LVN Pictures v.
Philippine Musicians Guild and Court of Industrial Relations Connor Lumber Company: Independent contractors have sufficient authority over the persons
Sampaguita Pictures, Inc., v. Philippine Musicians Guild and Court of Industrial Relations
Facts:
The Guild averred that it is a duly registered legitimate labor organization
LVN Pictures, Sampaguita Pictures, & Premiere Productions, Inc. are corporations engaged in
the making of motion pictures and in the processing and distribution thereof
said companies employ musicians for the purpose of making music recordings for title music,
background music, musical numbers, finale music & other incidental music, without which a
motion picture is incomplete
The Guild prayed that it be certified as the sole & exclusive bargaining agency for all musicians
working in the aforementioned companies & it does not intend to represent the other employees
therein
The companies then denied that they have any musicians as employees, & alleged that the
musical numbers in the filing of the companies are furnished by independent contractors
LVN also maintains that a petition for certification cannot be entertained when the existence
of an employer-employee relationship between the parties is contested (however, this claim is
neither borne out by any legal provision nor supported by any authority; it is proper to pass
upon the merits of the petition for certification)
Issue: W/N the musicians in question are employees of the film companies.
Ruling: YES.
The cases at bar are concerned with the right of the Guild to represent the musicians as a
collective bargaining unit
R.A. Act 875: AN ACT TO PROMOTE INDUSTRIAL PEACE AND FOR OTHER PURPOSES
(a) To eliminate the causes of industrial unrest by protecting the exercise of their right to self-
organization for the purpose of collective bargaining
(b) To promote sound stable industrial peace and the advancement of the general welfare, & the best
interests of employers and employees by the settlement of issues respecting terms and conditions of
employment through the process of collective bargaining between employers & representatives of their
employees
R.A. Act 875 is substantially the same as the Wagner Act: designed to avert the substantial
obstruction to the free flow of commerce which results from strikes and other forms of
industrial unrest by eliminating the causes of the unrest
For whom the Act is aimed and the remedies it offers are not confined exclusively to 'employees'
within the traditional legal distinctions, separating them from 'independent contractor
By declaring a worker an employee of the person for whom he works & by recognizing &
protecting his rights as such we enable him to negotiate an agreement which will settle disputes
regarding conditions of employment, through the process of collective bargaining
To determine whether a person who performs work for another is the latter's employee or an
independent contractor, the National Labor Relations relies on 'the right to control' test
An employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be achieved, but also the manner
and means to be used in reaching the end
working under their immediate supervision to warrant their exclusion from the unit
Notwithstanding that the employees are called independent contractors, the Board will hold
them to be employees under the Act where the extent of the employer's control over them
indicates that the relationship is in reality one of employment
The right of control of the film company over the musicians is shown
by calling the musicians through 'call slips' in 'the name of the company
by arranging schedules in its studio for recording sessions
by furnishing transportation and meals to musicians
by supervising and directing in detail, through the motion picture director, the performance of the
musicians before the camera
The members of the PH Musicians Guild are employees of the 3 film companies & are entitled
to right of collective bargaining under RA No. 875
In view of the fact that the 3 film companies did not question the union's majority, the Guild is
hereby declared as the sole collective bargaining representative for all the musicians employed by
the film companies
Philippine Manufacturing Co.s case involved a contract between said company and Eliano
Garcia, who undertook to paint a tank of the former
Garcia, in turn engaged the services of Arcadio Geronimo, a laborer, who fell while painting
the tank and died in consequence of the injuries thus sustained by him
Connection between its business and the painting aforementioned was purely casual; that
Eliano Garcia was an independent contractor; that Geronimo was not an employee of the
company
In the cases at bar, "the work of the musicians is an integral part of the entire motion picture
and not merely causal
In the language of the order appealed from "during the recording sessions, the motion picture
director who is an employee of the company" and not the musical director "supervises the
recording of the musicians & tells them what to do in every detail. The motion picture director
and not the musical director "solely directs and performance of the musicians before the
camera and "the movie director tells the musical director what to do
It is well settled that "an employer-employee relationship exists . . .where the person for whom
the services are performed reserves a right to control not only the end to be achieved but also
the means to be used in reaching such end
The employer-employee relationship was held to exist between the management and the
workers, notwithstanding the intervention of an alleged independent contractor, who had, &
exercise, the power to hire and fire said workers
WHEREFORE, order appealed from is hereby affirmed, with costs against petitioners.
Dy Keh Beng v. International Labor and Marine Union of the Philippines, et al. The establishment of Dy is engaged in the manufacture of baskets known as kaing, it is
natural to expect that those working under him would have to observe, among others, his
Facts: requirements of size and quality of the kaing
Petitioner Dy Keh Beng seeks a review by certiorari of the decision that found him guilty of the Some control would necessarily be exercised by Dy as the making of the kaing would be
unfair labor practice acts alleged & order him to reinstate Carlos Solano and Ricardo Tudla to subject to his specifications
their former jobs with back wages Since the work on the baskets is done at Dy's establishments, it can be inferred that the
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, proprietor Dy could easily exercise control on the men he employed
for discriminatory acts by dismissing Carlos Solano and Ricardo Tudla for their union activities As to the contention that Solano was not an employee because he worked on piece basis, the
Dy contended that he did not know Tudla and that Solano was not his employee because the Court agrees with the Hearing Examiner that they cannot construe payment by the piece where
latter came to the establishment only when there was work which he did on pakiaw basis, each work is done in such an establishment so as to put the worker completely at liberty to turn him
piece of work being done under a separate contract. out and take in another at pleasure
The "pakyaw" system mentioned in this case as generally practiced in our country, is a labor
Issue: W/N there existed an employee-employer relation between petitioner Dy & the respondents Solano & contract between employers & employees, between capitalists and laborers
Tudla
Nevertheless, considering that about 18yrs. have already elapsed from the time the complainants
were dismissed it is fitting to apply in this connection the formula for backwages worked out by
Ruling: YES. Justice Teehankee in "cases not terminated sooner
According to the Hearing Examiner, Solano and Tudlas work with the establishment was The formula calls for fixing the award of backwages without qualification & deduction to
continuous although their services were compensated on piece basis 3yrs., "subject to deduction where there are mitigating circumstances in favor of the employer
According to Dy, however, Solano was not his employee because but subject to increase by way of exemplary damages where there are aggravating
Solano never stayed long enough at Dy's establishment circumstances.
Solano had to leave as soon as he was through with the order given him by Dy WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein
When there were no orders needing his services there was nothing for him to do modified to an award of backwages for 3yrs. without qualification & deduction at the respective
When orders came to the shop that his regular workers could not fill it was then that Dy went rates of compensation the employees concerned were receiving at the time of dismissal.
to his address in Caloocan & fetched him for these orders
Solano's work with Dy's establishment was not continuous
Accdg. to Dy, Solano & Tudla are only piece workers, not employees under RA 875:
Sec. 2 (d) Employee: shall include any employee and shall not be limited to the employee of a
particular employer unless the Act explicitly states otherwise
Sec. 2 (c) Employer: includes any person acting in the interest of an employer, directly or
indirectly but shall not include any labor organization
Petitioner anchors his contention of the non-existence of employee-employer relationship on
the control test
The test of the existence of employee-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 & recognition by them of the right of one to order and control the other in the
performance of the work & to direct the manner and method of its performance
Petitioner contends that the private respondents did not meet the control test in the light of the
definition of the terms employer & employee, because there was no evidence to show that
petitioner had the right to direct the manner and method of respondent's work.
The court finds no merit with petitioners arguments
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
Osias Corporal, Pedro Tolentino, Manuel Caparas, Elpidio Lacap, Simplicio Pedelos,
Patricia Nas, & Teresita v. National Labor Relations Commission, Lao Enteng Company,
Inc. and Trinidad Lao Ong
Facts:
The 5 male petitioners worked as barbers, while the two female petitioners, worked as
manicurists in New Look Barber Shop owned by private respondent Lao Enteng Co. Inc.
Petitioner Nas alleged that she also worked as watcher and marketer of private respondent
Petitioners claim that at the start of their employment with the New Look Barber Shop, it was a
single proprietorship owned & managed by Vicente Lao. In or about Jan. 1982, the children of
Vicente Lao organized a corp. as Lao Enteng Co. Inc.
Upon incorporation, the respondent company took over the assets, equipment, & properties
of the New Look Barber Shop & continued the business
All the petitioners were allowed to continue working with the new company until 1995 when
respondent Trinidad Ong informed them that the building wherein the New Look Barber
Shop was located had been sold & that their services were no longer needed
Petitioners filed with the Arbitration Branch of the NLRC, a complaint for illegal dismissal,
illegal deduction, separation pay, non-payment of 13th month pay, and salary differentials
Private respondent averred that the petitioners were joint venture partners & were receiving 50%
commission of the amount charged to customers. Thus, there was no employer-employee
relationship between them & petitioners
Lao Enteng Company, Inc. did not take over the management of the New Look Barber Shop
Labor Arbiter ordered the dismissal of the complaint. The NLRC affirmed the said findings of
the Labor Arbiter and also dismissed the complaint for lack of merit
Issue: W/N an employer-employee relationship existed between petitioners & private respondent
Lao Enteng Company, Inc.
Ruling: YES.
The Labor Arbiter's findings that the parties were engaged in a joint venture is unsupported by
any documentary evidence
Aside from the self-serving affidavit of respondent Ong, there were no other evidentiary
documents, nor written partnership agreements presented
An independent contractor is one who undertakes "job contracting", i.e., a person who:
carries on an independent business and undertakes the contract work on his own account
under his own responsibility according to his own manner & method, free from the control &
direction of his employer or principal in all matters connected with the performance of the
work except as to the results thereof
has substantial capital or investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of the business
The Court is convinced that petitioners are not independent contractors
They did not carry on an independent business.
Neither did the petitioners undertake cutting hair & manicuring nails, on their own as their
responsibility, and in their own manner & method
More importantly, the petitioners, individually or collectively, did not have a substantial capital
or investment in the form of tools, equipment, work premises & other materials which are
necessary in the conduct of the business of the respondent company
What the petitioners owned were only combs, scissors, razors, nail cutters, nail polishes, the
nippers - nothing else. By no standard can these be considered substantial capital necessary
to operate a barber shop
Petitioners were required to observe rules and regulations of the respondent company
pertaining observance of daily attendance, job performance, & regularity of job output
The ff. elements must be present for an employer-employee relationship to exist:
the selection and engagement of the workers
power of dismissal
the payment of wages by whatever means
the power to control the worker's conduct, with the latter assuming primacy in the overall
consideration.
In the case at bar, the elements are present but private respondent claims it had no control over
petitioners.
The power to control refers to the existence of the power and not necessarily to the actual
exercise thereof, nor is it essential for the employer to actually supervise the performance of
duties of the employee. It is enough that the employer has the right to wield that power.
Respondent company was clothed with the power to dismiss any or all of them for just and valid
cause.
they worked in the barber shop owned and operated by the respondents
they were required to report daily and observe definite hours of work
they were not free to accept other employment elsewhere but devoted their full time working
in the New Look Barber Shop for all the 15 years they have worked until Apr. 15, 1995
that petitioner Nas was instructed by the respondents to watch the other 6 petitioners in their
daily task
The court could not agree with private respondents that petitioners were registered with the
Social Security System as their employees only as an accommodation. It is unlikely that
respondents would report certain persons as their workers, pay their SSS premium as well as
their wages if it were not true that they were indeed their employees.
Therefore, petitioners are employees of the respondent company thus they are entitled to a
separation pay & the 13th month pay
IN VIEW WHEREOF, the petition is GRANTED. Private respondents are hereby ordered to
pay, severally and jointly, the 7 petitioners their 13th month pay and separation pay
Alejandro Maraguinot and Paulino Enero v. National Labor Relations Commission and Viva Films
Facts:
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents as part of the
filming crew, then was designated as assistant electrician, then promoted to the rank of electrician
Petitioner Paulino Enero, on his part, claims that private respondents employed him as a member of the
shooting crew
Petitioners sought the assistance of their supervisor to facilitate their request that private respondents adjust
their salary in accordance with the minimum wage law
Petitioners were informed 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 then refused to take him
back when he went back to report for work
Maraguinot was dropped from the company payroll but was returned. He was again asked to sign a blank
employment contract, and when he still refused, private respondents terminated his services
Petitioners thus sued for illegal dismissal before the Labor Arbiter
Private respondents claim that Viva Films is primarily engaged in the distribution and exhibition of movies,
but not in the business of making movies
Private respondent del Rosario is merely an executive producer and that petitioners are project employees
of the associate 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. Anent petitioner Enero, he was hired for the movie entitled Narito ang
Puso.
LA declared that that complainants were illegally dismissed
Private respondents appealed to the NLRC & the latter indicated that complainants (herein petitioners) were
project employees
After their motion for reconsideration was denied by the NLRC, petitioners filed the instant petition
Issues:
1. W/N an employer-employee relationship existed between petitioners and private respondents
or any one of private respondents
2. W/N private respondents were illegally dismissed from their jobs
Ruling:
1. YES
Private respondents insist that petitioners are project employees of associate producers who, in turn, act as
independent contractors
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, 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. It is thus clear that the associate producer merely leases the equipment from Viva.
Producers rented Shooting Unit #2 from Viva to finish their films
When Vivas generators broke down during petitioners last movie project, it forced the associate producer
concerned to rent generators, equipment and crew from another company. This only shows that the
associate producer did not have substantial capital nor investment in the form of tools & equipment
Associate producers are also not labor-only contractors; they did not supply, recruit nor hire the workers
Labor-only contractors: 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, & the
workers recruited and placed by such persons are performing activities which are directly related to the
principal business of such employer
Relationship between Viva and its producers or associate producers seems to be that of agency, as the latter
make movies on behalf of Viva, whose business is to make movies
The employer-employee relationship between petitioners and Viva can further be established by the control
test. All of the elements are present.
the selection and engagement of the employee, the payment of wages, the power of dismissal, at the
employers power to control the employees conduct (most important)
Producer has to work within the limits of the budget he is given by the company, for as long as the
ultimate finished product is acceptable to the company
The Supervising Producer acts as the eyes and ears of the company and of the Executive Producer to
monitor the progress of the Producers work accomplishment
Vivas control is evident in its mandate that the end result must be a quality film acceptable to the company.
It may not be validly argued that petitioners are actually subject to the movie directors control, & not Vivas
direction. The director merely instructs petitioners on how to better comply with Vivas requirements to
ensure that a quality film is completed w/in schedule & w/o exceeding the budget
All the circumstances indicate an employment relationship between petitioners & Viva alone, thus the
inevitable conclusion is that petitioners are employees only of Viva
2. YES
A project employee or a member of a work pool may acquire the status of a regular employee when the
following concur:
There is a continuous rehiring of project employees even after cessation of a project
The tasks performed by the alleged project employee are vital, necessary & indispensable to the usual
business or trade of the employer
However, the length of time during which the employee was continuously re-hired is not controlling, but
merely serves as a badge of regular employment
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.
This is beneficial to both the employer & employee for it prevents the unjust situation of coddling labor
at the expense of capital & at the same time enables the workers to attain the status of regular employees
Case of Industrial-Commercial-Agricultural Workers Organization v. CIR
The cessation of construction activities at the end of every project is a foreseeable suspension of work
Similar to the case of regular seasonal employees, the employment relation is not severed by merely being
suspended
The employees are, strictly speaking, not separated from services but merely on leave of absence without
pay until they are reemployed.
There seems to be no impediment to applying the underlying principles to industries other than the
construction industry
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
The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening the
labor sector, but, we stress, not at the expense of management.
In closing then, as petitioners had already gained the status of regular employees, their dismissal was
unwarranted, for the cause invoked by private respondents for petitioners dismissal, viz., completion of
project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code.
Petitioners were dismissed at a time when RA No. 6715 was already in effect. Petitioners are entitled to
receive full back wages from the date of their dismissal up to the time of their reinstatement
WHEREFORE, the instant petition is GRANTED.
Jose Sonza v. ABS-CBN Broadcasting Corporation
Facts:
Respondent ABS-CBN Broadcasting Corp. signed an Agreement with the Mel and Jay Management and
Development Corp.
Referred to in the Agreement as Agent, MJMDC agreed to provide Sonzas services exclusively to ABS as
talent for radio & television
ABS agreed to pay for Sonzas services a monthly talent fee of P310k for the 1st year and P317k for the 2nd
and 3rd year of the Agreement
On Apr 1 1996, Sonza wrote a letter to ABSs President, Eugenio Lopez III that he will be resigning. He
also mentioned that he reserves the right to seek recovery of the benefits under the Agreement
Sonza filed a complaint against ABS before the DOLE, NCR in Quezon City. Sonza complained that ABS
did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan
Meanwhile, ABS continued to remit Sonzas monthly talent fees
The Labor Arbiter rendered his decision dismissing the complaint for lack of jurisdiction thus leading to
Sonzas appeal to the NLRC. NLRC rendered a decision affirming the LAs decision. Sonza filed a motion
for reconsideration but was denied. He brought it up to the CA but the case was dismissed hence this
petition
Issue: W/N there is an employer-employee relationship between Sonza and ABS-CBN.
Ruling: No.
The jurisdiction over the instant controversy belongs to the regular courts, the same being in the nature of
an action for alleged breach of contractual obligation on the part of respondent-appellee
Sonzas claims for compensation are not based on the Labor Code but rather on the provisions of the
May 1994 Agreement
Instead of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining
amount stipulated in the Agreement but reserves the right to such recovery of the other benefits under
said Agreement
Employee or Independent Contractor: Sonza claims that the elements of an employer-employee
relationship are present:
- Selection and engagement of employee
- The specific selection and hiring of Sonza, because of his unique skills, talent and celebrity status
not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship
- Payment of wages
- All the talent fees and benefits paid to Sonza were the result of negotiations that led to the
Agreement
- If Sonza were ABSs employee, there would be no need for the parties to stipulate on benefits
which the law automatically incorporates into every employer-employee contract. Whatever benefits
Sonza enjoyed arose from contract and not because of an employer-employee relationship.
- Sonzas talent fees are so huge and out of the ordinary that they indicate more an independent
contractual relationship rather than an employer-employee relationship
- The power to bargain talent fees way above the salary scales of ordinary employees is a
circumstance indicative, but not conclusive, of an independent contractual relationship
- Power of dismissal
- During the life of the Agreement, ABS agreed to pay Sonzas talent fees as long as MJM and Jay
Sonza shall faithfully and completely perform each condition of this Agreement. Even if it suffered
severe business losses, ABS could not retrench Sonza because ABS remained obligated to pay
Sonzas talent fees during the life of the Agreement
- Power of control
- In Alberty-Vlez v. WIPR, a television program host is an independent contractor
- The control test is based on the extent of control the hirer exercises over a worker. The greater the
supervision and control the hirer exercises, the more likely the worker is deemed an employee
- ABS did not assign any other work to Sonza
- Sonza did not have to render 8 hours of work/day, had to attend only rehearsals and tapings of the
shows, as well as pre- & post-production staff meetings
- ABS could not dictate the contents of Sonzas script
- Sonza had a free hand on what to say or discuss in his shows provided he did not attack ABS or its
interests
- ABS was not involved in the actual performance that produced the finished product of Sonzas
work, did not instruct Sonza how to perform his job, merely reserved the right to modify the
program format and airtime schedule for more effective programming
- ABSs right not to broadcast Sonzas show, burdened as it was by the obligation to continue paying
in full Sonzas talent fees, did not amount to control over the means and methods of the
performance of Sonzas work
- Sonza contends that ABS exercised control over his work by supplying all equipment and crew.
However, the equipment, crew and airtime are not the tools and instrumentalities Sonza needed to
perform his job
- The Agreement does not require Sonza to comply with the rules and standards of performance
prescribed for employees of ABS
- Not every form of control that a party reserves to himself over the conduct of the other party in
relation to the services being rendered may be accorded the effect of establishing an employer-
employee relationship
- Being an exclusive talent does not by itself mean that Sonza is an employee of ABS. Even an
independent contractor can validly provide his services exclusively to the hiring party.
MJMDC as Agent of Sonza
- Labor-only contract: labor-only contractor, employee, principal. Elements are not present in this case
- Only 2 parties involved under the Agreement, Sonza and ABS
- It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by Sonza, acted as
agent of ABS-CBN in entering into the Agreement with Sonza, who himself is represented by MJMDC
Policy Instruction No. 40
- Under this policy, the types of employees in the broadcast industry are the station and program
employees
- But is a mere executive issuance which does not have the force and effect of law. A mere executive
issuance cannot exclude independent contractors from the class of service providers to the broadcast
industry
Talents as Independent contractors
- The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an
employer-employee relationship under labor laws. Not every performance of services for a fee creates
an employer-employee relationship.
- The Court will not interpret the right of labor to security of tenure to compel artists and talents to
render their services only as employees
There is a different tax treatment as talents and broadcasters
Therefore, Sonza is an individual contractor, or a talent and not an employee of ABS-CBN.
WHEREFORE, petition is DENIED.
Jose Mel Bernarte v. Philippine Basketball Association, Jose Emmanuel Eala and promulgated:
Perry Martinez
Facts:
Complainants (Jose Mel Bernarte & Renato Guevarra) were invited to join the PBA as referees. They
were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala, changes
were made on the terms of their employment
- Bernarte received a letter from the Office of the Commissioner advising him that his contract
would not be renewed citing his unsatisfactory performance on and off the court
- Respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his
questioning on the assignment of referees officiating out-of-town games. So Guevarra was no
longer made to sign a contract
Respondents aver that complainants entered into 2 contracts of retainer with the PBA in the year
2003. After the lapse of the period, PBA decided not to renew their contracts
Labor Arbiter declared petitioner an employee whose dismissal by respondents was illegal
NLRC affirmed the Labor Arbiters judgment
Respondents filed a petition for certiorari with the CA, which overturned the decisions of the NLRC
and Labor Arbiter
Issues:
Main issue: W/N petitioner is an employee of respondents. If so, is petitioner illegally dismissed?
Procedural issue: W/N the Labor Arbiters decision has become final and executory for failure of
respondents to appeal with the NLRC within the reglementary period
Ruling:
Procedural issue: No.
- Petitioner contends that the LAs decision became final and executory for failure of respondents
to appeal with the NLRC w/in the prescribed period
- Petitioner points out that service of an unclaimed registered mail is deemed complete 5 days from
the date of 1st notice of the post master
- The rule on service by registered mail contemplates 2 situations:
1. Actual service the completeness of which is determined upon receipt by the addressee of
the registered mail
2. Constructive service the completeness of which is determined upon expiration of 5 days
from the date the addressee received the first notice of the postmaster
- Insofar as constructive service is concerned, there must be conclusive proof that a 1st notice was
duly sent by the postmaster to the addressee. Not only is it required that notice of the registered
mail be issued but that it should also be delivered to and received by the addressee
- In this case, petitioner failed to present any concrete proof as to how, when and to whom the
delivery and receipt of the 3 notices issued by the post office was made.
- No conclusive evidence showing that the post office notices were actually received by
respondents
- The issuance of the notices by the post office is not equivalent to delivery to & receipt by the
addressee of the registered mail.
- Thus, there is no proof of completed constructive service of the Labor Arbiters decision on
respondents
- The ends of justice will be better served if the instant case be resolved on the merits rather than
allowing the substantial issue of whether petitioner is an independent contractor or an employee
linger and remain unsettled due to procedural technicalities
Main issue: No.
- To determine the existence of an employer-employee relationship, case law has consistently
applied the four-fold test: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; & (d) the employers power to control the employee on the
means and methods by which the work is accomplished.
- Petitioner contends that he is an employee of respondents since the latter exercise control over
the performance of his work
- Respondents classify or rate a referee
- Respondents require referees to attend all basketball games organized or authorized by the
PBA
- Respondents assign petitioner to officiate ballgames, or to act as alternate referee or substitute
- Referee agrees to observe and comply with all the requirements of the PBA governing the
conduct of the referees whether on or off the court
- Referee agrees (a) to keep himself in good physical, mental, & emotional condition during the
life of the contract; (b) to give always his best effort and service, & loyalty to the PBA
- Imposition of various sanctions for violation of the terms & conditions of the contract
- The contractual stipulations do not pertain to, much less dictate, how and when petitioner will
blow the whistle and make calls. On the contrary, they merely serve as rules of conduct or
guidelines in order to maintain the integrity of the professional basketball league
- In Sonza v. ABS, not all rules imposed by the hiring party on the hired party indicate that the latter
is an employee of the former
- Not every form of control that a party reserves to himself over the conduct of the other party
in relation to the services being rendered may be accorded the effect of establishing an
employer-employee relationship
- Once in the playing court, the referees exercise their own independent judgment, based on the
rules of the game, as to when and how a call or decision is to be made
- The referees are the only, absolute, & final authority on the playing court
- Respondents or any of the PBA officers cannot and do not determine which calls to make or
not to make and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referees
- The very nature of petitioners job of officiating a professional basketball game undoubtedly
calls for freedom of control by respondents
- The ff. circumstances indicate that petitioner is an independent contractor
- the referees are required to report for work only when PBA games are scheduled
- only deductions from the fees received by the referees are withholding taxes
- In Yonan v. US Soccer Federation, a soccer referee, is an independent contractor, and not an
employee of defendant
- For a hired party to be considered an employee, the hiring party must have control over the
means and methods by which the hired party is to perform his work, which is absent in this
case
- The continuous rehiring by PBA of petitioner simply signifies the renewal of the contract
between PBA and petitioner. The non-renewal of the contract between the parties does not
constitute illegal dismissal of petitioner by respondents
For a person to be illegally dismissed, they must be employees first.
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of the CA
Legend Hotel Manila and Nelson Napud v. Hernani Realuyo a.k.a. Joey Roa
Facts:
Roa filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/
nonpayment of his premium pay for holidays, separation pay, service incentive leave pay, and 13th month
pay
Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant
The management had notified him that as a cost-cutting measure his services as a pianist would no longer be
required
The Labor Arbiter dismissed the complaint for lack of merit. Respondent appealed, but the National Labor
Relations Commission affirmed the LA. Respondent assailed the decision of the NLRC in the CA on
certiorari where the respondents petition was granted
Issues:
Procedural issue: W/N the petition for certiorari filed in the CA was the proper recourse
Substantive issues:
1. W/N respondent was an employee of petitioner
2. If respondent was petitioner s employee, whether he was validly terminated
Ruling:
Procedural issue: YES. Certiorari was a proper recourse
- There is no longer any doubt that a petition for certiorari brought to assail the decision of the NLRC
may raise factual issues
- The power of the CA to review factual issues in the exercise of its original jurisdiction to issue writs of
certiorari is based on Sec. 9 of Batas Pambansa Blg. 129, which pertinently provides that the CA "shall
have the power to try cases and conduct hearings, receive evidence and perform any and all acts
necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings."
Substantive issue #1: YES.
- The factors that determine the issue include who has the power to select the employee, who pays
the employees wages, who has the power to dismiss the employee, and who exercises control of
the methods and results by which the work of the employee is accomplished
- Respondent was, indeed, petitioners employee. He was undeniably employed as a pianist in
petitioners Madison Coffee Shop/Tanglaw Restaurant
- Power of selection
- Petitioner actually wielded the power of selection at the time it entered into the service
contract with respondent
- The power of selection was firmly evidenced by, among others, the express written
Substantive Issue #2: No. He was not validly terminated.
recommendation by Christine Velazco, petitioners restaurant manager, for the increase of his
remuneration
- Petitioner could not seek refuge behind the service contract entered into with respondent. It is the
law that defines and governs an employment relationship, whose terms are not restricted to those
fixed in the written contract
- The law affords protection to an employee, and does not countenance any attempt to subvert its
spirit and intent. Any stipulation in writing can be ignored when the employer utilizes the
stipulation to deprive the employee of his security of tenure
- Remuneration:
- There is no denying that the remuneration denominated as talent fees was fixed on the basis of
his talent and skill and the quality of the music he played during the hours of performance
each night
- Respondents remuneration, albeit denominated as talent fees, was still considered as included
in the term wage in the sense and context of the Labor Code
- Wage paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, which is payable by an employer to an
employee under a written or unwritten contract of employment
- Clearly, respondent received compensation for the services he rendered as a pianist in
petitioners hotel
- Every employer is required to pay his employees by means of a payroll. Yet, petitioner did not
present the payroll of its employees to bolster its insistence of respondent not being its
employee
- That respondent worked for less than 8 hours/day was of no consequence and did not detract
from the CAs finding on the existence of the employer-employee relationship
- The Labor Code only set a maximum of number of hours as "normal hours of work" but did
not prohibit work of less than 8 hours
- Power to control:
- Respondent performed his work as a pianist under petitioners supervision and control. The
petitioners control of both the end achieved and the manner and means used to achieve that
end was demonstrated by the following
- He could not choose the time of performance, which had been fixed from 7pm to 10pm
for 3 to 6 times/week
- The restaurant manager had required him to conform with the venues motif
- He had been subjected to the rules on employees representation checks and chits, a
privilege granted to other employees
- The employer need not actually supervise the performance of duties by the employee, for it
sufficed that the employer has the right to wield that power
- Roa was supervised and controlled by respondents restaurant manager who at certain times
would require him to perform only Tagalog songs or music, or wear barong tagalog to
conform with Filipiniana motif of the place and the time of his performance is fixed by the
respondents from 7:00 pm to 10:00 pm, three to six times a week. Petitioner could not choose
the time of his performance
- Power to dismiss
- The memorandum informing respondent of the discontinuance of his service because of the
present business or financial condition of petitioner showed that the latter had the power to
dismiss him from employment
- Retrenchment is one of the authorized causes for the dismissal of employees recognized by the
Labor Code. It is a management prerogative resorted to by employers to avoid or to minimize
business losses
- The expected losses should be substantial
- The substantial losses apprehended must be reasonably imminent
- The retrenchment must be reasonably necessary and likely to effectively prevent the expected
losses
- The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence
- In termination cases, the burden of proving that the dismissal was for a valid or authorized cause
rests upon the employer. Here, petitioner did not submit evidence of the losses to its business
operations and the economic havoc it would thereby imminently sustain.
- Not every loss incurred or expected to be incurred by an employer can justify retrenchment
- By its failure to present sufficient and convincing evidence to prove that retrenchment was
necessary, respondents termination due to retrenchment is not allowed
- The petitioner should instead pay to him separation pay and full back wages from the time his
compensation was withheld until the finality of this decision
- WHEREFORE, we DENY the Petition for Review on Certiorari, and AFFIRM the decision of the Court of
Appeals
WPP Marketing Communications, Inc., John Steedman, Mark Webster, and Nominada
Lansang v. Jocelyn Galera (and vise versa)
Facts:
Petitioner Jocelyn Galera, an American citizen who was recruited by private respondent John
Steedman, Chairman-WPP Worldwide and CEO of Mindshare, Co., a corporation based in HK to
work in the PH for WPP Marketing Communications, Inc. (WPP)
Galera accepted the offer and she signed an Employment Contract
Employment of Galera with WPP became effective on Sep. 1, 1999 solely on the instruction of the
CEO and upon signing of the contract
4 months had passed when WPP filed before the Bureau of Immigration an application for Galera to
receive a working visa, wherein she was designated as Vice President of WPP
On Dec. 14, 2000, Galera alleged she was verbally notified by Steedman that her services had been
terminated from WPP. A termination letter followed the next day.
Galera filed a complaint for illegal dismissal
Labor Arbiters Ruling: In favor of Galera
- Labor Arbiter held WPP, Steedman, Webster, and Lansang liable for illegal dismissal and damages.
Galera was not only illegally dismissed but was also not accorded due process.
- WPP failed to observe the 2-notice rule and did not give Galera an opportunity to defend herself
and explain her side
- The law mandates that the dismissal must be properly done otherwise, the termination is gravely
defective and may be declared unlawful as we hereby hold Galeras dismissal to be illegal and
unlawful
- The law considers the matter a case of illegal dismissal and the burden is on the employer to
prove that the termination was for a valid or authorized cause
- In the instant case, respondents have not been able to muster evidence to counter Galeras
allegations
NLRCs Ruling: In favor of WPP
- Reversed ruling of Arbiter Madriaga
- Galera was WPPs Vice-President, and therefore, a corporate officer at the time she was removed
by the BoD and not an employee of the respondent corporation
- This an intra-corporate dispute which is beyond the LAs jurisdiction. These consolidated cases
clearly involve the relationship between a corporation and its officer and is properly within the
definition of an intra-corporate relationship which is within the jurisdiction of the SEC
Galera assailed the NLRCs decision and resolution before the appellate court
Decision of Appellate Court: In favor of Galera
- The appellate court reversed and set aside the decision of the NLRC
- A corporation, through its board of directors, could only act in the manner and within the
formalities, if any, prescribed by its charter or by the general law
- Even if Galera had been appointed by the BoD, WPPs By-Laws provided for only 1 Vice-
President, a position already occupied by private respondent Webster
- The same defect also stains the BoD appointment of Galera as a Director of the corporation,
because at that time the By-Laws provided for only 5 directors
- The BoD then exceeded when it enacted Resolution of Dec. 31 1999 and May 31 2000 its
authority under the By-Laws and are, therefore, ultra vires
Issues:
1. W/N Galera is a regular employee of WPP.
2. W/N the Labor Arbiter and the NLRC has jurisdiction over the present case.
3. If Galera is a regular employee of WPP, W/N the former was illegally dismissed.
Ruling:
1. YES. Galera is a regular employee of WPP.
- An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate
officer (VP with the operational title of Managing Director of Mindshare) during a special
meeting of WPPs BoD is an appointment to a non-existent corporate office
- WPPs by-laws provided for only 1 VP. At the time of Galeras appointment, WPP already had 1
VP in the person of Webster
- Galera cannot be said to be a director of WPP also because all 5 directorship positions provided
in the by-laws are already occupied
- WPP cannot rely on its Amended By-Laws to support its argument that Galera is a corporate
officer because the SEC approved the amended by-laws 2 months after Galeras dismissal
- An indication that the Employment Contract was one of regular employment is Section 12, which
states that the rights to any invention, discovery, improvement in procedure, trademark, or
copyright created or discovered by Galera during her employment shall automatically belong to
WPP
- Disciplinary procedure under Sec. 10 and 11 of the Employment Contract, which states that her
right of redress is through Mindshares CEO for the Asia-Pacific. If she was a corporate officer,
she wouldve been under the control of the B.o.D
2. Yes. They have the jurisdiction over the instant cases.
- Galera being an employee, then the Labor Arbiter and the NLRC have jurisdiction over the
present case
- Article 217 of the Labor Code provides that the Labor Arbiters have original and exclusive
jurisdiction over termination disputes.
- Sec. 5.2 of RA 8799 or the Securities Regulation Code: Commission shall retain jurisdiction over
pending cases involving intra-corporate disputes submitted for final resolution
3. Yes. She was dismissed illegally.
- WPPs dismissal of Galera lacked both substantive and procedural due process
- WPP failed to prove any just or authorized cause for Galeras dismissal
- The law further requires that the employer must furnish the worker sought to be dismissed with 2
written notices before termination of employment can be legally effected:
- notice which apprises the employee of the particular acts or omissions for which his dismissal
is sought
- the subsequent notice which informs the employee of the employers decision to dismiss him.
- Failure to comply with the requirements taints the dismissal with illegality. WPPs acts clearly show
that Galeras dismissal did not comply with the 2-notice rule
The law and the rules are consistent in stating that the employment permit must be acquired prior
to employment. Since Galera was not able to comply with this, she cannot claim for the benefits like
the 13th month and the like in the instant case.