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Part II

American Pres Lines vs. Clave

FACTS:

The Maritime Security Union through private respondent filed

a complaint against petitioner for unfair labor practice under
RA 875. They contended that the petitioner had refused to
negotiate an agreement with them and discriminated them
regarding their tenure of employment by dismissing them.
Petitioner entered into a contract with the Maritime Security
Agency for the latter to guard the petitioners vessel. The
term of the contract is one year and may be terminated by
either party upon 30 days notice.
The relationship between petitioner and Maritime Security
Agency is that it was the latter who hired the guards and the
guards were not known to petitioner. A lump sum would be
paid by the petitioner to the agency wherein the latter pays
the compensation to the guards. However, petitioner
terminated the contract on its termination period with prior
notice. After its termination, petitioner executed a contact
with another agency. Respondents protested on this.

ISSUE: W/N an employer-employee relationship exists between

petitioner and watchmen

HELD:

No. It is the agency that hires the work of its watchmen.

Hence, a watchman cannot perform any security service
unless the agency first accepts him. It is also the agency that
pays the wages to a watchman. Neither does the petitioner
have any power of dismissal, because such power lies in the
hands of the agency. Since the petitioner has to deal with the
agency, petitioner does not exercise any power over
watchmens conduct. Thus, it is the agency that is answerable
to the petitioner for the conduct of its guards. It follows that
petitioner cannot be guilty of unfair labor practice because
under RA 875 Sec. 13, an unfair labor practice may be
committed only within the context of an employer-employee
relationship.

Elias Villuga, et al v NLRC and Broad Street Tailoring

August 23, 1993
L-70538
HELD:
Rule 1, Section 2(c), Book III of the Implementing Rules of
Labor Code, provides the Elements of Membership of a
Managerial Staff:
(1) that his primary duty consists of the performance of
workdirectly related to management policies;
(2) that he customarily and regularly exercises discretion and
independent judgment in the performance of his functions;
(3) that he regularly and directly assists in the management of
theestablishment; and
(4) that he does not devote his twenty per cent of his time to
work other than those described above.
Villugas primary work or duty is to cut or prepare patterns for
items to be sewn.
The duty to lay down/implement any of the management
policies lies in their manager and assistant manager. While he
distributes and assigns work to employees in the absence of
the manager & the assistant manager, the duty is only
occasional. Also, Villuga does not participate in policy-making.
Rather, his positions functions involve execution of approved
and established policies.
In Franklin Baker Company of the Philippines v.
Trajano, employees who do not participate in policy-making
but are given ready policies to execute and standard practices
to observe are not managerial employees.
Villuga is definitely a rank and file employee hired to perform
the work of the cutter and not hired to perform supervisory
or managerial functions. The fact that he is uniformly paid by

the month does not exclude him from the benefits

of holiday pay. He should also be paid in addition to the 13th
month pay, his overtime pay, holiday pay, premium pay for
holiday and rest day, and service incentive leave pay.
For abandonment to constitute a valid cause for dismissal, there
must be a deliberate and unjustified refusal of the employee
to resume his employment. Mere absence is not sufficient, it
must be accompanied by overt acts unerringly pointing to the
factthat the employee simply does not want to work
anymore. 8 At any rate, dismissal of an employee due to
hisprolonged absence without leave by reason of illness duly
established by the presentation of a medical certificate is not
justified. 9 In the case at bar, however, considering that
petitioner Villuga absented himself for four (4) dayswithout
leave and without submitting a medical certificate to support
his claim of illness, the imposition of a sanctionis justified, but
surely, not dismissal, in the light of the fact that this is
petitioners first offense. In lieu ofreinstatement, petitioner
Villuga should be paid separation pay where reinstatement
can no longer be effected inview of the long passage of time
or because of the realities of the situation. 10 But petitioner
should not be grantedbackwages in addition to reinstatement
as the same is not just and equitable under the circumstances
consideringthat he was not entirely free from blame.
As to the other eleven petitioners, there is no clear showing that
they were dismissed because the circumstancessurrounding
their dismissal were not even alleged. However, we disagree
with the finding of respondentCommission that the eleven
petitioners are independent contractors.
For an employer-employee relationship to exist, the following
elements are generally considered: (1) the selectionand

engagement of the employee; and engagement of the

employee;
(2) the payment of wages; (3) the power of dismissal and (4)
the power to control the employees conduct.
The mere fact that petitioners were paid on a piece-rate basis is
no argumentthat herein petitioners were not employees. The
term wage has been broadly defined in Article 97 of the
LaborCode as remuneration or earnings, capable of being
expressed in terms of money whether fixed or ascertained on
atime, task, piece or commission
basis. . . . The facts of this case indicate that payment by the
piece is just a method of compensation and does notdefine
the essence of the
relation. 13 The petitioners were allowed to perform their
work at home does not likewise imply absence of controland
supervision. The control test calls merely for the existence of
a right to control the manner of doing the work, not the
actual exercise of the right.
In determining whether the relationship is that of employer and
employee or one of an independent contractor,each case
must be determined on its own facts and all the features of
the relationship are to be considered. 15Considering that
petitioners who are either sewers, repairmen or ironer, have
been in the employ of privaterespondent as early as 1972 or
at the latest in 1976, faithfully rendering services which are
desirable or necessaryfor the business of private respondent,
and observing managements approved standards set for
their respectivelines of work as well as the customers
specifications, petitioners should be considered employees,
not independentcontractors.
Independent contractors are those who exercise independent

employment, contracting to do a piece of workaccording to

their own methods and without being subjected to control of
their employer except as to the result oftheir work. By the
nature of the different phases of work in a tailoring shop
where the customers specifications mustbe followed to the
letter, it is inconceivable that the workers therein would not
be subjected to control.befollowed to the letter, it is
inconceivable that the workers therein would not be
subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that
tailors and similar workers hired in the tailoring
department,although paid weekly wages on piece work basis,
are employees not independent contractors. Accordingly,
asregular employees, paid on a piece-rate basis, petitioners
are not entitled to overtime pay, holiday pay, premium
payfor holiday/rest day and service incentive leave pay. Their
claim for separation pay should also be defined for lack
ofevidence that they were in fact dismissed by private
respondent. They should be paid, however, their 13th
monthpay under P.D. 851, since they are employees not
independent contractors.

Investment Planning v. SSS

FACTS:

Petitioner is a domestic corporation engaged in business

management and sale of securities. It has 2 classes of agents
selling investment plans: 1) salaried employees who have
fixed hours of work under the control of the company; 2)
registered representatives are on commission basis.

Petitioner applied to SSS for exemption of coverage of these

registered representatives. However, it was denied on the
ground that these registered employees are employees of the
petitioner.

ISSUE: W/N petitioners registered representatives are employees

HELD:

No. These representatives are in reality commission agents.

They are not required to report for work anytime. They
shoulder their own selling expenses as well as transportation
and they are paid with commission based on a certain
percentage of their sales.

Where there is no element of control and where a person

who works for another is not subject to definite hours of
work and in turn compensated according to the result of his
efforts and not the amount thereof, there is no employeremployee relationship.

Shipside v NLRC

FACTS:
Shipside is a domestic corporation engaged in the handling in
bulks all kinds of materials. It entered into a contact with
STEVEDORES, a stevedoring company, wherein Shipside shall
give exclusive right to handle stevedoring services to
STEVEDORE.
The business relations between Shipside and STEVEDORES
were finally terminated and as a result, several stevedores
and office personnel were dismissed. Thus, these
respondents filed a complaint against Shipside and
STEVEDORES for not paying them separation benefits.

ISSUE: W/N an employer-employee relationship exists between

Shipside and respondents
W/N Shipside can be held liable for the money benefits

HELD:

No. Shipside has no participation for the selection and

engagement of every stevedores who constitutes the labor
force of STEVEDORES. There is no direct employment
relationship between Shipside and respondents. Payment of
salary is made by STEVEDORES to the individual stevedores.

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Also, Shipside has no power to dismiss them. Since there is no

employer-employee relationship between Shipside and
respondents, Shipside cannot be held liable for the money
benefits. There is no termination of employment, but merely
a termination of Shipsides contract for services with
STEVEDORES.

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La suerte cigar v dole

In the determination of the basic issue raised in the case at bar
involving the status of some 14 members of private
respondent local union whether they are employees of
petitioner company in which case they should be included in
the 30% jurisdictional requirement necessary to support the
petition for certification election, or independent contractors
and hence, excluded therefrom, Our rulings in Mafinco
Trading Corp. vs. Ople, 70 SCRA 139, where We reiterated the
"control test" earlier laid down in Investment Planning Corp.
vs. Social Security System, 21 SCRA 924, and in Social Security
System vs. Hon. Court of Appeals and Shriro (Phils.) Inc., 37
SCRA 579 are authoritative and controlling.

Factors to determine existence of independent contract

relationship. An independent contractor is one who
exercises independent employment and contracts to do a
piece of work according to his own methods and without
being subject to control of his employer except as to the
result of the work. 'Among the factors to be considered are
whether the contractor is carrying on an independent
business; whether the work is part of the employer's general
business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right
to assign the performance of the work to another; the power
to terminate the relationship; the existence of a contract for
the performance of a specified piece of work; the control and
supervision of the work; the employer's powers and duties
with respect to the hiring, firing, and payment of the
contractor's servants; the control of the premises; the duty to

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supply the premises, tools, appliances, material and labor,

and the mode, manner, and terms of payment.'

The question of when there is employer-employee relationship

for purposes of the Social Security Act has been settled in this
jurisdiction in the case of Investment Planning Corp. vs. Social
Security System, 21 SCRA 924 which applied the so-called
control test, that is, whether the employer controls or has
reserved the right to control the employee not only as to the
result of the work to be done but also as to the means and
methods by which the same is to be accomplished. In other
words, where the element of control is absent; whether a
person who works for another does so more or less at his
own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to
the result of his efforts and not the amount thereof, we
should not find that the relationship of employer and
employee exists. This decision rejected the economic facts of
the relation test.
Precisely, there was need to change the contract of employment
because of the change of relationship, from an employee to
that of an independent dealer or contractor. The employees
were free to enter into the new status, to sign or not to sign
the new agreement. As in the Mafinco case, the respondents
therein as in the instant case, were free to reject the terms of
the dealership but having signed it, they were bound by its
stipulations and the consequences thereof under existing
labor laws. The fact that the 14 local union members
voluntarily executed with La Suerte formal dealership
agreements which indicate the distribution and sale of La

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Suerte cigarettes signifies that they were acting as

independent businessmen

Sevilla vs ca
The records show that petitioner, Sevilla, was not subject to
control by the private respondent TWS. In
thefirst place, under the contract of lease, she
had bound herself in solidum as and for rental payments,
anarrangement that would belie claims of a master-servant
relationship. That does not make her an employee of TWS,since a
true employee cannot be made to part with his own money in
pursuance of his employers business, orotherwise, assume any
liability thereof.
In the second place, when the branch office was opened, the
same was run by the appellant Sevilla payableto TWS by any
airline for any fare brought in on the effort of Sevilla. Thus, it
cannot be said that Sevilla was underthe control of TWS. Sevilla in
pursuing the business, relied on her own capabilities.

It is further admitted that Sevilla was not in the companys

payroll. For her efforts, she retained 4% incommissions from
airline bookings, the remaining 3% going to TWS. Unlike an
employee, who earns a fixed salary,she earned compensation in
fluctuating amount depending on her booking successes.
The fact that Sevilla had been designated branch manager does
not make her a TWS employee. It appears that Sevilla is a bona
fide travel agent herself, and she acquired an interest in the

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business entrusted toher. She also had assumed personal

obligation for the operation thereof, holding herself solidary liable
for thepayment of rentals.Wherefore, TWS and Canilao are jointly
and severally liable to indemnify the petitioner, Sevilla.

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Television and Production Exponents, Inc. and/or Antonio P.

Tuviera vs Roberto C. Servaa

Regular Employee Employer-employee relationship Four Fold

Test
Servaa started out as a security for the Agro-Commercial
Security Agency (ACSA) since 1987. The agency had a contract
with TV network RPN 9.
On the other hand, Television and Production Exponents, Inc
(TAPE). is a company in charge of TV programming and was
handling showslike Eat Bulaga! Eat Bulaga! was then with RPN 9.
In 1995, RPN 9 severed its relations with ACSA. TAPE retained the
services of Servaa as a security guard and absorbed him.
In 2000, TAPE contracted the services of Sun Shield Security
Agency. It then notified Servaa that he is being terminated
because he is now a redundant employee.
Servaa then filed a case for illegal Dismissal. The Labor Arbiter
ruled that Servaas dismissal is valid on the ground of
redundancy but though he was not illegally dismissed he is still
entitled to be paid a separation pay which is amounting to one
month pay for every year of service which totals to P78,000.00.
TAPE appealed and argued that Servaa is not entitled to receive
separation pay for he is considered as a talent and not as a regular
employee; that as such, there is no employee-employer
relationship between TAPE and Servaa. The National Labor
Relations Commission ruled in favor of TAPE. It ruled that Servaa
is a program employee. Servaa appealed before the Court of
Appeals.

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The Court of Appeals reversed the NLRC and affirmed the LA. The
CA further ruled that TAPE and its president Tuviera
should pay for nominal damages amounting to P10,000.00.
ISSUE: Whether or not there is an employee-employer
relationship existing between TAPE and Servaa.
HELD: Yes. Servaa is a regular employee.
In determining Servaas nature of employment, the Supreme
Court employed the Four Fold Test:
1. Whether or not employer conducted the selection and
engagement of the employee.
Servaa was selected and engaged by TAPE when he was
absorbed as a talent in 1995. He is not really a talent, as termed
by TAPE, because he performs an activity which is necessary and
desirable to TAPEs business and that is being a security guard.
Further, the primary evidence of him being engaged as an
employee is his employee identification card. 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.
2. Whether or not there is payment of wages to the employee by
the employer.
Servaa is definitely receiving a fixed amount as monthly
compensation. Hes receiving P6,000.00 a month.
3. Whether or not employer has the power to dismiss employee.
The Memorandum of Discontinuance issued to Servaa to notify
him that he is a redundant employee evidenced TAPEs power to
dismiss Servaa.
4. Whether or not the employer has the power of control over
the employee.

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The bundy cards which showed that Servaa was required to

report to work at fixed hours of the day manifested the fact that
TAPE does have control over him. Otherwise, Servaa could have
reported at any time during the day as he may wish.
Therefore, Servaa is entitled to receive a separation pay.
On the other hand, the Supreme Court ruled that Tuviera, as
president of TAPE, should not be held liable for nominal damages
as there was no showing he acted in bad faith in terminating
Servaa.
Regular Employee Defined:
One having been engaged to perform an activity that is necessary
and desirable to a companys business.

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HOUSEHELPERS
ULTRA VILLA FOOD HAUS A/O ROSIE TIO v GENISTON, NLRC
This special civil action for certiorari arises from an illegal
dismissal complaint filed by private respondent Geniston. He
claims to have been an all-around worker of Ultra Villa Food
Haus Restaurant. He was employed from March 1, 1989 until May
13, 1992.As Geniston served acted as NUCD Poll Watcher in the
1992 elections, he did not report for work on May 11-12, 1992. He
alleged that his employer told his mother that he was dismissed
from work and his pleas for reinstatement failed.
Petitioner Tio maintains that Geniston was her personal driver
and not an employee of Ultra Villa. His responsibility was to drive
her to and from her Office. Although May 12, 1992 was a holiday,
she asked him to report for work, but was told that he was doing
election duties. Hence she had to hire a substitute driver, as
Respondent returned to work a week after and only to collect his
salary.
The Labor Arbiter ruled that Geniston was Petitioners personal
driver and therefore not entitled to OT, premium pay, SIL pay and
13th month pay. He was also deemed not entitled to salary
differentials or separation pay. However, Petitioner was ordered
to indemnify private Respondent the amount of P1,000.00 for
failure of employer to observe procedural due process.
On appeal, the NLRC ordered petitioner to reinstate Geniston and
pay backwages, OT,Holiday pay, premium pay, 13th month pay
and SIL. On Motion for Reconsideration, the NLRC ordered
payment of separation pay in lieu of reinstatement (due to
closure of the business) but denied Genistons prayer for damages

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and attorneys fees. It denied petitioners MR, ruling that

Gensiton was an employee of Ultravilla Food Haus.
The Supreme Court found Geniston was the personal driver of
petitioner, not of Ultra Villa Food Haus, as shown by the
submitted evidence and admissions of the respondent that he
was petitioners personal driver. The criterion of househelper
under Art. 141 have been met: Domestic or household service
shall mean services in the employers home which is usually
necessary or desirable for the maintenance and enjoyment
therefore and includes ministering to the personal comfort and
convenience of the members of the employers
household, including services of family drivers. Book III, Title 1 of
the Labor Code and Article 82, expressly excludes domestic
helpers from its coverage, and as such, petitioner is not required
to grantOT, holiday pay, premium pay and SIL. While PD851
excludes househelpers from the coverage of 13 th month pay,
petitioner was required to pay such considering that it has been
its practice to give its employees 13th Month Pay.
The Court found, however, that respondent did not abandon his
job, as the two requisites ( failure to report to work without valid
reason, and a clear intention to sever the employer-employee
relationship) were not met. Petitioner failed to prove
abandonment. It is quite unbelievable that private respondent
would leave a stable and relatively well-paying job as petitioners
family driver to work as an election worker the functions of
which are seasonal and temporary in nature. He was unjustly
dismissed from work, and is entitled to indemnity as provided for
under Art. 149 of the Labor Code. . compensation already
earned plus that for fifteen days by way of indemnity. Further,
because of failure to comply with die process in dismissing private

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respondent, petitioner was also ordered to pay an additional

indemnity of P 1,000.00

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Orozco vs CA, PDI and Magsanoc

Employee-employer Relationship in a Publication Bond

Requirement When Employer Appeals in a Labor Case

Orozco was hired as a writer by the Philippine Daily Inquirer in

1990. She was the columnist of Feminist Reflections under the
Lifestyle section of the publication. She writes on a weekly basis
and on a per article basis (P250-300/article).
In 1991, Magsanoc as the editor-in-chief sought to improve the
Lifestyle section of the paper. She said there were too many
Lifestyle writers and that it was time to reduce the number of
writers. Orozcos column was eventually dropped.
Orozco filed for a case for Illegal Dismissal against PDI and
Magsanoc. Orozco won in the Labor Arbiter. The LA ruled that
there exists an employer-employee relationship between PDI and
Orozco hence Orozco is entitled to receive backwages,
reinstatement, and 13thmonth pay.
PDI appealed to the National Labor Relations Commission. The
NLRC denied the appeal because of the failure of PDI to post a
surety bond as required by Article 223 of the Labor Code. The
Court of Appeals reversed the NLRC.
ISSUE: Whether or not there exists an employer-employee
relationship between PDI and Orozco. Whether or not PDIs
appeal will prosper.
HELD: Under Article 223 of the Labor Code:
ART. 223. Appeal. Decisions, awards or orders of the Labor
Arbiter are final and executory unless appealed to the

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Commission by any or both parties within ten (10) calendar days

from receipt of such decisions, awards, or orders.
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.
The requirement that the employer post a cash or surety bond to
perfect its/his appeal is apparently intended to assure the
workers that if they prevail in the case, they will receive the
money judgment in their favor upon the dismissal of the
employers appeal. It was intended to discourage employers from
using an appeal to delay, or even evade, their obligation to satisfy
their employees just and lawful claims.
But in this case, this principle is relaxed by the Supreme Court
considering the fact that the Labor Arbiter, in ruling that the
Orozco is entitled to backwages, did not provide any computation.
The case is then remanded to the Labor Arbiter for
the computation. This necessarily pended the resolution of the
other issue of whether or not there exists an employer-employee
relationship between PDI and Orozco.