, it is Our considered
view that the members of the faculty or teaching staff of private universities,
colleges, and schools in the Philippines, regardless of whether the university,
college or school is run for profit or not, are included in the term "employees"
as contemplated in Republic Act No. 875 and as such they may organize
themselves pursuant to the above-quoted provision of Section 3 of said Act.
Certainly, 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.
The contention of the University in the instant case that the members of the
Faculty Club can not unionize and the Faculty Club can not exist as a valid
labor organization is, therefore, without merit. The record shows that the
Faculty Club is a duly registered labor organization and this fact is admitted by
counsel for the University.5a
The other issue raised by the University is the validity of the Presidential
certification. The University contends that under Section 10 of Republic Act No.
875 the power of the President of the Philippines to certify is subject to the
following conditions, namely: (1) that here is a labor dispute, and (2) that said
labor dispute exists in an industry that is vital to the national interest. The
LABOR LAW I |76
University maintains that those conditions do not obtain in the instant case.
This contention has also no merit.
We have previously stated that the University is an establishment or enterprise
that is included in the term "industry" and is covered by the provisions of
Republic Act No. 875. Now, was there a labor dispute between the University
and the Faculty Club?
Republic Act No. 875 defines a labor dispute as follows:
The term "labor dispute" includes any controversy concerning terms,
tenure or conditions of employment, or concerning the association or
representation of persons in negotiating, fixing, maintaining, changing,
or seeking to arrange terms or conditions of employment regardless of
whether the disputants stand in proximate relation of employer and
employees.
The test of whether a controversy comes within the definition of "labor dispute"
depends on whether the controversy involves or concerns "terms, tenure or
condition of employment" or "representation." It is admitted by the University, in
the instant case, that on January 14, 1963 the President of the Faculty Club
wrote to the President of the University a letter informing the latter of the
organization of the Faculty Club as a labor union, duly registered with the
Bureau of Labor Relations; that again on January 22, 1963 another letter was
sent, to which was attached a list of demands consisting of 26 items, and
asking the President of the University to answer within ten days from date of
receipt thereof; that the University questioned the right of the Faculty Club to
be the exclusive representative of the majority of the employees and asked
proof that the Faculty Club had been designated or selected as exclusive
representative by the vote of the majority of said employees; that on February
1, 1963 the Faculty Club filed with the Bureau of Labor Relations a notice of
strike alleging as reason therefor the refusal of the University to bargain
collectively with the representative of the faculty members; that on February
18, 1963 the members of the Faculty Club went on strike and established
picket lines in the premises of the University, thereby disrupting the schedule of
classes; that on March 1, 1963 the Faculty Club filed Case No. 3666-ULP for
unfair labor practice against the University, but which was later dismissed (on
April 2, 1963 after Case 41-IPA was certified to the CIR); and that on March 7,
1963 a petition for certification election, Case No. 1183-MC, was filed by the
Faculty Club in the CIR.6 All these admitted facts show that the controversy
between the University and the Faculty Club involved terms and conditions of
employment, and the question of representation. Hence, there was a labor
dispute between the University and the Faculty Club, as contemplated by
Republic Act No. 875. It having been shown that the University is an institution
operated for profit, that is an employer, and that there is an employer-employee
relationship, between the University and the members of the Faculty Club, and
it having been shown that a labor dispute existed between the University and
the Faculty Club, the contention of the University, that the certification made by
the President is not only not authorized by Section 10 of Republic Act 875 but
is violative thereof, is groundless.
Section 10 of Republic Act No. 875 provides:
When in the opinion of the President of the Philippines there exists a
labor dispute in an industry indispensable to the national interest and
when such labor dispute is certified by the President to the Court of
Industrial Relations, said Court may cause to be issued a restraining
order forbidding the employees to strike or the employer to lockout the
employees, and if no other solution to the dispute is found, the Court
may issue an order fixing the terms and conditions of employment.
This Court had occasion to rule on the application of the above-quoted
provision of Section 10 of Republic Act No. 875. In the case of Pampanga
Sugar Development Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it
was held:
It thus appears that when in the opinion of the President a labor
dispute exists in an industry indispensable to national interest and he
certifies it to the Court of Industrial Relations the latter acquires
jurisdiction to act thereon in the manner provided by law. Thus the
court may take either of the following courses: it may issue an order
forbidding the employees to strike or the employer to lockout its
employees, or, failing in this, it may issue an order fixing the terms and
conditions of employment. It has no other alternative. It can not throw
the case out in the assumption that the certification was erroneous.
xxx
xxx
xxx
The third issue raised by the University refers to the question of the legality of
the return-to-work order (of March 30, 1963 in Case 41-IPA) and the order
implementing the same (of April 6, 1963). It alleges that the orders are illegal
upon the grounds: (1) that Republic Act No. 875, supplementing
Commonwealth Act No. 103, has withdrawn from the CIR the power to issue a
return-to-work order; (2) that the only power granted by Section 10 of Republic
Act No. 875 to the CIR is to issue an order forbidding the employees to strike
or forbidding the employer to lockout the employees, as the case may be,
before either contingency had become a fait accompli; (3) that the taking in by
the University of replacement professors was valid, and the return-to-work
order of March 30, 1963 constituted impairment of the obligation of contracts;
and (4) the CIR could not issue said order without having previously
determined the legality or illegality of the strike.
The contention of the University that Republic Act No. 875 has withdrawn the
power of the Court of Industrial Relations to issue a return-to-work order
exercised by it under Commonwealth Act No. 103 can not be sustained. When
a case is certified by the President to the Court of Industrial Relations, the case
thereby comes under the operation of Commonwealth Act No. 103, and the
Court may exercise the broad powers and jurisdiction granted to it by said Act.
Section 10 of Republic Act No. 875 empowers the Court of Industrial Relations
to issue an order "fixing the terms of employment." This clause is broad enough
to authorize the Court to order the strikers to return to work and the employer
to readmit them. This Court, in the cases of the Philippine Marine Officers
Association vs. The Court of Industrial Relations, Compania Maritima, et al.;
and Compaia Martima, et al. vs. Philippine Marine Radio Officers Association
and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31, 1957, declared:
We cannot subscribe to the above contention. We agree with counsel
for the Philippine Radio Officers' Association that upon certification by
the President under Section 10 of Republic Act 875, the case comes
under the operation of Commonwealth Act 103, which enforces
compulsory arbitration in cases of labor disputes in industries
indispensable to the national interest when the President certifies the
case to the Court of Industrial Relations. The evident intention of the
law is to empower the Court of Industrial Relations to act in such
cases, not only in the manner prescribed under Commonwealth Act
103, but with the same broad powers and jurisdiction granted by that
act. If the Court of Industrial Relations is granted authority to find a
solution to an industrial dispute and such solution consists in the
LABOR LAW I |78
30, 1963, it was agreed before the hearing of Case 41-IPA on March 23, 1963
that the strikers would return to work under the status quo arrangement and the
University would readmit them, and the return-to-work order was a confirmation
of that agreement. This is a declaration of fact by the CIR which we cannot
disregard. The faculty members, by striking, have not abandoned their
employment but, rather, they have only ceased from their labor (Keith Theatre
v. Vachon et al., 187 A. 692). The striking faculty members have not lost their
right to go back to their positions, because the declaration of a strike is not a
renunciation of their employment and their employee relationship with the
University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13, 138). The
employment of replacements was not authorized by the CIR. At most, that was
a temporary expedient resorted to by the University, which was subject to the
power of the CIR to allow to continue or not. The employment of replacements
by the University prior to the issuance of the order of March 30, 1963 did not
vest in the replacements a permanent right to the positions they held. Neither
could such temporary employment bind the University to retain permanently
the replacements.
Striking employees maintained their status as employees of the
employer (Western Castridge Co. v. National Labor Relations Board,
C.C.A. 139 F. 2d 855, 858) ; that employees who took the place of
strikers do not displace them as `employees." ' (National Labor
Relations Board v. A. Sartorius & Co., C.C.A. 2, 140 F. 2d 203, 206,
207.)
It is clear from what has been said that the return-to-work order cannot be
considered as an impairment of the contract entered into by petitioner with the
replacements. Besides, labor contracts must yield to the common good and
such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and similar subjects (Article 1700, Civil Code).
Likewise unsustainable is the contention of the University that the Court of
Industrial Relations could not issue the return-to-work order without having
resolved previously the issue of the legality or illegality of the strike, citing as
authority therefor the case of Philippine Can Company v. Court of Industrial
Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not
applicable to the case at bar, the facts and circumstances being very different.
The Philippine Can Company case, unlike the instant case, did not involve the
national interest and it was not certified by the President. In that case the
company no longer needed the services of the strikers, nor did it need
LABOR LAW I |79
substitutes for the strikers, because the company was losing, and it was
imperative that it lay off such laborers as were not necessary for its operation in
order to save the company from bankruptcy. This was the reason of this Court
in ruling, in that case, that the legality or illegality of the strike should have been
decided first before the issuance of the return-to-work order. The University, in
the case before Us, does not claim that it no longer needs the services of
professors and/or instructors; neither does it claim that it was imperative for it
to lay off the striking professors and instructors because of impending
bankruptcy. On the contrary, it was imperative for the University to hire
replacements for the strikers. Therefore, the ruling in the Philippine Can case
that the legality of the strike should be decided first before the issuance of the
return-to-work order does not apply to the case at bar. Besides, as We have
adverted to, the return-to-work order of March 30, 1963, now in question, was a
confirmation of an agreement between the University and the Faculty Club
during a prehearing conference on March 23, 1963.
The University also maintains that there was no more basis for the claim of the
members of the Faculty Club to return to their work, as their individual
contracts for teaching had expired on March 25 or 31, 1963, as the case may
be, and consequently, there was also no basis for the return-to-work order of
the CIR because the contractual relationships having ceased there were no
positions to which the members of the Faculty Club could return to. This
contention is not well taken. This argument loses sight of the fact that when the
professors and instructors struck on February 18, 1963, they continued to be
employees of the University for the purposes of the labor controversy
notwithstanding the subsequent termination of their teaching contracts, for
Section 2(d) of the Industrial Peace Act includes among employees "any
individual whose work has ceased a consequence of, or in connection with,
any current labor dispute or of any unfair labor practice and who has not
obtained any other substantially equivalent and regular employment."
The University, furthermore, claims that the information for indirect contempt
filed against the officers of the University (Case No. V-30) as well as the order
of April 29, 1963 for their arrest were improper, irregular and illegal because (1)
the officers of the University had complied in good faith with the return-to-work
order and in those cases that they did not, it was due to circumstance beyond
their control; (2) the return-to-work order and the order implementing the same
were illegal; and (3) even assuming that the order was legal, the same was not
Yet final because there was a motion to reconsider it.
The question raised by the University was resolved in a similar case in the
United States. In the case of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read:
Again We find no merit in this claim of Petitioner. We have already ruled that
the CIR had jurisdiction to issue the order of March 30, 1963 in CIR Case 41IPA, and the return-to-work provision of that order is valid and legal.
Necessarily the order of April 6, 1963 implementing that order of March 30,
1963 was also valid and legal.
coercive powers of the industrial court in the settlement of the labor disputes in
those cases would be rendered useless and nugatory.
The University points to Section 6 of Commonwealth Act No. 103 which
provides that "Any violation of any order, award, or decision of the Court of
Industrial Relations shall after such order, award or decision has become final,
conclusive and executory constitute contempt of court," and contends that only
the disobedience of orders that are final (meaning one that is not appealed)
may be the subject of contempt proceedings. We believe that there is no
inconsistency between the above-quoted provision of Section 6 and the
provision of Section 14 of Commonwealth Act No. 103. It will be noted that
Section 6 speaks of order, award or decision that is executory. By the provision
of Section 14 an order, award or decision of the Court of Industrial Relations in
cases involving strikes and lockouts are immediately executory, so that a
violation of that order would constitute an indirect contempt of court.
We believe that the action of the CIR in issuing the order of arrest of April 29,
1963 is also authorized under Section 19 of Commonwealth Act No. 103 which
provides as follows:
SEC. 19. Implied condition in every contract of employment.In every
contract of employment whether verbal or written, it is an implied
condition that when any dispute between the employer and the
employee or laborer has been submitted to the Court of Industrial
Relations for settlement or arbitration pursuant to the provisions of this
Act . . . and pending award, or decision by the Court of such
dispute . . . the employee or laborer shall not strike or walk out of his
employment when so enjoined by the Court after hearing and when
public interest so requires, and if he has already done so, that he shall
forthwith return to it, upon order of the Court, which shall be issued
only after hearing when public interest so requires or when the dispute
cannot, in its opinion, be promptly decided or settled; and if the
employees or laborers fail to return to work, the Court may authorize
the employer to accept other employees or laborers. A condition shall
further be implied that while such dispute . . . is pending, the employer
shall refrain from accepting other employees or laborers, unless with
the express authority of the Court, and shall permit the continuation in
the service of his employees or laborers under the last terms and
conditions existing before the dispute arose. . . . A violation by the
employer or by the employee or laborer of such an order or the implied
LABOR LAW I |81
We believe that these contentions of the University in Case G.R. No. L-21462
have been sufficiently covered by the discussion in this decision of the main
issues raised in the principal case, which is Case G.R. No. L-21278. After all,
the University wanted CIR Case 1183-MC dismissed, and the withdrawal of the
petition for certification election had in a way produced the situation desired by
the University. After considering the arguments adduced by the University in
support of its petition for certiorari by way of appeal in Case G.R. No. L-21278,
We hold that the CIR did not commit any error when it granted the withdrawal
of the petition for certification election in Case No. 1183-MC. The principal case
before the CIR is Case No. 41-IPA and all the questions relating to the labor
disputes between the University and the Faculty Club may be threshed out,
and decided, in that case.
In Case G.R. No. L-21500 the University appealed from the order of the CIR of
March 30, 1963, issued by Judge Bautista, and from the resolution of the
CIR en banc promulgated on June 28, 1963, denying the motion for the
reconsideration of that order of March 30, 1963, in CIR Case No. 41-IPA. We
have already ruled that the CIR has jurisdiction to issue that order of March 30,
1963, and that order is valid, and We, therefore, hold that the CIR did not err in
issuing that order of March 30, 1963 and in issuing the resolution promulgated
on June 28, 1963 (although dated May 7, 1963) denying the motion to
reconsider that order of March 30, 1963.
IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with
preliminary injunction in Case G.R. No. L-21278 is dismissed and the writs
prayed for therein are denied. The writ of preliminary injunction issued in Case
G.R. No. L-21278 is dissolved. The orders and resolutions appealed from, in
Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases
against the petitioner-appellant Feati University. It is so ordered.
It is contended by the University before this Court, in G.R. L-21462, that the
issues of employer-employee relationship between the University and the
Faculty Club, the alleged status of the Faculty Club as a labor union, its
majority representation and designation as bargaining representative in an
appropriate unit of the Faculty Club should have been resolved first in Case
No. 1183-MC prior to the determination of the issues in Case No. 41-IPA, and,
therefore, the motion to withdraw the petition for certification election should
not have been granted upon the ground that the issues in the first case were
absorbed in the second case.
LABOR LAW I |82
EN BANC
G.R. No. L-21212
On March 11, 1963 the respondent judge granted the writ prayed for, while
deferring action on petitioners' motion to dissolve said writ to March 20 of the
same year.
Meanwhile, on March 12, 1963, petitioners filed a complaint for unfair labor
practice against the respondents-spouses with the Court of Industrial Relations
on the ground, among others, of the latter's refusal to bargain with
them. 1awphl.nt
On March 18, 1963, petitioners filed a motion to declare the writ of preliminary
injunction void on the ground that the same had expired by virtue of Section 9
(d) of Republic Act 875. In his order of March 21, 1963, however, the
respondent judge denied said motion on the ground that there was no
employer-employee relationship between respondents-spouses and the
individual petitioners herein and that, consequently, the Rules of Court and not
Republic Act No. 875 applied to the matter of injunction. Thereupon the petition
under consideration was filed.
In the case of Isabelo Doce vs. Workmen's Compensation Commission, et
al. (G.R. No. L-9417, December 22, 1958), upon a similar if not an altogether
identical set of facts, We held:
This case falls squarely within our ruling in National Labor Union v.
Dinglasan, 52 O.G., No. 4, 1933, wherein this Court held that a driver
of a jeep who operates the same under the boundary system is
considered an employee within the meaning of the law and as such the
case comes under the jurisdiction of the Court of Industrial Relations.
In that case, Benedicto Dinglasan was the owner and operator of TPU
jeepneys which were driven by petitioner under verbal contracts that
they will pay P7.50 for 10 hours use under the so called "boundary
system." The drivers did not receive salaries or wages from the owner.
Their day's earnings were the excess over the P7.50 they paid for the
use of the jeepneys. In the event that they did not earn more, the
owner did not have to pay them anything. In holding that the employeremployee relationship existed between the owner of the jeepneys and
the drivers even if the latter worked under the boundary system, this
Court said:
FIRST DIVISION
G.R. No. 165881
vehicle until Bustamante paid his arrears, including a penalty of P50.00 a day;
in case Bustamante failed to remit the daily boundary-hulog for a period of one
week, the Kasunduan would cease to have legal effect and Bustamante would
have to return the vehicle to Villamaria Motors.
Under the Kasunduan, Bustamante was prohibited from driving the vehicle
without prior authority from Villamaria Motors. Thus, Bustamante was
authorized to operate the vehicle to transport passengers only and not for other
purposes. He was also required to display an identification card in front of the
windshield of the vehicle; in case of failure to do so, any fine that may be
imposed by government authorities would be charged against his account.
Bustamante further obliged himself to pay for the cost of replacing any parts of
the vehicle that would be lost or damaged due to his negligence. In case the
vehicle sustained serious damage, Bustamante was obliged to notify Villamaria
Motors before commencing repairs. Bustamante was not allowed to wear
slippers, short pants or undershirts while driving. He was required to be polite
and respectful towards the passengers. He was also obliged to notify Villamaria
Motors in case the vehicle was leased for two or more days and was required
to attend any meetings which may be called from time to time. Aside from the
boundary-hulog, Bustamante was also obliged to pay for the annual
registration fees of the vehicle and the premium for the vehicles
comprehensive insurance. Bustamante promised to strictly comply with the
rules and regulations imposed by Villamaria for the upkeep and maintenance of
the jeepney.
Bustamante continued driving the jeepney under the supervision and control of
Villamaria. As agreed upon, he made daily remittances of P550.00 in payment
of the purchase price of the vehicle. Bustamante failed to pay for the annual
registration fees of the vehicle, but Villamaria allowed him to continue driving
the jeepney.
In 1999, Bustamante and other drivers who also had the same arrangement
with Villamaria Motors failed to pay their respective boundary-hulog. This
prompted Villamaria to serve a "Paalala,"6 reminding them that under the
Kasunduan, failure to pay the daily boundary-hulog for one week, would mean
their respective jeepneys would be returned to him without any complaints. He
warned the drivers that the Kasunduan would henceforth be strictly enforced
and urged them to comply with their obligation to avoid litigation.
On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and
barred the latter from driving the vehicle.
On August 15, 2000, Bustamante filed a Complaint 7 for Illegal Dismissal
against Villamaria and his wife Teresita. In his Position Paper,8 Bustamante
alleged that he was employed by Villamaria in July 1996 under the boundary
system, where he was required to remit P450.00 a day. After one year of
continuously working for them, the spouses Villamaria presented the
Kasunduan for his signature, with the assurance that he (Bustamante) would
own the jeepney by March 2001 after paying P550.00 in daily installments and
that he would thereafter continue driving the vehicle along the same route
under the same franchise. He further narrated that in July 2000, he informed
the Villamaria spouses that the surplus engine of the jeepney needed to be
replaced, and was assured that it would be done. However, he was later
arrested and his drivers license was confiscated because apparently, the
replacement engine that was installed was taken from a stolen vehicle. Due to
negotiations with the apprehending authorities, the jeepney was not
impounded. The Villamaria spouses took the jeepney from him on July 24,
2000, and he was no longer allowed to drive the vehicle since then unless he
paid them P70,000.00.
Bustamante prayed that judgment be rendered in his favor, thus:
WHEREFORE, in the light of the foregoing, it is most respectfully prayed that
judgment be rendered ordering the respondents, jointly and severally, the
following:
1. Reinstate complainant to his former position without loss of seniority
rights and execute a Deed of Sale in favor of the complainant relative
to the PUJ with Plate No. PVU-660;
2. Ordering the respondents to pay backwages in the amount of
P400.00 a day and other benefits computed from July 24, 2000 up to
the time of his actual reinstatement;
3. Ordering respondents to return the amount of P10,000.00 and
P180,000.00 for the expenses incurred by the complainant in the repair
and maintenance of the subject jeep;
representation that he would own the vehicle after four years. Moreover, it
appeared that the Paalala was duly received by him, as he, together with other
drivers, was made to affix his signature on a blank piece of paper purporting to
be an "attendance sheet."
On March 15, 2002, the Labor Arbiter rendered judgment 17 in favor of the
spouses Villamaria and ordered the complaint dismissed on the following
ratiocination:
Respondents presented the contract of Boundary-Hulog, as well as the
PAALALA, to prove their claim that complainant violated the terms of their
contract and afterwards abandoned the vehicle assigned to him. As against the
foregoing, [the] complaints (sic) mere allegations to the contrary cannot
prevail.
Not having been illegally dismissed, complainant is not entitled to damages
and attorney's fees.18
Bustamante appealed the decision to the NLRC, 19 insisting that the Kasunduan
did not extinguish the employer-employee relationship between him and
Villamaria. While he did not receive fixed wages, he kept only the excess of the
boundary-hulog which he was required to remit daily to Villamaria under the
agreement. Bustamante maintained that he remained an employee because he
was engaged to perform activities which were necessary or desirable to
Villamarias trade or business.
The NLRC rendered judgment20 dismissing the appeal for lack of merit, thus:
WHEREFORE, premises considered, complainant's appeal is hereby
DISMISSED for reasons not stated in the Labor Arbiter's decision but mainly on
a jurisdictional issue, there being none over the subject matter of the
controversy.21
The NLRC ruled that under the Kasunduan, the juridical relationship between
Bustamante and Villamaria was that of vendor and vendee, hence, the Labor
Arbiter had no jurisdiction over the complaint. Bustamante filed a Motion for
Reconsideration, which the NLRC resolved to deny on May 30, 2003. 22
Bustamante elevated the matter to the CA via Petition for Certiorari, alleging
that the NLRC erred
I
IN DISMISSING PETITIONERS APPEAL "FOR REASON NOT STATED IN
THE LABOR ARBITERS DECISION, BUT MAINLY ON JURISDICTIONAL
ISSUE;"
II
IN DISREGARDING THE LAW AND PREVAILING JURISPRUDENCE WHEN
IT DECLARED THAT THE RELATIONSHIP WHICH WAS ESTABLISHED
BETWEEN PETITIONER AND THE PRIVATE RESPONDENT WAS
DEFINITELY A MATTER WHICH IS BEYOND THE PROTECTIVE MANTLE
OF OUR LABOR LAWS.23
Bustamante insisted that despite the Kasunduan, the relationship between him
and Villamaria continued to be that of employer-employee and as such, the
Labor Arbiter had jurisdiction over his complaint. He further alleged that it is
common knowledge that operators of passenger jeepneys (including taxis) pay
their drivers not on a regular monthly basis but on commission or boundary
basis, or even the boundary-hulog system. Bustamante asserted that he was
dismissed from employment without any lawful or just cause and without due
notice.
For his part, Villamaria averred that Bustamante failed to adduce proof of their
employer-employee relationship. He further pointed out that the Dinglasan
case pertains to the boundary system and not the boundary-hulog system,
hence inapplicable in the instant case. He argued that upon the execution of
the Kasunduan, the juridical tie between him and Bustamante was transformed
into a vendor-vendee relationship. Noting that he was engaged in the
manufacture and sale of jeepneys and not in the business of transporting
passengers for consideration, Villamaria contended that the daily fees which
Bustmante paid were actually periodic installments for the the vehicle and were
not the same fees as understood in the boundary system. He added that the
boundary-hulog plan was basically a scheme to help the driver-buyer earn
money and eventually pay for the unit in full, and for the owner to profit not
from the daily earnings of the driver-buyer but from the purchase price of the
unit sold. Villamaria further asserted that the apparently restrictive conditions in
the Kasunduan did not mean that the means and method of driver-buyers
conduct was controlled, but were mere ways to preserve the vehicle for the
benefit of both parties: Villamaria would be able to collect the agreed purchase
LABOR LAW I |87
price, while Bustamante would be assured that the vehicle would still be in
good running condition even after four years. Moreover, the right of vendor to
impose certain conditions on the buyer should be respected until full ownership
of the property is vested on the latter. Villamaria insisted that the parallel
circumstances obtaining in Singer Sewing Machine Company v. Drilon 24 has
analogous application to the instant issue.
In its Decision25 dated August 30, 2004, the CA reversed and set aside the
NLRC decision. The fallo of the decision reads:
UPON THE VIEW WE TAKE IN THIS CASE, THUS, the impugned resolutions
of the NLRC must be, as they are hereby are, REVERSED AND SET ASIDE,
and judgment entered in favor of petitioner:
1. Sentencing private respondent Oscar Villamaria, Jr. to pay petitioner
Jerry Bustamante separation pay computed from the time of his
employment up to the time of termination based on the prevailing
minimum wage at the time of termination; and,
2. Condemning private respondent Oscar Villamaria, Jr. to pay
petitioner Jerry Bustamante back wages computed from the time of his
dismissal up to March 2001 based on the prevailing minimum wage at
the time of his dismissal.
method of the employees work. In this case, Villamarias directives (to drive
carefully, wear an identification card, don decent attire, park the vehicle in his
garage, and to inform him about provincial trips, etc.) was a means to control
the way in which Bustamante was to go about his work. In view of Villamarias
supervision and control as employer, the fact that the "boundary" represented
installment payments of the purchase price on the jeepney did not remove the
parties employer-employee relationship.
While the appellate court recognized that a weeks default in paying the
boundary-hulog constituted an additional cause for terminating Bustamantes
employment, it held that the latter was illegally dismissed. According to the CA,
assuming that Bustamante failed to make the required payments as claimed by
Villamaria, the latter nevertheless failed to take steps to recover the unit and
waited for Bustamante to abandon it. It also pointed out that Villamaria neither
submitted any police report to support his claim that the vehicle figured in a
mishap nor presented the affidavit of the gas station guard to substantiate the
claim that Bustamante abandoned the unit.
Villamaria received a copy of the decision on September 8, 2004, and filed, on
September 17, 2004, a motion for reconsideration thereof. The CA denied the
motion in a Resolution27 dated November 2, 2004, and Villamaria received a
copy thereof on November 8, 2004.
The appellate court ruled that the Labor Arbiter had jurisdiction over
Bustamantes complaint. Under the Kasunduan, the relationship between him
and Villamaria was dual: that of vendor-vendee and employer-employee. The
CA ratiocinated that Villamarias exercise of control over Bustamantes conduct
in operating the jeepney is inconsistent with the formers claim that he was not
engaged in the transportation business. There was no evidence that petitioner
was allowed to let some other person drive the jeepney.
Villamaria, now petitioner, seeks relief from this Court via petition for review on
certiorari under Rule 65 of the Rules of Court, alleging that the CA committed
grave abuse of its discretion amounting to excess or lack of jurisdiction in
reversing the decision of the Labor Arbiter and the NLRC. He claims that the
CA erred in ruling that the juridical relationship between him and respondent
under the Kasunduan was a combination of employer-employee and vendorvendee relationships. The terms and conditions of the Kasunduan clearly state
that he and respondent Bustamante had entered into a conditional deed of sale
over the jeepney; as such, their employer-employee relationship had been
transformed into that of vendor-vendee. Petitioner insists that he had the right
to reserve his title on the jeepney until after the purchase price thereof had
been paid in full.
The CA further held that, while the power to dismiss was not mentioned in the
Kasunduan, it did not mean that Villamaria could not exercise it. It explained
that the existence of an employment relationship did not depend on how the
worker was paid but on the presence or absence of control over the means and
In his Comment on the petition, respondent avers that the appropriate remedy
of petitioner was an appeal via a petition for review on certiorari under Rule 45
of the Rules of Court and not a special civil action of certiorari under Rule 65.
He argues that petitioner failed to establish that the CA committed grave abuse
Without Costs.
SO ORDERED.26
its resolution denying the motion for reconsideration of the same. This is based
on the premise that in issuing the assailed decision and resolution, the CA
acted with grave abuse of discretion, amounting to excess or lack of jurisdiction
and there is no plain, speedy and adequate remedy in the ordinary course of
law. A remedy is considered plain, speedy and adequate if it will promptly
relieve the petitioner from the injurious effect of the judgment and the acts of
the lower court.
The aggrieved party is proscribed from filing a petition for certiorari if appeal is
available, for the remedies of appeal and certiorari are mutually exclusive and
not alternative or successive. The aggrieved party is, likewise, barred from
filing a petition for certiorari if the remedy of appeal is lost through his
negligence. A petition for certiorari is an original action and does not interrupt
the course of the principal case unless a temporary restraining order or a writ
of preliminary injunction has been issued against the public respondent from
further proceeding. A petition for certiorari must be based on jurisdictional
grounds because, as long as the respondent court acted within its jurisdiction,
any error committed by it will amount to nothing more than an error of judgment
which may be corrected or reviewed only by appeal.31
However, we have also ruled that a petition for certiorari under Rule 65 may be
considered as filed under Rule 45, conformably with the principle that rules of
procedure are to be construed liberally, provided that the petition is filed within
the reglementary period under Section 2, Rule 45 of the Rules of Court, and
where valid and compelling circumstances warrant that the petition be resolved
on its merits.32 In this case, the petition was filed within the reglementary period
and petitioner has raised an issue of substance: whether the existence of a
boundary-hulog agreement negates the employer-employee relationship
between the vendor and vendee, and, as a corollary, whether the Labor Arbiter
has jurisdiction over a complaint for illegal dismissal in such case.
We resolve these issues in the affirmative.
The rule is that, the nature of an action and the subject matter thereof, as well
as, which court or agency of the government has jurisdiction over the same,
are determined by the material allegations of the complaint in relation to the
law involved and the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs. 33 A prayer or
demand for relief is not part of the petition of the cause of action; nor does it
enlarge the cause of action stated or change the legal effect of what is
LABOR LAW I |89
alleged.34 In determining which body has jurisdiction over a case, the better
policy is to consider not only the status or relationship of the parties but also
the nature of the action that is the subject of their controversy.35
Article 217 of the Labor Code, as amended, vests on the Labor Arbiter
exclusive original jurisdiction only over the following:
x x x (a) Except as otherwise provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wage, rates of pay, hours of work, and other
terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
5. Cases arising from violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relationship, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of
collective bargaining agreements, and those arising from the
interpretation or enforcement of company personnel policies
We agree with the ruling of the CA that, under the boundary-hulog scheme
incorporated in the Kasunduan, a dual juridical relationship was created
between petitioner and respondent: that of employer-employee and vendorvendee. The Kasunduan did not extinguish the employer-employee relationship
of the parties extant before the execution of said deed.
As early as 1956, the Court ruled in National Labor Union v. Dinglasan 40 that
the jeepney owner/operator-driver relationship under the boundary system is
that of employer-employee and not lessor-lessee. This doctrine was affirmed,
under similar factual settings, in Magboo v. Bernardo 41 and Lantaco, Sr. v.
Llamas,42 and was analogously applied to govern the relationships between
auto-calesa
owner/operator
and
driver,43 bus
owner/operator
and
44
conductor, and taxi owner/operator and driver.45
The boundary system is a scheme by an owner/operator engaged in
transporting passengers as a common carrier to primarily govern the
compensation of the driver, that is, the latters daily earnings are remitted to the
owner/operator less the excess of the boundary which represents the drivers
compensation. Under this system, the owner/operator exercises control and
supervision over the driver. It is unlike in lease of chattels where the lessor
loses complete control over the chattel leased but the lessee is still ultimately
responsible for the consequences of its use. The management of the business
LABOR LAW I |90
is still in the hands of the owner/operator, who, being the holder of the
certificate of public convenience, must see to it that the driver follows the route
prescribed by the franchising and regulatory authority, and the rules
promulgated with regard to the business operations. The fact that the driver
does not receive fixed wages but only the excess of the "boundary" given to the
owner/operator is not sufficient to change the relationship between them.
Indubitably, the driver performs activities which are usually necessary or
desirable in the usual business or trade of the owner/operator.46
Under the Kasunduan, respondent was required to remit P550.00 daily to
petitioner, an amount which represented the boundary of petitioner as well as
respondents partial payment (hulog) of the purchase price of the jeepney.
Respondent was entitled to keep the excess of his daily earnings as his daily
wage. Thus, the daily remittances also had a dual purpose: that of petitioners
boundary and respondents partial payment (hulog) for the vehicle. This dual
purpose was expressly stated in the Kasunduan. The well-settled rule is that an
obligation is not novated by an instrument that expressly recognizes the old
one, changes only the terms of payment, and adds other obligations not
incompatible with the old provisions or where the new contract merely
supplements the previous one. 47 The two obligations of the respondent to remit
to petitioner the boundary-hulog can stand together.
In resolving an issue based on contract, this Court must first examine the
contract itself, keeping in mind that when the terms of the agreement are clear
and leave no doubt as to the intention of the contracting parties, the literal
meaning of its stipulations shall prevail. 48 The intention of the contracting
parties should be ascertained by looking at the words used to project their
intention, that is, all the words, not just a particular word or two or more words
standing alone. The various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which may result from all of
them taken jointly.49 The parts and clauses must be interpreted in relation to
one another to give effect to the whole. The legal effect of a contract is to be
determined from the whole read together.50
Under the Kasunduan, petitioner retained supervision and control over the
conduct of the respondent as driver of the jeepney, thus:
20. Na ang TAUHAN NG IKALAWANG PANIG ay iiwasan ang pakikipagunahan sa kaninumang sasakyan upang maiwasan ang aksidente.
respondent would be able to pay the requisite daily installment of P550.00, and
that the vehicle would still be in good condition despite the lapse of four years.
What is primordial is that petitioner retained control over the conduct of the
respondent as driver of the jeepney.
Indeed, petitioner, as the owner of the vehicle and the holder of the franchise,
is entitled to exercise supervision and control over the respondent, by seeing to
it that the route provided in his franchise, and the rules and regulations of the
Land Transportation Regulatory Board are duly complied with. Moreover, in a
business establishment, an identification card is usually provided not just as a
security measure but to mainly identify the holder thereof as a bona fide
employee of the firm who issues it.57
As respondents employer, it was the burden of petitioner to prove that
respondents termination from employment was for a lawful or just cause, or, at
the very least, that respondent failed to make his daily remittances of P550.00
as boundary. However, petitioner failed to do so. As correctly ruled by the
appellate court:
It is basic of course that termination of employment must be effected in
accordance with law. The just and authorized causes for termination of
employment are enumerated under Articles 282, 283 and 284 of the Labor
Code.
Parenthetically, given the peculiarity of the situation of the parties here, the
default in the remittance of the boundary hulog for one week or longer may be
considered an additional cause for termination of employment. The reason is
because the Kasunduan would be of no force and effect in the event that the
purchaser failed to remit the boundary hulog for one week. The Kasunduan in
this case pertinently stipulates:
13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi makapagbigay ng
BOUNDARY HULOG sa loob ng isang linggo ay NANGANGAHULUGAN na
ang kasunduang ito ay wala ng bisa at kusang ibabalik ng TAUHAN NG
IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG UNANG PANIG
na wala ng paghahabol pa.
Moreover, well-settled is the rule that, the employer has the burden of proving
that the dismissal of an employee is for a just cause. The failure of the
employer to discharge this burden means that the dismissal is not justified and
that the employee is entitled to reinstatement and back wages.
In the case at bench, private respondent in his position paper before the Labor
Arbiter, alleged that petitioner failed to pay the miscellaneous fee of
P10,000.00 and the yearly registration of the unit; that petitioner also stopped
remitting the "boundary hulog," prompting him (private respondent) to issue a
"Paalala," which petitioner however ignored; that petitioner even brought the
unit to his (petitioners) province without informing him (private respondent)
about it; and that petitioner eventually abandoned the vehicle at a gasoline
station after figuring in an accident. But private respondent failed to
substantiate these allegations with solid, sufficient proof. Notably, private
respondents allegation viz, that he retrieved the vehicle from the gas station,
where petitioner abandoned it, contradicted his statement in the Paalala that he
would enforce the provision (in the Kasunduan) to the effect that default in the
remittance of the boundary hulog for one week would result in the forfeiture of
the unit. The Paalala reads as follows:
"Sa lahat ng mga kumukuha ng sasakyan
SO ORDERED.
SECOND DIVISION
G.R. No. 142293
retinopathy G II (Annexes "G-5" and "G-3", pp. 48, 104, respectively), 6 HPM,
UTI, Osteoarthritis (Annex "G-4", p. 105),7 and heart enlargement (Annex G, p.
107).8 On said grounds, Belen Paulino of the SBT Trucking Service
management told him to file a formal request for extension of his leave. At the
end of his week-long absence, Sahot applied for extension of his leave for the
whole month of June, 1994. It was at this time when petitioners allegedly
threatened to terminate his employment should he refuse to go back to work.
At this point, Sahot found himself in a dilemma. He was facing dismissal if he
refused to work, But he could not retire on pension because petitioners never
paid his correct SSS premiums. The fact remained he could no longer work as
his left thigh hurt abominably. Petitioners ended his dilemma. They carried out
their threat and dismissed him from work, effective June 30, 1994. He ended
up sick, jobless and penniless.
On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a
complaint for illegal dismissal, docketed as NLRC NCR Case No. 00-09-0671794. He prayed for the recovery of separation pay and attorneys fees against
Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T.
Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein petitioners.
For their part, petitioners admitted they had a trucking business in the 1950s
but denied employing helpers and drivers. They contend that private
respondent was not illegally dismissed as a driver because he was in fact
petitioners industrial partner. They add that it was not until the year 1994,
when SBT Trucking Corporation was established, and only then did respondent
Sahot become an employee of the company, with a monthly salary that
reached P4,160.00 at the time of his separation.
In April 1994, Sahot was already 59 years old. He had been incurring absences
as he was suffering from various ailments. Particularly causing him pain was
his left thigh, which greatly affected the performance of his task as a driver. He
inquired about his medical and retirement benefits with the Social Security
System (SSS) on April 25, 1994, but discovered that his premium payments
had not been remitted by his employer.
Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on
leave and was not able to report for work for almost seven days. On June 1,
1994, Sahot asked permission to extend his leave of absence until June 30,
1994. It appeared that from the expiration of his leave, private respondent
never reported back to work nor did he file an extension of his leave. Instead,
he filed the complaint for illegal dismissal against the trucking company and its
owners.
Sahot had filed a week-long leave sometime in May 1994. On May 27th, he
was medically examined and treated for EOR, presleyopia, hypertensive
Petitioners add that due to Sahots refusal to work after the expiration of his
authorized leave of absence, he should be deemed to have voluntarily
LABOR LAW I |95
resigned from his work. They contended that Sahot had all the time to extend
his leave or at least inform petitioners of his health condition. Lastly, they cited
NLRC Case No. RE-4997-76, entitled "Manuelito Jimenez et al. vs. T. Paulino
Trucking Service," as a defense in view of the alleged similarity in the factual
milieu and issues of said case to that of Sahots, hence they are in pari
material and Sahots complaint ought also to be dismissed.
The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente
Santos, ruled that there was no illegal dismissal in Sahots case. Private
respondent had failed to report to work. Moreover, said the Labor Arbiter,
petitioners and private respondent were industrial partners before January
1994. The Labor Arbiter concluded by ordering petitioners to pay "financial
assistance" of P15,000 to Sahot for having served the company as a regular
employee since January 1994 only.
On appeal, the National Labor Relations Commission modified the judgment of
the Labor Arbiter. It declared that private respondent was an employee, not an
industrial partner, since the start. Private respondent Sahot did not abandon his
job but his employment was terminated on account of his illness, pursuant to
Article 2849 of the Labor Code. Accordingly, the NLRC ordered petitioners to
pay private respondent separation pay in the amount of P60,320.00, at the rate
of P2,080.00 per year for 29 years of service.
Petitioners assailed the decision of the NLRC before the Court of Appeals. In
its decision dated February 29, 2000, the appellate court affirmed with
modification the judgment of the NLRC. It held that private respondent was
indeed an employee of petitioners since 1958. It also increased the amount of
separation pay awarded to private respondent to P74,880, computed at the
rate of P2,080 per year for 36 years of service from 1958 to 1994. It decreed:
WHEREFORE, the assailed decision is hereby AFFIRMED with
MODIFICATION. SB Trucking Corporation is hereby directed to pay
complainant Jaime Sahot the sum of SEVENTY-FOUR THOUSAND EIGHT
HUNDRED EIGHTY (P74,880.00) PESOS as and for his separation pay.10
Hence, the instant petition anchored on the following contentions:
I RESPONDENT COURT OF APPEALS IN PROMULGATING THE
QUESTION[ED] DECISION AFFIRMING WITH MODIFICATION THE
DECISION OF NATIONAL LABOR RELATIONS COMMISSION DECIDED
NOT IN ACCORD WITH LAW AND PUT AT NAUGHT ARTICLE 402 OF THE
CIVIL CODE.11
II RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT
RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION IS
BOUND BY THE FACTUAL FINDINGS OF THE LABOR ARBITER AS THE
LATTER WAS IN A BETTER POSITION TO OBSERVE THE DEMEANOR AND
DEPORTMENT OF THE WITNESSES IN THE CASE OF ASSOCIATION OF
INDEPENDENT UNIONS IN THE PHILIPPINES VERSUS NATIONAL
CAPITAL REGION (305 SCRA 233).12
III
PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT
TRUCKING CORPORATION.13
Three issues are to be resolved: (1) Whether or not an employer-employee
relationship existed between petitioners and respondent Sahot; (2) Whether or
not there was valid dismissal; and (3) Whether or not respondent Sahot is
entitled to separation pay.
Crucial to the resolution of this case is the determination of the first issue.
Before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.14
Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which
found that respondent Sahot was not an employee but was in fact, petitioners
industrial partner.15 It is contended that it was the Labor Arbiter who heard the
case and had the opportunity to observe the demeanor and deportment of the
parties. The same conclusion, aver petitioners, is supported by substantial
evidence.16 Moreover, it is argued that the findings of fact of the Labor Arbiter
was wrongly overturned by the NLRC when the latter made the following
pronouncement:
We agree with complainant that there was error committed by the Labor Arbiter
when he concluded that complainant was an industrial partner prior to 1994. A
computation of the age of complainant shows that he was only twenty-three
(23) years when he started working with respondent as truck helper. How can
we entertain in our mind that a twenty-three (23) year old man, working as a
truck helper, be considered an industrial partner. Hence we rule that
LABOR LAW I |96
complainant was only an employee, not a partner of respondents from the time
complainant started working for respondent.17
Thus, the NLRC and the CA did not err in reversing the finding of the Labor
Arbiter that private respondent was an industrial partner from 1958 to 1994.
On this point, we affirm the findings of the appellate court and the NLRC.
Private respondent Jaime Sahot was not an industrial partner but an employee
of petitioners from 1958 to 1994. The existence of an employer-employee
relationship is ultimately a question of fact 23 and the findings thereon by the
NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality
when supported by substantial evidence. Substantial evidence is such amount
of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.24
Private respondent, for his part, denies that he was ever an industrial partner of
petitioners. There was no written agreement, no proof that he received a share
in petitioners profits, nor was there anything to show he had any participation
with respect to the running of the business.18
The elements to determine the existence of an employment relationship are:
(a) the selection and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employers power to control the
employees conduct. The most important element is the employers control of
the employees conduct, not only as to the result of the work to be done, but
also as to the means and methods to accomplish it.19
As found by the appellate court, petitioners owned and operated a trucking
business since the 1950s and by their own allegations, they determined private
respondents wages and rest day.20 Records of the case show that private
respondent actually engaged in work as an employee. During the entire course
of his employment he did not have the freedom to determine where he would
go, what he would do, and how he would do it. He merely followed instructions
of petitioners and was content to do so, as long as he was paid his wages.
Indeed, said the CA, private respondent had worked as a truck helper and
driver of petitioners not for his own pleasure but under the latters control.
Article 176721 of the Civil Code states that in a contract of partnership two or
more persons bind themselves to contribute money, property or industry to a
common fund, with the intention of dividing the profits among themselves. 22 Not
one of these circumstances is present in this case. No written agreement exists
to prove the partnership between the parties. Private respondent did not
contribute money, property or industry for the purpose of engaging in the
supposed business. There is no proof that he was receiving a share in the
profits as a matter of course, during the period when the trucking business was
under operation. Neither is there any proof that he had actively participated in
the management, administration and adoption of policies of the business.
Time and again this Court has said that "if doubt exists between the evidence
presented by the employer and the employee, the scales of justice must be
tilted in favor of the latter."25 Here, we entertain no doubt. Private respondent
since the beginning was an employee of, not an industrial partner in, the
trucking business.
Coming now to the second issue, was private respondent validly dismissed by
petitioners?
Petitioners contend that it was private respondent who refused to go back to
work. The decision of the Labor Arbiter pointed out that during the conciliation
proceedings, petitioners requested respondent Sahot to report back for work.
However, in the same proceedings, Sahot stated that he was no longer fit to
continue working, and instead he demanded separation pay. Petitioners then
retorted that if Sahot did not like to work as a driver anymore, then he could be
given a job that was less strenuous, such as working as a checker. However,
Sahot declined that suggestion. Based on the foregoing recitals, petitioners
assert that it is clear that Sahot was not dismissed but it was of his own volition
that he did not report for work anymore.
In his decision, the Labor Arbiter concluded that:
While it may be true that respondents insisted that complainant continue
working with respondents despite his alleged illness, there is no direct
evidence that will prove that complainants illness prevents or incapacitates him
from performing the function of a driver. The fact remains that complainant
suddenly stopped working due to boredom or otherwise when he refused to
work as a checker which certainly is a much less strenuous job than a driver.26
LABOR LAW I |97
But dealing the Labor Arbiter a reversal on this score the NLRC, concurred in
by the Court of Appeals, held that:
While it was very obvious that complainant did not have any intention to report
back to work due to his illness which incapacitated him to perform his job, such
intention cannot be construed to be an abandonment. Instead, the same
should have been considered as one of those falling under the just causes of
terminating an employment. The insistence of respondent in making
complainant work did not change the scenario.
It is worthy to note that respondent is engaged in the trucking business where
physical strength is of utmost requirement (sic). Complainant started working
with respondent as truck helper at age twenty-three (23), then as truck driver
since 1965. Complainant was already fifty-nine (59) when the complaint was
filed and suffering from various illness triggered by his work and age.
x x x27
In termination cases, the burden is upon the employer to show by substantial
evidence that the termination was for lawful cause and validly made. 28 Article
277(b) of the Labor Code puts the burden of proving that the dismissal of an
employee was for a valid or authorized cause on the employer, without
distinction whether the employer admits or does not admit the dismissal. 29 For
an employees dismissal to be valid, (a) the dismissal must be for a valid cause
and (b) the employee must be afforded due process.30
Article 284 of the Labor Code authorizes an employer to terminate an
employee on the ground of disease, viz:
Art. 284. Disease as a ground for termination- An employer may terminate the
services of an employee who has been found to be suffering from any disease
and whose continued employment is prohibited by law or prejudicial to his
health as well as the health of his co-employees: xxx
However, in order to validly terminate employment on this ground, Book VI,
Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code
requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a
disease and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, the employer shall not terminate
his employment unless there is a certification by competent public health
authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment. If
the disease or ailment can be cured within the period, the employer shall not
terminate the employee but shall ask the employee to take a leave. The
employer shall reinstate such employee to his former position immediately
upon the restoration of his normal health. (Italics supplied).
As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC, 31 the
requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent of the
employees illness and thus defeat the public policy in the protection of labor.
In the case at bar, the employer clearly did not comply with the medical
certificate requirement before Sahots dismissal was effected. In the same case
of Sevillana vs. I.T. (International) Corp., we ruled:
Since the burden of proving the validity of the dismissal of the employee rests
on the employer, the latter should likewise bear the burden of showing that the
requisites for a valid dismissal due to a disease have been complied with. In
the absence of the required certification by a competent public health authority,
this Court has ruled against the validity of the employees dismissal. It is
therefore incumbent upon the private respondents to prove by the quantum of
evidence required by law that petitioner was not dismissed, or if dismissed, that
the dismissal was not illegal; otherwise, the dismissal would be unjustified. This
Court will not sanction a dismissal premised on mere conjectures and
suspicions, the evidence must be substantial and not arbitrary and must be
founded on clearly established facts sufficient to warrant his separation from
work.32
In addition, we must likewise determine if the procedural aspect of due process
had been complied with by the employer.
From the records, it clearly appears that procedural due process was not
observed in the separation of private respondent by the management of the
trucking company. The employer is required to furnish an employee with two
written notices before the latter is dismissed: (1) the notice to apprise the
employee of the particular acts or omissions for which his dismissal is sought,
LABOR LAW I |98
which is the equivalent of a charge; and (2) the notice informing the employee
of his dismissal, to be issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense. 33 These, the petitioners
failed to do, even only for record purposes. What management did was to
threaten the employee with dismissal, then actually implement the threat when
the occasion presented itself because of private respondents painful left thigh.
All told, both the substantive and procedural aspects of due process were
violated. Clearly, therefore, Sahots dismissal is tainted with invalidity.
On the last issue, as held by the Court of Appeals, respondent Jaime Sahot is
entitled to separation pay. The law is clear on the matter. An employee who is
terminated because of disease is entitled to "separation pay equivalent to at
least one month salary or to one-half month salary for every year of service,
whichever is greater xxx."34Following the formula set in Art. 284 of the Labor
Code, his separation pay was computed by the appellate court at P2,080 times
36 years (1958 to 1994) or P74,880. We agree with the computation, after
noting that his last monthly salary was P4,160.00 so that one-half thereof is
P2,080.00. Finding no reversible error nor grave abuse of discretion on the part
of appellate court, we are constrained to sustain its decision. To avoid further
delay in the payment due the separated worker, whose claim was filed way
back in 1994, this decision is immediately executory. Otherwise, six percent
(6%) interest per annum should be charged thereon, for any delay, pursuant to
provisions of the Civil Code.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals
dated February 29, 2000 is AFFIRMED. Petitioners must pay private
respondent Jaime Sahot his separation pay for 36 years of service at the rate
of one-half monthly pay for every year of service, amounting to P74,880.00,
with interest of six per centum (6%) per annum from finality of this decision until
fully paid.
Costs against petitioners. SO ORDERED.
THIRD DIVISION
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA
(Labor Arbiter, Department of Labor and Employment, National Capital
Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP
and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO
Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA,
ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS,
MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA
ALCOCEBA and MARIA ANGELES, respondents.
FERNAN, C.J.:
This petition for certiorari involving two separate cases filed by private
respondents against herein petitioners assails the decision of respondent
National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled
"Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati
Haberdashery and/or Toppers Makati, et al." and NLRC CASE No. 2-428-85
entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al.
v. Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly
heard and decided aforesaid cases, finding: (a) petitioners guilty of illegal
dismissal and ordering them to reinstate the dismissed workers and (b) the
existence of employer-employee relationship and granting respondent workers
by reason thereof their various monetary claims.
The undisputed facts are as follows:
Individual complainants, private respondents herein, have been working for
petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters
(manlililip) and "plantsadoras". They are paid on a piece-rate basis except
Maria Angeles and Leonila Serafina who are paid on a monthly basis. In
addition to their piece-rate, they are given a daily allowance of three (P 3.00)
pesos provided they report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or
7:00 p.m. from Monday to Saturday and during peak periods even on Sundays
and holidays.
NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b)
underpayment of living allowance; (c) non-payment of overtime work; (d) nonpayment of holiday pay; (e) non-payment of service incentive pay; (f) 13th
month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4
and 5. 1
During the pendency of NLRC NCR Case No. 7-2603-84, private respondent
Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner
Haberdashery, an open package which was discovered to contain a "jusi"
barong tagalog. When confronted, Pelobello replied that the same was ordered
by respondent Casimiro Zapata for his customer. Zapata allegedly admitted
that he copied the design of petitioner Haberdashery. But in the afternoon,
when again questioned about said barong, Pelobello and Zapata denied
ownership of the same. Consequently a memorandum was issued to each of
them to explain on or before February 4, 1985 why no action should be taken
against them for accepting a job order which is prejudicial and in direct
competition with the business of the company. 2 Both respondents allegedly did
not submit their explanation and did not report for work. 3 Hence, they were
dismissed by petitioners on February 4, 1985. They countered by filing a
complaint for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on
February 5, 1985. 4
On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2428-85 finding respondents guilty of illegal dismissal and ordering them to
reinstate Dioscoro Pelobello and Casimiro Zapata to their respective or
similar positions without loss of seniority rights, with full backwages from
July 4, 1985 up to actual reinstatement. The charge of unfair labor practice
is dismissed for lack of merit.
In NLRC NCR Case No. 7-26030-84, the complainants' claims for
underpayment re violation of the minimum wage law is hereby ordered
dismissed for lack of merit.
Respondents are hereby found to have violated the decrees on the cost of
living allowance, service incentive leave pay and the 13th Month Pay. In
view thereof, the economic analyst of the Commission is directed to
compute the monetary awards due each complainant based on the
work regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional
allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is
forfeited when they arrive at or after 9:30 a.m. 11
Since private respondents are regular employees, necessarily the argument
that they are independent contractors must fail. As established in the preceding
paragraphs, private respondents did not exercise independence in their own
methods, but on the contrary were subject to the control of petitioners from the
beginning of their tasks to their completion. Unlike independent contractors
who generally rely on their own resources, the equipment, tools, accessories,
and paraphernalia used by private respondents are supplied and owned by
petitioners. Private respondents are totally dependent on petitioners in all these
aspects.
Coming now to the second issue, there is no dispute that private respondents
are entitled to the Minimum Wage as mandated by Section 2(g) of Letter of
Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which
explicitly states that, "All employees paid by the result shall receive not less
than the applicable new minimum wage rates for eight (8) hours work a day,
except where a payment by result rate has been established by the Secretary
of Labor. ..." 12No such rate has been established in this case.
But all these notwithstanding, the question as to whether or not there is in fact
an underpayment of minimum wages to private respondents has already been
resolved in the decision of the Labor Arbiter where he stated: "Hence, for lack
of sufficient evidence to support the claims of the complainants for alleged
violation of the minimum wage, their claims for underpayment re violation of the
Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce
fall." 13
The records show that private respondents did not appeal the above ruling of
the Labor Arbiter to the NLRC; neither did they file any petition raising that
issue in the Supreme Court. Accordingly, insofar as this case is concerned, that
issue has been laid to rest. As to private respondents, the judgment may be
said to have attained finality. For it is a well-settled rule in this jurisdiction that
"an appellee who has not himself appealed cannot obtain from the appellate
court-, any affirmative relief other than the ones granted in the decision of the
court below. " 14
activities. Assuming that such acts do not constitute abandonment of their jobs
as insisted by private respondents, their blatant disregard of their employer's
memorandum is undoubtedly an open defiance to the lawful orders of the latter,
a justifiable ground for termination of employment by the employer expressly
provided for in Article 283(a) of the Labor Code as well as a clear indication of
guilt for the commission of acts inimical to the interests of the employer,
another justifiable ground for dismissal under the same Article of the Labor
Code, paragraph (c). Well established in our jurisprudence is the right of an
employer to dismiss an employee whose continuance in the service is inimical
to the employer's interest. 16
In fact the Labor Arbiter himself to whom the explanation of private
respondents was submitted gave no credence to their version and found their
excuses that said barong tagalog was the one they got from the embroiderer
for the Assistant Manager who was investigating them, unbelievable.
Under the circumstances, it is evident that there is no illegal dismissal of said
employees. Thus, We have ruled that:
No employer may rationally be expected to continue in employment a
person whose lack of morals, respect and loyalty to his employer, regard
for his employer's rules, and appreciation of the dignity and responsibility of
his office, has so plainly and completely been bared.
That there should be concern, sympathy, and solicitude for the rights and
welfare of the working class, is meet and proper. That in controversies
between a laborer and his master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and writings should be
resolved in the former's favor, is not an unreasonable or unfair rule. But
that disregard of the employer's own rights and interests can be justified by
that concern and solicitude is unjust and unacceptable. (Stanford
Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988] ).
The law is protecting the rights of the laborer authorizes neither oppression nor
self-destruction of the employer.17 More importantly, while the Constitution is
committed to the policy of social justice and the protection of the working class,
it should not be supposed that every labor dispute will automatically be decided
in favor of labor. 18
Finally, it has been established that the right to dismiss or otherwise impose
discriplinary sanctions upon an employee for just and valid cause, pertains in
the first place to the employer, as well as the authority to determine the
existence of said cause in accordance with the norms of due process. 19
There is no evidence that the employer violated said norms. On the contrary,
private respondents who vigorously insist on the existence of employeremployee relationship, because of the supervision and control of their
employer over them, were the very ones who exhibited their lack of respect
and regard for their employer's rules.
Under the foregoing facts, it is evident that petitioner Haberdashery had valid
grounds to terminate the services of private respondents.
WHEREFORE, the decision of the National Labor Relations Commission dated
March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby
modified. The complaint filed by Pelobello and Zapata for illegal dismissal
docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and
legal bases. Award of service incentive leave pay to private respondents is
deleted.
SO ORDERED.
FIRST DIVISION
[G.R. No. 113542. February 24, 1998]
CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P.
COSTALES, JR. in his capacity as union president, petitioner,
vs.UNDERSECRETARY BIENVENIDO E. LAGUESMA and
CORFARM GRAINS, INC., respondents.
[G.R. No. 114911. February 24, 1998]
CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by
JUANITO P. COSTALES, JR., president, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC.
and/or
TEODY
C.
RAPISORA
and
HERMINIO
RABANG, respondents.
DECISION
PANGANIBAN, J.:
The Court reiterates some fundamental labor doctrines: (1) this Court may
review factual determinations where the findings of the med-arbiter conflict with
those
of
the
undersecretary
of
labor;
(2)
an
employeremployee relationship may be established by substantial evidence; (3)
procedural due process is satisfied by the grant of an opportunity to be heard
and an actual adversarial-type trial is not required; (4) the NLRC commits
grave abuse of discretion when it remands a case to the labor arbiter in spite of
ample pieces of evidence on record which are sufficient to decide the case
directly; and (5) where illegal dismissal is proven, the workers are entitled to
back wages and other similar benefits without deductions or conditions.
Statement of the Case
These doctrines are used by the Court in resolving these consolidated
petitions for certiorari under Rule 65, challenging the resolutions of
Undersecretary Bienvenido Laguesma and the National Labor Relations
Commission.
First Case
In G.R. No. 113542, hereafter referred to as the First Case, Petitioner
Caurdanetaan Piece Workers Union/Association (CPWU) prays for the
nullification and reversal of Undersecretary Laguesmas Order dated January 4,
1994 in OS-MA-A-8-119-93 (RO100-9207-RU-001), which granted Respondent
Corfarms motion for reconsideration and dismissed petitioners prayer for
further
under service. Finally, Corfarm submits that the OSGs position is negated by
the fact that petitioners members contracted for loading and unloading services
with respondent company when such work was available and when they felt
like it x x x.[31]
We rule for petitioners. Section 5, Rule 133 of the Rules of Court
mandates that in cases filed before administrative or quasi-judicial bodies, like
the Department of Labor, a fact may be established by substantial
evidence, i.e. that amount of evidence which a reasonable mind might accept
as adequate to justify a conclusion.[32] Also fundamental is the rule granting not
only respect but even finality to factual findings of the Department of Labor, if
supported by substantial evidence. Such findings are binding upon this Court,
unless petitioner is able to show that the secretary of labor (or the
undersecretary acting in his place) has arbitrarily disregarded or
misapprehended evidence before him to such an extent as to compel a
contrary conclusion if such evidence were properly appreciated. This is rooted
in the principle that this Court is not a trier of facts, and that the determinations
made by administrative bodies on matters falling within their respective fields of
specialization or expertise are accorded respect. [33] Also well-settled is the
doctrine that the existence of an employer-employee relationship is ultimately a
question of fact and that the findings thereon by the labor authorities shall be
accorded not only respect but even finality when supported by substantial
evidence.[34] Finally, in certiorariproceedings under Rule 65, this Court does not,
as a rule, evaluate the sufficiency of evidence upon which the labor officials
based their determinations. The inquiry is essentially limited to whether they
acted without or in excess of jurisdiction or with grave abuse of discretion.
[35]
However, this doctrine is not absolute. Where the labor officers findings are
contrary to those of the med-arbiter, the Court -- in the exercise of its equity
jurisdiction -- may wade into and reevaluate such findings, [36] which we now
embark on in this case.[37]
To determine the existence of an employer-employee relation, this Court
has consistently applied the four-fold test which has the following elements: (1)
the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4)
the power to control -- the last being the most important element. [38]
Our examination of the case records indubitably shows the presence of an
employer-employee relationship. Relying on the evidence adduced by the
petitioners, Respondent Laguesma himself affirmed the presence of such
connection. Thus, in his Order dated September 7, 1993, he astutely held: [39]
Anent the first issue, we find the annexes submitted by the
respondent company not enough to prove that herein petitioner is
warehouses to the cargo trucks and from the cargo trucks to the buyers. This
work is directly related, necessary and vital to the operations of
Corfarm. Moreover, Corfarm did not even allege, much less prove, that
petitioners members have substantial capital or investment in the form of tools,
equipment, machineries, [and] work premises, among others. Furthermore,
said respondent did not contradict petitioners allegation that it paid wages
directly to these workers without the intervention of any third-party independent
contractor. It also wielded the power of dismissal over petitioners; in fact, its
exercise of this power was the progenitor of the Second Case. Clearly, the
workers are not independent contractors.
Applying Article 280[41] of the Labor Code, we hold that the CPWU
members were regular employees of private respondent. Their tasks were
essential in the usual business of private respondent.
As we have ruled in an earlier case, the question of whether an employeremployee relationship exists in a certain situation has bedevilled the
courts. Businessmen, with the aid of lawyers, have tried to avoid or sidestep
such relationship, because that juridical vinculum engenders obligations
connected with workmens compensation, social security, medicare, minimum
wage, termination pay and unionism. [42] All too familiarly, Respondent Corfarm
sought refuge from these obligations. However, the records of this case clearly
support the existence of the juridical vinculum.
RJL Martinez Fishing Corporation,[43] cited by the solicitor general, is
relevant because petitioners members were also made to wait for loading and
unloading of cavans of palay to and from the storage areas and to and from the
milling areas.[44] This waiting time does not denigrate the regular employment of
petitioners members. As ruled in that case:[45]
x x x Besides, the continuity of employment is not the determining
factor, but rather whether the work of the laborer is part of the regular
business or occupation of the employer.(fn: Article 281, Labor Code,
as amended; Philippine Fishing Boat Officers and Engineer[s]
Union vs. Court of Industrial Relations, 112 SCRA 159 (1982). We are
thus in accord with the findings of respondent NLRC in this regard.
Although it may be that private respondents alternated their
employment on different vessels when they were not assigned to
petitioners boats, that did not affect their employee status. The
evidence also establishes that petitioners had a fleet of fishing
vessels with about 65 ship captains, and as private respondents
contended, when they finished with one vessel they were instructed
to wait for the next. As respondent NLRC had found:
We further find that the employer-employee relationship
between the parties herein is not co-terminous with each
loading and unloading job. As earlier shown, respondents
are engaged in the business of fishing. For this purpose,
they have a fleet of fishing vessels. Under this situation,
respondents activity of catching fish is a continuous process
and could hardly be considered as seasonal in nature. So
that the activities performed by herein complainants, i.e.
unloading the catch of tuna fish from respondents vessels
and then loading the same to refrigerated vans, are
necessary or desirable in the business of respondents. This
circumstance makes the employment of complainants a
regular one, in the sense that it does not depend on any
specific project or seasonal activity. (fn: NLRC Decision, p.
94, Rollo.)
Employer-Employee Relationship
Petitioner assails the NLRC for setting aside the labor arbiters decision
and remanding the case for further proceedings. Petitioner argues that the
order of remand will only prolong the agony of the 92 union members and their
families for living or existing without jobs and earnings to give them
support. Further, petitioner contends:[56]
It is axiomatic that in illegal dismissal cases, the employer always has the
burden of proof,[75] and his failure to discharge this duty results in a finding that
the dismissal was unjustified.[76] Having defaulted from filing its position paper,
Respondent Corfarm is deemed to have waived its right to present evidence
and counter the allegations of petitioners members.
In the same light, we sustain the labor arbiters holding in respect of unfair
labor practice.[77] As ruled by Labor Arbiter Rolando D. Gambito:[78]
The last issue: Instead of sitting down with the individual
complainants or the union officers to discuss their demands,
respondents resorted to mass lay-off of all the members of the union
and replaced them with outsiders. This is clearly a case of union
busting which Art. 248 of the Labor Code prohibits. Art. 248 provides
that It shall be unlawful for an employer to commit any of the
following unfair labor practice (a) To interfere with, restrain or coerce
employees in the exercise of their right to self-organization; (b) x x x
(c) To contract out service or functions being performed by union
members when such will interfere with, restrain or coerce employees
in the exercise of their rights to self-organization.
In view of recent jurisprudence, [79] we are correcting some items in the
labor arbiters decision. The thirteenth month pay awarded should be computed
for each year of service from the time each employee was hired up to the date
of his actual reinstatement. The same computation applies to the award of the
service incentive leave[80] and underpaid wages. Each employee is to be paid
the remaining underpaid wages from the date of his or her hiring in accordance
with the then prevailing wage legislations. Likewise, a refund of P12 shall be
computed for each day of service of each employee, to be reckoned from the
date such employee was hired. The damages awarded should be sustained
because the employer acted in bad faith. [81] Back wages are to be computed
from the date of dismissal up to the date of actual reinstatement without any
deductions or conditions. This is in consonance with Fernandez, et al. vs.
National Labor Relations Commission:[82]
THIRD DIVISION
On March 31, 1984, after the case was submitted for resolution, Labor Arbiter
Asisclo S. Coralde rendered a joint decision 5 dismissing all the complaints of
petitioners on a finding that a "joint fishing venture" and not one of employeremployee relationship existed between private respondent and petitioners.
From the adverse decision against them, petitioners appealed to the National
Labor Relations Commission.
Aside from seeking the dismissal of the petition on the ground that the decision
of the labor arbiter is now final and executory for failure of petitioners to file
their appeal with the NLRC within 10 calendar days from receipt of said
decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine
Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the Solicitor General claims
that the ruling of public respondent that a "joint fishing venture" exists between
private respondent and petitioners rests on the resolution of the Social Security
System (SSS) in a 1968 case, Case No. 708 (De Guzman Fishing Enterprises
vs. SSS), exempting De Guzman Fishing Enterprises, private respondent
herein, from compulsory coverage of the SSS on the ground that there is no
employer-employee relations between the boat-owner and the fishermen-crew
members following the doctrine laid down inPajarillo vs. SSS, 17 SCRA 1014
(1966). In applying to the case at bar the doctrine in Pajarillo vs. SSS, supra,
that there is no employer-employee relationship between the boat-owner and
the pilot and crew members when the boat-owner supplies the boat and
equipment while the pilot and crew members contribute the corresponding
labor and the parties get specific shares in the catch for their respective
contribution to the venture, the Solicitor General pointed out that the boatowners in the Pajarillo case, as in the case at bar, did not control the conduct of
the fishing operations and the pilot and crew members shared in the catch.
On May 30, 1985, the National Labor Relations Commission promulgated its
resolution 6 affirming the decision of the labor arbiter that a "joint fishing
venture" relationship existed between private respondent and petitioners.
Hence, the instant petition.
Petitioners assail the ruling of the public respondent NLRC that what exists
between private respondent and petitioners is a joint venture arrangement and
not an employer-employee relationship. To stress that there is an employeremployee relationship between them and private respondent, petitioners invite
attention to the following: that they were directly hired by private respondent
through its general manager, Arsenio de Guzman, and its operations manager,
Conrado de Guzman; that, except for Laurente Bautu, they had been employed
by private respondent from 8 to 15 years in various capacities; that private
respondent, through its operations manager, supervised and controlled the
conduct of their fishing operations as to the fixing of the schedule of the fishing
trips, the direction of the fishing vessel, the volume or number of tubes of the
fish-catch the time to return to the fishing port, which were communicated to
the patron/pilot by radio (single side band); that they were not allowed to join
other outfits even the other vessels owned by private respondent without the
permission of the operations manager; that they were compensated on
percentage commission basis of the gross sales of the fish-catch which were
delivered to them in cash by private respondent's cashier, Mrs. Pilar de
Guzman; and that they have to follow company policies, rules and regulations
imposed on them by private respondent.
Disputing the finding of public respondent that a "joint fishing venture" exists
between private respondent and petitioners, petitioners claim that public
respondent exceeded its jurisdiction and/or abused its discretion when it added
facts not contained in the records when it stated that the pilot-crew members
do not receive compensation from the boat-owners except their share in the
catch produced by their own efforts; that public respondent ignored the
who spend one (1) whole week or more 7 in the open sea performing their job
to earn a living to support their families, convince Us to adopt a more liberal
attitude in applying to petitioners the 10-calendar day rule in the filing of
appeals with the NLRC from the decision of the labor arbiter.
Records reveal that petitioners were informed of the labor arbiter's decision of
March 31, 1984 only on July 3,1984 by their non-lawyer representative during
the arbitration proceedings, Jose Dialogo who received the decision eight (8)
days earlier, or on June 25, 1984. As adverted to earlier, the circumstances
peculiar to petitioners' occupation as fishermen-crew members, who during the
pendency of the case understandably have to earn a living by seeking
employment elsewhere, impress upon Us that in the ordinary course of events,
the information as to the adverse decision against them would not reach them
within such time frame as would allow them to faithfully abide by the 10calendar day appeal period. This peculiar circumstance and the fact that their
representative is a non-lawyer provide equitable justification to conclude that
there is substantial compliance with the ten-calendar day rule of filing of
appeals with the NLRC when petitioners filed on July 10, 1984, or seven (7)
days after receipt of the decision, their appeal with the NLRC through
registered mail.
We have consistently ruled that in determining the existence of an employeremployee relationship, the elements that are generally considered are the
following (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employer's power to control
the employee with respect to the means and methods by which the work is to
be accomplished. 8 The employment relation arises from contract of hire,
express or implied. 9 In the absence of hiring, no actual employer-employee
relation could exist.
From the four (4) elements mentioned, We have generally relied on the socalled right-of-control test 10 where the person for whom the services are
performed reserves a right to control not only the end to be achieved but also
the means to be used in reaching such end. The test calls merely for the
existence of the right to control the manner of doing the work, not the actual
exercise of the right. 11
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as
authority for the ruling that a "joint fishing venture" existed between private
respondent and petitioners is not applicable in the instant case. There is neither
light of control nor actual exercise of such right on the part of the boat-owners
in the Pajarillo case, where the Court found that the pilots therein are not under
the order of the boat-owners as regards their employment; that they go out to
sea not upon directions of the boat-owners, but upon their own volition as to
when, how long and where to go fishing; that the boat-owners do not in any
way control the crew-members with whom the former have no relationship
whatsoever; that they simply join every trip for which the pilots allow them,
without any reference to the owners of the vessel; and that they only share in
their own catch produced by their own efforts.
The aforementioned circumstances obtaining in Pajarillo case do not exist in
the instant case. The conduct of the fishing operations was undisputably shown
by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be
under the control and supervision of private respondent's operations manager.
Matters dealing on the fixing of the schedule of the fishing trip and the time to
return to the fishing port were shown to be the prerogative of private
respondent. 12 While performing the fishing operations, petitioners received
instructions via a single-side band radio from private respondent's operations
manager who called the patron/pilot in the morning. They are told to report their
activities, their position, and the number of tubes of fish-catch in one
day. 13 Clearly thus, the conduct of the fishing operations was monitored by
private respondent thru the patron/pilot of 7/B Sandyman II who is responsible
for disseminating the instructions to the crew members.
The conclusion of public respondent that there had been no change in the
situation of the parties since 1968 when De Guzman Fishing Enterprises,
private respondent herein, obtained a favorable judgment in Case No. 708
exempting it from compulsory coverage of the SSS law is not supported by
evidence on record. It was erroneous for public respondent to apply the factual
situation of the parties in the 1968 case to the instant case in the light of the
changes in the conditions of employment agreed upon by the private
respondent and petitioners as discussed earlier.
Records show that in the instant case, as distinguished from the Pajarillo case
where the crew members are under no obligation to remain in the outfit for any
definite period as one can be the crew member of an outfit for one day and be
the member of the crew of another vessel the next day, the herein petitioners,
on the other hand, were directly hired by private respondent, through its
general manager, Arsenio de Guzman, and its operations manager, Conrado
de Guzman and have been under the employ of private respondent for a period
LABOR LAW I |117
of 8-15 years in various capacities, except for Laurente Bautu who was hired
on August 3, 1983 as assistant engineer. Petitioner Alipio Ruga was hired on
September 29, 1974 as patron/captain of the fishing vessel; Eladio Calderon
started as a mechanic on April 16, 1968 until he was promoted as chief
engineer of the fishing vessel; Jose Parma was employed on September 29,
1974 as assistant engineer; Jaime Barbin started as a pilot of the motor boat
until he was transferred as a master fisherman to the fishing vessel 7/B
Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while
Eleuterio Barbin was hired as winchman on April 15, 1976.
While tenure or length of employment is not considered as the test of
employment, nevertheless the hiring of petitioners to perform work which is
necessary or desirable in the usual business or trade of private respondent for
a period of 8-15 years since 1968 qualify them as regular employees within the
meaning of Article 281 of the Labor Code as they were indeed engaged to
perform activities usually necessary or desirable in the usual fishing business
or occupation of private respondent. 14
Aside from performing activities usually necessary and desirable in the
business of private respondent, it must be noted that petitioners received
compensation on a percentage commission based on the gross sale of the
fish-catch i.e. 13% of the proceeds of the sale if the total proceeds exceeded
the cost of the crude oil consumed during the fishing trip, otherwise only 10%
of the proceeds of the sale. Such compensation falls within the scope and
meaning of the term "wage" as defined under Article 97(f) of the Labor Code,
thus:
(f) "Wage" paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered, and
included the fair and reasonable value, as determined by the Secretary of
Labor, of board, lodging, or other facilities customarily furnished by the
employer to the employee. . . .
The claim of private respondent, which was given credence by public
respondent, that petitioners get paid in the form of share in the fish-catch which
the patron/pilot as head of the team distributes to his crew members in
held that fishermen crew members who were recruited by one master
fisherman locally known as "maestro" in charge of recruiting others to complete
the crew members are considered employees, not industrial partners, of the
boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA 379 (1973) where
petitioner therein, Dr. Agustin Abong, owner of the fishing boat, claimed that he
was not the employer of the fishermen crew members because of an alleged
partnership agreement between him, as financier, and Simplicio Panganiban,
as his team leader in charge of recruiting said fishermen to work for him, we
affirmed the finding of the WCC that there existed an employer-employee
relationship between the boat-owner and the fishermen crew members not only
because they worked for and in the interest of the business of the boat-owner
but also because they were subject to the control, supervision and dismissal of
the boat-owner, thru its agent, Simplicio Panganiban, the alleged "partner" of
Dr. Abong; that while these fishermen crew members were paid in kind, or by
"pakiao basis" still that fact did not alter the character of their relationship with
Dr. Abong as employees of the latter.
In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial
Relations, 112 SCRA 159 (1982), we held that the employer-employee
relationship between the crew members and the owners of the fishing vessels
engaged in deep sea fishing is merely suspended during the time the vessels
are drydocked or undergoing repairs or being loaded with the necessary
provisions for the next fishing trip. The said ruling is premised on the principle
that all these activities i.e., drydock, repairs, loading of necessary provisions,
form part of the regular operation of the company fishing business.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The
questioned resolution of the National Labor Relations Commission dated May
30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered
to reinstate petitioners to their former positions or any equivalent positions with
3-year backwages and other monetary benefits under the law. No
pronouncement as to costs.
SO ORDERED.
FIRST DIVISION
Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to
increase their salary only if they signed a blank employment contract. As
petitioners refused to sign, private respondents forced Enero to go on leave in
June 1992, then refused to take him back when he reported for work on 20 July
1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to
21 June 1992, but was returned on 22 June 1992. He was again asked to sign
a blank employment contract, and when he still refused, private respondents
terminated his services on 20 July 1992. 5 Petitioners thus sued for illegal
dismissal 6 before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter VIVA)
is the trade name of Viva Productions, Inc., and that it is primarily engaged in
the distribution and exhibition of movies but not in the business of making
movies; in the same vein, private respondent Vic del Rosario is merely an
executive producer,i.e., the financier who invests a certain sum of money for
the production of movies distributed and exhibited by VIVA. 7
Private respondents assert that they contract persons called "producers"
also referred to as "associate producers" 8 to "produce" or make movies for
private respondents; and contend that petitioners are project employees of the
association producers who, in turn, act as independent contractors. As such,
there is no employer-employee relationship between petitioners and private
respondents.
Private respondents further contend that it was the associate producer of the
film "Mahirap Maging Pogi," who hired petitioner Maraguinot. The movie shot
from 2 July up to 22 July 1992, and it was only then that Maraguinot was
released upon payment of his last salary, as his services were no longer
needed. Anent petitioner Enero, he was hired for the movie entitled "Sigaw ng
Puso," later re-tired "Narito and Puso." He went on vacation on 8 June 1992,
and by the time he reported for work on 20 July 1992, shooting for the movie
had already been completed.9
After considering both versions of the facts, the Labor Arbiter found as follows:
On the first issue, this Office rules that complainants are the employees of
the respondents. The producer cannot be considered as an independent
contractor but should be considered only as a labor-only contractor and as
such, acts as a mere agent of the real employer, the herein respondent.
Respondents even failed to name and specify who are the producers. Also,
it is an admitted fact that the complainants received their salaries from the
respondents. The case cited by the respondents,Rosario Brothers,
Inc. vs. Ople, 131 SCRA 72 does not apply in this case.
LABOR LAW I |120
It is very clear also that complainants are doing activities which are
necessary and essential to the business of the respondents, that of moviemaking. Complainant Maraguinot worked as an electrician while
complainant Enero worked as a crew [member]. 10
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as
follows:
WHEREFORE, judgment is hereby rendered declaring that complainants
were illegally dismissed.
Respondents are hereby ordered to reinstate complainant to their former
positions without loss [of] seniority rights and pay their backwages
starting July 21, 1992 to December 31, 1993 temporarily computed in the
amount of P38,000.00 for complainant Paulino Enero and P46,000.00 for
complainant Alejandro Maraguinot, Jr. and thereafter until actually
reinstated.
Respondents are ordered to pay also attorney's fees equivalent to ten
(10%) and/or P8,400.00 on top of the award. 11
Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No.
006195-94). In its decision 12 of 10 February 1995, the NLRC found the
following circumstances of petitioners' work "clearly established:"
1. Complainants [petitioners herein] were hired for specific movie projects
and their employment wasco-terminus with each movie project the
completion/termination of which are pre-determined, such fact being made
known to complainants at the time of their engagement.
xxx xxx xxx
2 Each shooting unit works on one movie project at a time. And the work of
the shooting units, which work independently from each other, are not
continuous in nature but depends on the availability of movie projects.
3. As a consequence of the non-continuous work of the shooting units, the
total working hours logged by complainants in a month show extreme
variations. . . For instance, complainant Maraguinot worked for
only 1.45 hours in June 1991 but logged a total of 183.25 hours in January
1992. Complainant Enero logged a total of only 31.57 hours in September
1991 but worked for 183.35hours the next month, October 1991.
4. Further shown by respondents is the irregular work schedule of
complainants on a daily basis. Complainant Maraguinot was supposed to
report on 05 August 1991 but reported only on 30 August 1991, or a gap of
prohibited from working with other movie companies; and ask that the facts be
viewed in the context of the peculiar characteristics of the movie industry.
The Office of the Solicitor General (OSG) is convinced that this petition is
improper since petitioners raise questions of fact, particularly, the NLRC's
finding that petitioners were project employees, a finding supported by
substantial evidence; and submits that petitioners' reliance on Article 280 of the
Labor Code to support their contention that they should be deemed regular
employees is misplaced, as said section "merely distinguishes between two
types of employees, i.e., regular employees and casual employees, for
purposes of determining the right of an employee to certain benefits."
The OSG likewise rejects petitioners' contention that since they were hired not
for one project, but for a series of projects, they should be deemed regular
employees. Citing Mamansag v. NLRC, 14 the OSG asserts that what matters is
that there was a time-frame for each movie project made known to petitioners
at the time of their hiring. In closing, the OSG disagrees with petitioners' claim
that the NLRC's classification of the movie producers as independent
contractors had no basis in fact and in law, since, on the contrary, the NLRC
"took pains in explaining its basis" for its decision.
As regards the propriety of this action, which the Office of the Solicitor General
takes issue with, we rule that a special civil action for certiorari under Rule 65
of the Rules of Court is the proper remedy for one who complains that the
NLRC acted in total disregard of evidence material to or decisive of the
controversy. 15 In the instant case, petitioners allege that the NLRC's
conclusions have no basis in fact and in law, hence the petition may not be
dismissed on procedural or jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of
whether an employer-employee relationship existed between petitioners and
private respondents or any one of private respondents. If there was none, then
this petition has no merit; conversely, if the relationship existed, then petitioners
could have been unjustly dismissed.
A related question is whether private respondents are engaged in the business
of making motion pictures. Del Rosario is necessarily engaged in such
business as he finances the production of movies. VIVA, on the other hand,
alleges that it does not "make" movies, but merely distributes and exhibits
motion pictures. There being no further proof to this effect, we cannot rely on
this self-serving denial. At any rate, and as will be discussed below, private
respondents' evidence even supports the view that VIVA is engaged in the
business of making movies.
We now turn to the critical issues. Private respondents insist that petitioners
are project employees of associate producers who, in turn, act as independent
contractors. It is settled that the contracting out of labor is allowed only in case
of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code describes permissible job contracting in this
wise:
Sec. 8. Job contracting. There is job contracting permissible under the
Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes
the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of
tools, equipment, machineries, work premises, and other materials which
are necessary in the conduct of his business.
Assuming that the associate producers are job contractors, they must then be
engaged in the business of making motion pictures. As such, and to be a job
contractor under the preceding description, associate producers must have
tools, equipment, machinery, work premises, and other materials necessary to
make motion pictures. However, the associate producers here have none of
these. Private respondents' evidence reveals that the movie-making equipment
are supplied to the producers and owned by VIVA. These include
generators, 16 cables and wooden platforms, 17 cameras and "shooting
equipment;" 18 in fact, VIVA likewise owns the trucks used to transport the
equipment. 19 It is thus clear that the associate producer merely leases the
equipment from VIVA. 20 Indeed, private respondents' Formal Offer of
Documentary Evidence stated one of the purposes of Exhibit "148" as:
To prove further that the independent Producers rented Shooting Unit No. 2
from Viva to finish their films. 21
While the purpose of Exhibits "149," "149-A" and "149-B" was:
[T]o prove that the movies of Viva Films were contracted out to the different
independent Producers who rented Shooting Unit No. 3 with a fixed budget
and time-frame of at least 30 shooting days or 45 days whichever comes
first. 22
Private respondent further narrated that VIVA's generators broke down during
petitioners' last movie project, which forced the associate producer concerned
LABOR LAW I |122
to rent generators, equipment and crew from another company.23 This only
shows that the associate producer did not have substantial capital nor
investment in the form of tools, equipment and other materials necessary for
making a movie. Private respondents in effect admit that their producers,
especially petitioners' last producer, are not engaged in permissible job
contracting.
If private respondents insist that the associate producers are labor contractors,
then these producers can only be "labor-only" contractors, defined by the Labor
Code as follows:
Art. 106. Contractor or subcontractor. . . .
There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such persons are performing activities
which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
A more detailed description is provided by Section 9, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing
activities which are directly related to the principal business or operations
of the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the
person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall
determine through appropriate orders whether or not the contracting out of
labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the
The Supervising PRODUCER acts as the eyes and ears of the company and
of the Executive Producer to monitor the progress of the PRODUCER's work
accomplishment. He is there usually in the field doing the rounds of
inspection to see if there is any problem that the PRODUCER is
encountering and to assist in threshing out the same so that the film project
will be finished on schedule. He supervises about 3 to 7 movie projects
simultaneously [at] any given time by coordinating with each film
"PRODUCER". The Project Accountant on the other hand assists the
PRODUCER in monitoring the actual expenses incurred because the
company wants to insure that any additional budget requested by the
PRODUCER is really justified and warranted especially when there is a
change of original plans to suit the tast[e] of the company on how a certain
scene must be presented to make the film more interesting and more
commercially viable. (emphasis supplied).
VIVA's control is evident in its mandate that the end result must be a "quality
film acceptable to the company." The means and methods to accomplish the
result are likewise controlled by VIVA, viz., the movie project must be finished
within schedule without exceeding the budget, and additional expenses must
be justified; certain scenes are subject to change to suit the taste of the
company; and the Supervising Producer, the "eyes and ears" of VIVA and del
Rosario, intervenes in the movie-making process by assisting the associate
producer in solving problems encountered in making the film.
It may not be validly argued then that petitioners are actually subject to the
movie director's control, and not VIVA's direction. The director merely instructs
petitioners on how to better comply with VIVA's requirements to ensure that a
quality film is completed within schedule and without exceeding the budget. At
bottom, the director is akin to a supervisor who merely oversees the activities
of rank-and-file employees with control ultimately resting on the employer.
Moreover, appointment slips 28 issued to all crew members state:
During the term of this appointment you shall comply with the
duties and responsibilities of your position as well as observe
the rules and regulations promulgated by your superiors and
by Top Management.
The words "supervisors" and "Top Management" can only refer to the
"supervisors" and "Top Management" of VIVA. By commanding crew members
to observe the rules and regulations promulgated by VIVA, the appointment
slips only emphasize VIVA's control over petitioners.
APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled
"MANAMBIT". This appointment shall be effective upon the
commencement of the said project and shall continue to be effective until
the completion of the same.
For your services you shall receive the daily/weekly/monthly compensation
of P812.50.
During the term of this appointment you shall comply with the duties and
responsibilities of your position as well as observe the rules and
regulations promulgated by your superiors and by Top Management. Very
truly yours, (an illegible signature)
CONFORME:
_________________
Name of appointee
Signed in the presence of:
___________________
Notably, nowhere in the appointment slip does it appear that it was the
producer or associate producer who hired the crew members; moreover, it is
VIVA's corporate name which appears on the heading of the appointment slip.
What likewise tells against VIVA is that it paid petitioners' salaries as evidenced
by vouchers, containing VIVA's letterhead, for that purpose. 30
All the circumstances indicate an employment relationship between petitioners
and VIVA alone, thus the inevitable conclusion is that petitioners are employees
only of VIVA.
LABOR LAW I |124
4/4/90
5/18/90
JUN CHING
NG
6/26/90
10/20/90
E. MANUEL
(2nd
8/10/90
9/23/90
E. MANUEL
ANG
9/6/90
10/20/90
JUN CHING
10/25/90
12/8/90
12/9/90
1/22/91
SANDY S
1/29/91
3/14/90
JUN CHING
3/15/91
4/6/91
JUN CHING
5/7/91
6/20/91
M. ONG
6/23/91
8/6/91
JUN CHING
8/18/91
10/2/91
SANDY S.
ILM
DATE
STARTED
DATE
COMPLETED
ASSOCIATE DARNA
PRODUCER
10/4/91
11/18/91
E. MANUEL
12/12/91
E. MANUEL
1/3/90
2/16/90
11/20/91
1/27/92
BOBBY GRIMALT
1/26/90
3/11/90
MAGNONG REHAS
EDITH MANUEL
12/13/91
AIKOT-IKOT
1/28/92
3/12/92
B. GRIMALT
2/13/90
3/29/90
M. ONG
4/29/92
M. ONG
3/12/90
4/3/90
HIRAM NA MUKHA
E. MANUEL
3/15/92
5/1/92
6/14/92
M. ONG
4/6/90
5/20/90
M. ONG
KAHIT AKO'Y BUSABOS
5/28/92
7/7/92
JERRY OHARA
3/4/92
3/26/92
M. ONG
BATANG RILES
3/9/92
3/30/92
BOBBY GRIMALT
3/22/92
5/6/92
B. GRIMALT
5/7/92
5/29/92
B. GRIMALT
IGAW NG PUSO
7/1/92
8/4/92
M. ONG
8/15/92
9/5/92
NGAYON AT KAILANMAN
9/6/92
10/20/92
3/14/90
4/27/90
JUN CHING
4/21/90
5/13/90
RUTH GRUTA
ADBOY
6/15/90
7/29/90
EDITH MANUEL
7/30/90
8/21/90
E. MANUEL
9/2/90
10/16/90
RUTH GRUTA
10/17/90
11/8/90
RUTH GRUTA
11/9/90
12/1/90
R. GRUTA
OYONG MANALAC
11/30/90
1/14/91
MARIVIC ONG
UMANAP KA NG PANGET
1/20/91
3/5/91
EDITH MANUEL
. PANGET(2nd contract)
3/10/91
4/23/91
E. MANUEL
5/22/91
7/5/91
M. ONG
7/7/91
8/20/91
M. ONG
TONG GAMOL
8/30/91
10/13/91
M. ONG
10/14/91
11/27/91
M. ONG
12/28/91
2/10/92
E. MANUEL
analogy
the
vase
of Industrial-Commercial-Agricultural
Workers
Organization v. CIR [16 SCRA 526, 567-568 (1966)] which deals with
regular seasonal employees. There we held: . . .
Truly, the cessation of construction activities at the end of every project is a
foreseeable suspension of work. Of course, no compensation can be
demanded from the employer because the stoppage of operations at the
end of a project and before the start of a new one is regular and expected
by both parties to the labor relations. Similar to the case of regular
seasonal employees, the employment relation is not severed by merely
being suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The
employees are, strictly speaking, not separated from services but merely
on leave of absence without pay until they are reemployed. Thus we
cannot affirm the argument that non-payment of salary or non-inclusion in
the payroll and the opportunity to seek other employment denote project
employment. 37 (emphasis supplied)
While Lao admittedly involved the construction industry, to which Policy
Instruction No. 20/Department Order No. 19 38 regarding work pools specifically
applies, there seems to be no impediment to applying the underlying principles
to industries other than the construction industry. 39 Neither may it be argued
that a substantial distinction exists between the projects undertaken in the
construction industry and the motion picture industry. On the contrary,
the raison d' etre of both industries concern projects with a foreseeable
suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an
employer by imposing a duty to re-hire a project employee even after
completion of the project for which he was hired. The import of this decision is
not to impose a positive and sweeping obligation upon the employer to re-hire
project employees. What this decision merely accomplishes is a judicial
recognition of the employment status of a project or work pool employee in
accordance with what is fait accompli, i.e., the continuous re-hiring by the
employer of project or work pool employees who perform tasks necessary or
desirable to the employer's usual business or trade. Let it not be said that this
decision "coddles" labor, for as Lao has ruled, project or work pool employees
who have gained the status of regular employees are subject to the "no workno pay" principle, to repeat:
A work pool may exist although the workers in the pool do not receive salaries
and are free to seek other employment during temporary breaks in the
business, provided that the worker shall be available when called to report for a
project. Although primarily applicable to regular seasonal workers, this set-up
THIRD DIVISION
[G.R. No. 129076. November 25, 1998]
ORLANDO FARM GROWERS ASSOCIATION/GLICERIO AOVER, petitioner,
vs. THE
HONORABLE
NATIONAL
LABOR
RELATIONS
COMMISSION (FIFTH DIVISION), ANTONIO PAQUIT, ESTHER
BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO, REBECCA
MOREN, MARCELINA HONTIVEROS, MARTIN ORDONO, TITO
ORDONO, FE ORDONO, ERNIE COLON, EUSTIQUIO GELDO,
DANNY SAM, JOEL PIAMONTE, FEDERICO PASTOLERO,
VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN, JR.
and BERNARDO OPERIO, respondents.
After respondents were dismissed on various dates from January 8, 1993 to July
30, 1994, several complaints were filed against petitioner for illegal dismissal and
monetary benefits. Based on similar grounds, the same were consolidated in the office
of Labor Arbiter Newton R. Sancho who, in a decision dated September 6, 1995,
ordered their reinstatement, viz:
"WHEREFORE, judgment is hereby rendered declaring the dismissal of the 20 abovenamed complainants ILLEGAL, and ordering respondents Orlando Farms Growers
Association/Glicerio Anover to REINSTATE them immediately to their former or
equivalent positions, and to PAY individual complainants their respective backwages
and other benefits (wage differentials, 13th month pay and holiday pay) appearing
opposite their names above set forth, including moral damages and attorney's fees, in
the total amount of P1,047,720.92 only.
DECISION
ROMERO, J.:
The case of Loran Paquit and Lovilla Dorlones [1] is dropped for having been amicably
settled.
In case of appeal, backwages and other benefits shall accrue but in no case exceeding 3
years, without any qualification or deduction.
SO ORDERED."[2]
On appeal, the National Labor Relations Commission (NLRC) affirmed the
same in toto in a decision dated December 26, 1996. Its motion for reconsideration
having been denied on February 25, 1997, petitioner filed the instant petition
for cetiorari.
Petitioner alleged that the NLRC erred in finding that respondents were its
employees and not of the individual landownners which fact can easily be deduced
from the payments made by the latter of respondent's Social Security System (SSS)
contributions. Moreover, it could have never exercised the power of control over them
with regard to the manner and method by which the work was to be accomplished,
which authority remain vested with the landowners despite becoming members thereof.
The arguments adduced before us do not warrant the nullification of the findings
made by the Labor Arbiter and the NLRC as the determination of the existence of an
employer-employee relationship between the party-litigants, being a question of fact, is
amply supported by substantial evidence, as can be gathered from a perfunctory
reading, not only of the pleadings submitted, but from the assailed decision, as
well. Thus, the authority of this Court to review the findings of the NLRC is limited to
allegations of lack of jurisdiction or grave abuse of discretion.
The contention that petitioner, being an unregistered association and having been
formed solely to serve as an effective medium for dealing collectively with Stanfilco,
does not exist in law and, therefore, cannot be considered an employer, is
misleading. This assertion can easily be dismissed by reference to Article 212(e) of the
Labor Code, as amended, which defines an employer as any person acting in the
interest of an employer, directly or indirectly. Following a careful scrutiny of the said
provision, the Court concludes that the law does not require an employer to be
registered before he may come within the purview of the Labor Code, consistent with
the established rule in statutory construction that when the law does not distinguish, we
should not distinguish. To do otherwise would bring about a situation whereby
employees are denied, not only redress of their grievances, but, more importantly, the
protection and benefits accorded to them by law if their employer happens to be an
unregistered association.
To reiterate, as held in the case of Filipinas Broacasting Network, Inc. v. NLRC,
the following are generally considered in the determination of the existence of an
employer-employee relationship: (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; of these four, the last one being the most
important.
[3]
In the instant case, the following circumstances which support the existence of
employer-employee relations cannot be denied. During the subsistence of the
association, several circulars and memoranda were issued concerning, among other
things, absences without formal request, loitering in the work area and disciplinary
measures with which every worker is enjoined to comply. Furthermore, the employees
were issued identification cards which the Court, in the case of Domasig v. NLRC,
[4]
construed, not only as a security measure but mainly to identify the holder as a
bonafide employee of the firm. However, what makes the relationship explicit is the
power of the petitioner to enter into compromise agreements involving money claims
filed by three employees, namely: Lorna Paquit, Lovella Dorlones and Jasmine
Espanola. If petitioner's disclaimer were to believed, what benefit would accrue to it in
settling an employer-employee dispute to which it allegedly lay no claim?
In spite of the overwhelming evidence sufficient to justify a conclusion that
respondents were indeed employees of petitioner, the latter, nevertheless, maintain the
preposterous claim that the ID card, circulars and memoranda were issued merely to
facilitate the efficient use of common resources, as well as to promote uniform rules in
the work establishment. On this score, we defer to the observations made by the NLRC
when it ruled that, while the original purpose of the formation of the association was
merely to provide the landowners a unified voice in dealing with Stanfilco, petitioner
however exceeded its avowed intentions when its subsequent actions reenforced only
too clearly its admitted role of employer. As reiterated all too often, factual findings of
the NLRC, particularly when they coincide with those of the Labor Arbiter, are
accorded respect, even finality, and will not be disturbed for as long as such findings
are supported by substantial evidence.[5]
Prescinding from the foregoing, we now address the issue of whether or not
petitioner had a valid ground to dismiss respondents from their respective employment.
It is settled that in termination disputes, the employer bears the burden of proving
that the dismissal is for just cause, failing which it would mean that the dismissal is not
justified and the employer is entitled to reinstatement. [6] The dismissal of employees
must be made within the parameters of the law and pursuant to the basic tenets of
equity, justice and fair play.[7] In Brahm Industries, Inc. v. NLRC,[8]the Court explained
that there are two (2) facets of valid termination of employment: (a) the legality of the
act of dismissal, i.e., the dismissal must be under any of the just causes provided under
Art. 282[9] of the Labor Code; and (b) the legality of the manner of dismissal, which
means that there must be observance of the requirements of due process, otherwise
known as the two-notice rule. Thus, "the employer is required to furnish the employee
with a written notice containing a statement of the cause for termination and to afford
LABOR LAW I |130
said employee ample opportunity to be heard and to defend himself with the assistance
of his representative, if he so desires. The employer is also required to notify the
worker in writing of the decision to dismiss him, stating clearly the reasons
therefore."[10]
In the instant case, petitioner severed employment relations when it whimsically
dismissed the respondents in utter disregard of the safeguards underscored in the
Constitution, as well as in the Labor Code. Petitioner failed to controvert the allegation
that it was responsible for the dismissal of the employees. Instead of denying the same
or otherwise imputing liability on its member-landowner by naming the employees
allegedly in his employ, petitioner was silent on the issue and harped on the nonexistence of employer-employee relationship between the parties, which contention we
find to be tangential.However related the issue might seem, it would have been more
relevant for the petitioner to have presented ample evidence before the NLRC and this
Court to justify its exoneration from liability. Having failed in this respect, we deem it
fatal to its defense.
For having been dismissed without a valid cause and for non-observance of the
due process requirement, respondents, consistent with recent jurisprudence laid down
in the case of Bustamante v. NLRC,[11] are entitled to receive full backwages from the
date of their dismissal up to the time of their reinstatement. The order, therefore, of the
labor arbiter limiting backwages to a period of three (3) years in the event of an appeal,
is erroneous.
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and
the decision of the National Labor Relations Commission dated September 6, 1995 is
AFFIRMED subject to the deletion of the award of moral damages and attorney's
fees. The Court, however, is remanding this case to Labor Arbiter Newton R. Sancho to
specify in the dispositive portion of his decision the names of the respondents and the
amount that each is entitled to.
SO ORDERED.