Aliviado vs.

Procter and Gamble DIGEST

DECEMBER 19, 2016 ~ VBDIAZ

Aliviado vs. Procter and Gamble

G.R. No. 160506 June 6, 2011

Facts:

Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with either Promm-Gem or

SAPS. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They

received their wages from Promm-Gem or SAPS.

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism,

dishonesty or changing day-off without prior notice.

To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for

the promotion and merchandising of its products.

In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits

with damages.

Issue: WON P&G is the employer of petitioners.

Held:

In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-

Gem and SAPS are labor-only contractors or legitimate job contractors

.Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or

services. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current

labor rules expressly prohibit labor-only contracting.

To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places

workers to perform a job, work or service for a principal and any of the following elements are present:

1. i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to

be performed andthe employees recruited, supplied or placed by such contractor or subcontractor are performing activities

which are directly related to the main business of the principal; or

1. ii) The contractor does not exercise the right to control over the performance of the work of the contractual

Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate

independent contractor.

Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are

directly related to the principal business of P&G, we find that the former is engaged in labor-only contracting.

Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the

employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive

purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and
 the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the

principal employer.

Petition Granted

NOTE:

1. Respondent filed MR, which was denied.

2. In its resolution, the Court upheld its decision declaring SAPS has no substantial capital, therefore, labor-only contractor.-

COCA COLA BOTTLERS INC v. DELA CRUZ

G.R. No. 184977CASE DIGEST
Where the contractors were merely suppliers of labor, the contracted personnel, engaged in component
functions in the main business of the company under the latters supervision and control, cannot but be
regular company employees.

FACTS:
Respondents Dela Cruz et.al. filed complaints for regularization with money claims against Coca-Cola Bottlers.
The respondents alleged theyare route helpers who go from the Coca- Cola sales offices or plants to customer
outlets, and doing such, their jobs are necessary anddesirable in its main business. They further alleged that
they worked under the control and supervision of the companys supervisors who
prepared their work schedules and assignments. They argued that the petitioners contracts of services
with Peerless and Excellent are in thenature of labor -only contracts prohibited by law since Peerless and
Excellent did not have sufficient capital or investment to provide servicesto the petitioner. Coca-cola, the
petitioner, contended that it entered into contracts of services with Peerless and Excellent Partners to provide
allied services and that the contractors shall pay the salaries of all personnel assigned to the petitioner. It
claimed that its main business is softdrinks manufacturing and the respondents tasks of
sale and distribution are not part of the manufacturing process. The petitioner posited that thereis no
employer-employee relationship between the company and the respondents and the complaints should be
dismissed for lack of jurisdiction.The labor arbiter and the NLRC dismissed the case. CA reversed the
decision and denied the motion for reconsideration. Thus this petition.ISSUE:

W/N Excellent and Peerless were independent labor contractors or labor -only contractors.

HELD: Article 106 which provides:

Whenever, an employer enters into a contract with another person for the performance of the formers work,
theemployees of the contractor and of the latters subcontractor shall be paid in accordance with the
provisions of this Code
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 whichare directly related to
the principal business of such employer. In such cases, the person or intermediary shall be considered merely
as anagent of the employer who shall be responsible to the workers in the same manner and extent as if the
alter were directly employed by him.The CA noted that both the contracts for Peerless and the Excellent show
that their obligation was solely to provide the company with theservices of contractual employees,
and nothing more. Peerless and Excellent were mere suppliers of labor who had no sufficientcapitalization
and equipment to undertake sales and distribution of softdrinks as independent activities separate from the
manufacture ofsoftdrinks, and who had no control and supervision over the contracted personnel. They are
therefore labor-only contractors. Consequently,
the contracted personnel, engaged in component functions in the main business of the company under the
latters supervision and control, cannot but be regular company employees

PETITIONER Marites R. Cusap and 27 other employees filed a complaint for illegal dismissal against the respondents Adidas
Philippines, Inc., (Adidas), Promotion Resources & Inter-Marketing Exponents, Inc. (Prime), and later amended to include JC
Athletes, Inc. (JCA). They alleged that they were regular employees of Adidas after having worked as promo girls and stockmen
at the companys various rented outlets for years, ranging from one year to seven years. After its contract with its former
distributor, World Sports, Inc. (WOSI) expired, Adidas allegedly contracted JCA to be its exclusive distributor. In turn, JCA
entered into a promotional contract with PRIME. Petitioners claimed that they were dismissed from employment when the
service contract between PRIME and JCA was terminated. They argued that Adidas was their real employer, not PRIME, which
was merely a recruitment agency supplying Adidas with human resources. They pointed out that for years that they were
employed, they worked for Adidas, under its supervision and control and that of JCA personnel. Their work being related to
and in pursuit of Adidas principal business activity, they claimed they are its regular employees.
Can their action prosper?

Ruling: Yes. Again, in the absence of evidence that JCA had the wherewithal to undertake its distribution agreement with
Adidas, except to enter into a promotions contract with PRIME, we find merit in the petitioners contention that Adidas and
JCA, at a time, held office in the same address; and that Adidas provided the storage places and the outlets for the distribution
of its products, not PRIME or JCA. As the petitioner points out, formerly it was WOSI and later JCA which acted as agent of
Adidas. The record bears out her observations. Thus, the petitioner and the complainants (who withdrew from the case) were
performing activities that were necessary to market the products that Adidas itself manufactured. They sold these products for
several years, starting in June 1995 until Dec. 9, 2000. While Adidas explains that it amended its articles of incorporation in
October 2002 to engage in retail, it cannot be denied that in 1995, it was already in the retail business through its agents WOSI
and JCA and labor-only contractor PRIME. Thus, the petitioner had become an Adidas regular employee a long time before she
was supposedly made a contractual employee of PRIME. In the absence of evidence showing how or in what manner PRIME
carried out its promotion work under its contract with JCA and how it provided the necessary requirements for such
undertaking (such as the maintenance of storage areas and engagement of sales outlets), we likewise find merit in the
petitioners submission that it was Adidas who exercised control and supervision over the petitioners work performance,
through its sales manager Sonny Niebres, its president Philip Go, and even Cornelia Indon, head of the WOSI concession. In
sum, we hold that PRIME failed to satisfy the four-fold employer-employee relationship test, making it a labor-only contractor
under the law and the rules. Like JCA, it was merely an agent of Adidas, notwithstanding the quitclaims of some of the
complainants in its favor. Adidas, therefore, is petitioners real employer who shall be responsible to her in the same manner
and extent as if she were directly employed by the company (Brion, J., SC Second Division, Marites R. Cusap, v. Adidas
Philippines, Inc., (Adidas), Promotion Resources & Inter-Marketing Exponents, Inc. (PRIME) and JC Athletes, Inc. (JCA), G.R. No.
201494, July 29, 2015).

ON various dates from 1979 to 1998, Armz Caberte and eight other respondents were hired to work at petitioner Petron
Corp.s Bacolod Bulk Plant in San Patrick, Bacolod City, Negros Occidental as LPG/Gasul fillers, maintenance crew,
warehousemen, utility workers and tanker receiving crew. For the periods from March 1, 1996 to February 28, 1999 and Nov.
1, 1996 to June 30, 1999, Petron and ABC, a labor contracting business owned and operated by Antonio Caberte Sr., entered
into a contract for services and a contract for LPG assistance services. Under both service contracts, ABC undertook to provide
utility and maintenance services to Petron in its Bacolod Bulk Plant. Alleging that they were no longer allowed by Petron to
enter and work in the premises of plant, respondents filed on July 2, 1999 before the Labor Arbiter a complaint for illegal
dismissal with money claims and damages against Petron, ABC and Caberte Sr. claiming that ABC is a labor-only contractor and
Petron is their true employer. Petron invoked the defense that ABC is an independent contractor which supplied the needed
manpower for the maintenance of its bulk handling premises and offices, as well as for tanker assistance in the receiving and
re-filling of its LPG products. It has no direct control and supervision over respondents who were tasked to perform work
required by the service contracts it entered into with fABC, and that it cannot allow the continuous employment of
respondents beyond the expiration of the contracts with ABC. Petron also averred that the activities performed by respondents
were not necessary and desirable to its principal business.
Does the defense find merit?

Ruling: No. The Court finds otherwise. Gestupa, Ponteras, Develos, Blanco and Mariano were LPG fillers and maintenance crew;
Caberte was an LPG operator supervisor; Te was a warehouseman and utility worker; and Servicio and Galorosa were tanker
receiving crew and utility workers. Undoubtedly, the work they rendered were directly related to Petrons main business, vital
as they are in the manufacture and distribution of petroleum products. Besides, some of the respondents were already
working for Petron even before it engaged ABC as a contractor in 1996. Albeit it was made to appear that they were under the
different contractors that Petron engaged over the years, respondents have been regularly performing the same tasks within
the premises of Petron. This the repeated and continuing need for the performance of the job is sufficient evidence of the
necessity, if not indispensability of the activity to the business. What further militates against Petrons claim that ABC, as an
alleged independent contractor, is the true employer of respondents, is the fact that Petron has the power of control over
respondents in the performance of their work. It bears stressing that the power of control calls for the existence of the right to
control and not necessarily the exercise thereof. Here, Petron admitted in its position paper that the supervision of a Petron
employee is required over LPG and tanker assistance jobs for inventory control and safety checking purposes. It explained that
due to the hazardous nature of its products, constant checking of the procedures in their handling is essential considering the
high possibility of fatal accidents. It also admitted that it was the one supplying the materials and equipment in discharging
these functions to insure the integrity, quality and safety of its products. It is clear that Petron failed to prove that ABC is not a
labor-only contractor. A finding that a contractor is a labor-only contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed contractor, and the labor-only
contractor is considered as a mere agent of the principal, the real employer. In this case, Petron is declared the true employer
of respondents, who are considered regular employees as they have been regularly performing activities necessary and
desirable to the usual business of Petron for a number of years (Del Castillo, J., SC Second Division, Petron Corporation vs. Armz
Caberte, et. al., G.R. No. 182255, June 15, 2015).
PETITIONER Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing and Promotions Corp. (Zytron)
for the marketing and promotion of its milk and dairy products. Pursuant to the contract, Zytron provided Fonterra with trade
merchandising representatives (TMRs), including respondents Leonardo Largado and Teotimo Estrellado. The engagement of
their services was from Sept. 15, 2003 and May 27, 2002, respectively, to June 6, 2006. On May 3, 2006, Fonterra sent Zytron a
letter terminating its promotions contract, effective June 5, 2006. Subsequently, Fonterra entered into an agreement for
manpower supply with A.C. Sicat Marketing and Promotional Services (A.C. Sicat). Desirous of continuing their work as TMRs,
respondents applied for and were hired by A.C. Sicat for a term of five months beginning June 7, 2006 up to Nov.r 6, 2006.
Respondents alleged that when their 5-month contracts with A.C. Sicat were about to expire, they sought renewal thereof but
were refused. This prompted them to file complaints for illegal dismissal, regularization, non-payment of service incentive
leave and 13th month pay, and actual and moral damages against petitioner, Zytron, and A.C. Sicat. Both the Labor Arbiter and
the National Labor Relations Commission (NLRC) found that respondents were not illegally dismissed. They were the ones who
refused to renew their contracts. The Court of Appeals (CA) reversed their findings and ruled that respondents were illegally
dismissed.

Did the CA err?

Ruling: Yes. We do not agree with the CA that respondents employment with Zytron was illegally terminated. As correctly held
by the Labor Arbiter and the NLRC, the termination of respondents employment with Zytron was brought about by the
cessation of their contracts with the latter. We give credence to the Labor Arbiters conclusion that respondents were the ones
who refused to renew their contracts with Zytron, and the NLRCs finding that they themselves acquiesced to their transfer to
A.C. Sicat. By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is the
voluntary act of employees who are compelled by personal reasons to dissociate themselves from their employment, done
with the intention of relinquishing an office, accompanied by the act of abandonment. Here, it is obvious that respondents
were no longer interested in continuing their employment with Zytron. Their voluntary refusal to renew their contracts was
brought about by their desire to continue their assignment in Fonterra, which could not happen in view of the conclusion of
Zytrons contract with Fonterra. Hence, to be able to continue with their assignment, they applied for work with A.C. Sicat with
the hope that they will be able to continue rendering services as TMRs at Fonterra since A.C. Sicat is Fonterras new manpower
supplier. This fact is even acknowledged by the CA in the assailed decision, where it recognized the reason why respondents
applied for work at A.C. Sicat. The CA stated that to continuously work as merchandisers of Fonterra products, respondents
submitted their job applications to A.C. Sicat xxx. This is further bolstered by the fact that respondents voluntarily complied
with the requirements for them to claim their corresponding monetary benefits in relation to the cessation of their
employment contract with Zytron. In short, respondents voluntarily terminated their employment with Zytron by refusing to
renew their employment contracts with the latter, applying with A.C. Sicat, and working as the latters employees, thereby
abandoning their previous employment with Zytron. Too, it is well to mention that for obvious reasons, resignation is
inconsistent with illegal dismissal. This being the case, Zytron cannot be said to have illegally dismissed respondents, contrary
to the findings of the CA. (Velasco, Jr. J., Third Division; Fonterra Brands Phils., Inc. vs. Leonardo Largado and Teotimo
Estrellado, G.R. No. 205300, March 18, 2015).

In the case of Alilin vs. Petron G.R. No. 177592 9 June 2014, the Supreme Court held that: Generally, the contractor is
presumed to be a labor-only contractor, unless such contractor overcomes the burden of proving that it has the substantial
capital, investment, tools and the like. However, where the principal is the one claiming that the contractor is a legitimate
contractor, as in the present case, said principal has the burden of proving that supposed status.

Avelino S. Alilin, et al. vs. Petron Corporation

FACTS:

Alilin, et al. are laborers hired by Romualdo D. Gindang Contractor and RDG to work in the premises of Petron's bulk plant.
Their dates of hiring range from 1968 to 1993. In 2000, Petron and RDG entered into a Contract of Services for the period June
1, 2000 to May 31, 2002 whereby RDG undertook to provide Petron with janitorial, maintenance, tanker receiving, packaging
and other utility services in its Mandaue Bulk Plant. This contract was extended on July 31, 2002 and further extended until
September 30, 2002. Upon expiration, no further extension was made. Thus, on October 16, 2002, Alilin, et al. were barred
from continuing their services with Petron.

Hence, the filing of a complaint for illegal dismissal, etc. against Petron, claiming to be the latter's regular employees. Petron,
on the other hand, alleges that they are employees of RDG, an independent contractor. It presented the following pieces of
evidence: (1) RDG's Certificate of Registration of Business Name issued by DTI; (2) RDG's Certificate of Registration issued by
DOLE; (3) Contractor's Pre-Qualification Statement; (4) Conflict of Interest Statement signed by Romeo Gindang as manager of
RDG; (5) RDG's Audited Financial Statements for the years 1998, 1999 and 2000; (6) RDG's Mayor's Permit for the years 2000
and 2001; (7) RDG's Certificate of Accreditation issued by DTI; (8) performance bond and insurance policy; (9) SSS Online
Inquiry System Employee Contributions and Employee Static Information; and (10) Romeo's affidavit stating that he had paid
the salaries of his employees assigned to Petron.
LA found against Petron and ruled that Alilin, et al. are its regular employees because their jobs were directly related to
Petron's business operations; they worked under the supervision of Petron's foreman; they were using Petron's tools and
equipment in the performance of their works. NLRC affirmed the ruling. However, CA reversed the ruling and found RDG to be
a legitimate contractor.

ISSUE: Whether or not RDG is a legitimate contractor

HELD:

Petron failed to discharge the burden of proving that RDG is a legitimate contractor. Hence, the presumption that RDG is a
labor-only contractor stands.

The audited financial statements and other financial documents of RDG for the years 1999 to 2001 establish that it does have
sufficient working capital to meet the requirements of its service contract. In fact, the financial evaluation conducted by Petron
of RDG's financial statements for years 1998-2000 showed RDG to have a maximum financial capability of Php4.807 Million as
of December 1998, and PHp1.611 Million as of December 2000. Petron was able to establish RDG's sufficient capitalization
when it entered into the service contract in 2000. The Court stresses though that this determination of RDG's status as an
independent contractor is only with respect to its financial capability for the period covered by the financial and other
documents presented. In other words, the evidence adduced merely proves that RDG was financially qualified as a legitimate
contractor but only with respect to its last service contract with Petron in the year 2000.

As may be recalled, petitioners have rendered work for Petron for a long period of time even before the service contract was
executed in 2000. The respective dates on which petitioners claim to have started working for Petron, as well as the fact that
they have rendered continuous service to it until October 16, 2002, when they were prevented from entering the premises of
Petron's Mandaue Bulk Plant, were not at all disputed by Petron. In fact, Petron even recognized that some of the petitioners
were initially fielded by Romualdo Gindang, the father of Romeo, through RDG's precursor, Romualdo D. Gindang Contractor,
while the others were provided by Romeo himself when he took over the business of his father in 1989. Hence, while Petron
was able to establish that RDG was financially capable as a legitimate contractor at the time of the execution of the service
contract in 2000, it nevertheless failed to establish the financial capability of RDG at the time when petitioners actually started
to work for Petron in 1968, 1979, 1981, 1987, 1990, 1992 and 1993.

Petron's power of control over petitioners exists in this case

The facts that petitioners were hired by Romeo or his father and that their salaries were paid by them do not detract from the
conclusion that there exists an employer-employee relationship between the parties due to Petron's power of control over
petitioners. One manifestation of the power of control is the power to transfer employees from one work assignment to
another. Here, Petron could order petitioners to work outside of their regular "maintenance/utility" job. Also, petitioners were
required to report for work every day at the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear
proper uniform and safety helmets as prescribed by the safety and security measures being implemented within the bulk plant.
All these imply control. In an industry where safety is of paramount concern, control and supervision over sensitive operations,
such as those performed by the petitioners, are inevitable if not at all necessary. Indeed, Petron deals with commodities that
are highly volatile and flammable which, if mishandled or not properly attended to, may cause serious injuries and damage to
property and the environment. Naturally, supervision by Petron is essential in every aspect of its product handling in order not
to compromise the integrity, quality and safety of the products that it distributes to the consuming public.

Petitioners already attained regular status as employees of Petron

Petitioners were given various work assignments such as tanker receiving, barge loading, sounding, gauging, warehousing,
mixing, painting, carpentry, driving, gasul filling and other utility works. Petron refers to these work assignments as menial
works which could be performed by any able-bodied individual. The Court finds, however, that while the jobs performed by
petitioners may be menial and mechanical, they are nevertheless necessary and related to Petron's business operations. If not
for these tasks, Petron's products will not reach the consumers in their proper state. Indeed, petitioners' roles were vital
inasmuch as they involve the preparation of the products that Petron will distribute to its consumers.

Furthermore, while it may be true that any able-bodied individual can perform the tasks assigned to petitioners, the Court
notes the undisputed fact that for many years, it was the same able-bodied individuals (petitioners) who performed the tasks
for Petron. The engagement of petitioners for the same works for a long period of time is a strong indication that such works
were indeed necessary to Petron's business. In view of these, and considering further that petitioners' length of service entitles
them to become regular employees under the Labor Code, petitioners are deemed by law to have already attained the status
as Petitioner's regular employees. As such, Petron could not terminate their services on the pretext that the service contract it
entered with RDG has already lasped.

The principal who alleges that the contractor is a legitimate one has the burden of proving permissible contracting
For a contractor to be considered a legitimate one, it must have substantial capitalization for the entire duration that the
contractor's employees were assigned at the principal's premises

Case Digest
Case Digest: Manila Memorial v. Lluz (February 3, 2016)
February 24, 2017
|
Lord Zedrique T. Macatiag
Undisputed Facts and Material Dates

On 23 February 2006, Manila Memorial Park Cemetery, Inc. (Manila Memorial) entered into a Contract of Services with Ward
Trading and Services (Ward Trading). The Contract provided that Ward Trading, as a job contractor, will render interment and
exhumation services and other related work to Manila Memorial in order to supplement operations at Manila Memorial Park,
Paraaque City.

Ward Trading assigned respondents Ezard Lluz and eight others[1] (respondents) to perform services at the Manila Memorial
Park.

On 26 June 2007, the respondents filed a Complaint for regularization and Collective Bargaining Agreement (CBA) benefits
against Manila Memorial, Enrique B. Lagdameo, Manila Memorials Executive Vice-President and Director in Charge for Overall
Operations, and Ward Trading. On 6 August 2007, respondents filed an amended complaint to include illegal dismissal,
underpayment of 13th month pay, and payment of attorneys fees.

Employees Allegations and Position

Respondents alleged that they asked Manila Memorial to consider them as regular workers within the appropriate bargaining
unit established in the CBA by Manila Memorial and its union, the Manila Memorial Park Free Workers Union (MMP Union).
Manila Memorial refused the request since respondents were employed by Ward Trading, its contractor. Thereafter,
respondents joined the MMP Union. The MMP Union, on behalf of respondents, sought their regularization, which Manila
Memorial again declined. Respondents then filed the complaint. Subsequently, respondents were dismissed. Thus,
respondents amended the complaint to include the prayer for their reinstatement and payment of back wages.

Employers Allegations and Position

Manila Memorial argued that it has no employer-employee relationship with the respondents since they were the employees
of Ward Trading.

The Labor Arbiters Ruling

The LA dismissed the complaint for failure to prove the existence of employer-employee relationship between Manila
Memorial and the respondents.

The NLRCs Ruling on the Appeal and on the MR

The NLRC reversed the decision of the LA, ruling that Ward Trading is a labor-only contractor. This implies that Ward Trading is
merely an agent of Manila Memorial, and therefore, the respondents are the employees of the latter. The Motion for
Reconsideration filed by Manila Memorial was denied.

Court of Appeal's Ruling on the Appeal and on the MR

The CA affirmed the ruling of the NLRC. It subsequently denied Manila Memorials Motion for Reconsideration.

Factual and Evidentiary Issue

Whether or not Ward Trading is a labor-only contractor YES, and Manila Memorial is the employer of the respondents.

Supreme Court's Ratio Decidendi

As provided under Department Order No. 18-02, Sec. 7 (2), where there is labor-only contracting, the principal shall be deemed
the employer of the contractual employee.
The elements of labor-only contracting are found in Ward Trading
The Court cited Department Order No. 18-02, Sec. 5, which prohibits labor-only contracting and provides for its definition:
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and any of the following elements are present:
The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal; or
The contractor does not exercise the right to control over the performance of the work of the contractual employee.
xxxx

Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the
performance or completion of the job, work or service contracted out.

The right to control shall refer to the right reserved to the person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

Hence, there is labor only contracting when the contractor has no substantial capital or investment, OR does not exercise the
right to control over the contractual employees performance. These two elements are found in the case of Ward Trading.
Ward Trading has no substantial capital or investment
In the case of investment, Ward Trading had practically none. While the Contract of Services provides that Manila Memorial
shall sell equipment worth P1.4 million to Ward Trading[2], the Court found no evidence to prove that the sale actually pushed
through or that payments were made by Ward Trading.

The Contract also provides that Manila Memorial shall have the right to rent back from Ward Trading all or any of its
equipment.[3] This provision, as the Court agreed with the NLRC, is clear proof that Ward Trading does not have an absolute
right to use or enjoy the equipment; hence proving that it has no ownership thereof.

Furthermore, since Manila Memorial agreed to provide office space for Ward Tradings staff and personnel, the Court treated it
as a clear proof that even its work premises are not owned by Ward Trading.

Lastly, the Court had the following to say on the increase of Ward Tradings capital:

Ward Tradings Balance Sheet as of 31 December 2005 showed that it had assets in the amount of P441,178.50 and property
and equipment with a net book value of P86,026.50 totaling P534,705. A year later, Ward Tradings Balance Sheet ending in 31
December 2006 showed that it had assets in the amount of P57,084.70 and property and equipment with a net book value of
P1,426,468 totaling P1,491,052.70. Ward Trading, in its Income Statements for the years 2005 and 2006, only earned a net
income of P53,800.00 in the year ending 2005 and P68,141.50 in 2006. Obviously, Ward Trading could not have raised a
substantial capital of P1,400,000.00 from its income alone without the inclusion of the equipment owned and allegedly sold by
Manila Memorial to Ward Trading after they signed the Contract of Services on 23 February 2006. (Citations omitted, emphasis
supplied.)
Ward Trading has no control over the work performance of the respondents
The Court agreed with the CA that the Contract of Services shows proof that Manila Memorial even retained control over the
performance of the work of the respondents. The Court cited the findings of the CA:

A perusal of the Service Contract would reveal that respondent Ward is still subject to petitioners control as it specifically
provides that although Ward shall be in charge of the supervision over individual respondents, the exercise of its supervisory
function is heavily dependent upon the needs of petitioner Memorial Park.

XXX

The contract further provides that petitioner has the option to take over the functions of Wards personnel if it finds any part
or aspect of the work or service provided to be unsatisfactory.
Evidence did not overcome the presumption of labor-only contracting
The Court found that Ward Trading is not a registered contractor under the Department of Labor and Employment. The Court
cited D.O. No. 18-02 once more regarding the presumption of labor-only contracting, which arises from failure to register:

Section 11. Registration of Contractors or Subcontractors. Consistent with authority of the Secretary of Labor and
Employment to restrict or prohibit the contracting out of labor through appropriate regulations, a registration system to
govern contracting arrangements and to be implemented by the Regional Office is hereby established.

The Registration of contractors and subcontractors shall be necessary for purposes of establishing an effective labor market
information and monitoring.
Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting. (Emphasis
supplied.)

For failing to register as a contractor, Ward Trading is presumed engaged in labor-only contracting unless it proves that it has
substantial capital, investment, tools and the like. In this case, however, the opposite was proven.

[1] Norman Corral, Erwin Fugaban, Valdimar Balisi, Emilio Fabon, John Mark Aplicador, Michael Curioso, Junlin Espares, and
Gavino Farinas.

[2] The COMPANY shall [sell] to the contractor the COMPANY owned equipment in the amount of ONE MILLION FOUR
HUNDRED THOUSAND PESOS ONLY (Php 1,400,000.00) payable in two (2) years or a monthly payment of FIFTY EIGHT
THOUSAND THREE HUNDRED THIRTY FIVE PESOS ONLY (Php 58,335.00) to be deducted from the CONTRACTORs billing.

[3] 5. The COMPANY reserves the right to rent all or any of the CONTRACTORs equipment in the event the COMPANY requires
the use of said equipment. x x x.

FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU

G.R. NO. 204944-45 DECEMBER 3, 2014
J. Leonen

FACTS: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a news correspondent/producer tasked
to report Philippine news to Fuji through its Manila Bureau field office. The employment contract was initially for one year, but
was successively renewed on a yearly basis with salary adjustments upon every renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the Chief of News Agency
of Fuji, Yoshiki Aoki, informed the former that the company had a problem with renewing her contract considering her
condition. Arlene insisted she was still fit to work as certified by her attending physician.

After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In consideration thereof,
Arlene acknowledged the receipt of the total amount of her salary from March-May 2009, year-end bonus, mid-year bonus and
separation pay. However, Arlene executed the non-renewal contract under protest.

Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC, alleging that she was forced to sign
the non-renewal contract after Fuji came to know of her illness. She also alleged that Fuji withheld her salaries and other
benefits when she refused to sign, and that she was left with no other recourse but to sign the non-renewal contract to get her
salaries.

ISSUES:
1. Was Arlene an independent contractor?
2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed?
4. Did the Court of Appeals correctly awarded reinstatement, damages and attorneys fees?

LAWS:
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided, That, any employee
who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall continue while such activity exist.

Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an employee
except for a just cause of when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.

Thus, on the right to security of tenure, no employee shall be dismissed, unless there are just or authorized causes and only
after compliance with procedural and substantive due process is conducted.
Art. 284. Disease as 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 is prejudicial to his health as well as to
the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-
half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as
one (1) whole year.

Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code. 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 a 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.

CASE HISTORY:
Labor Arbiter dismissed the complaint and held that Arlene was not a regular employee but an independent contractor.

The NLRC reversed the Labor Arbiters decision and ruled that Arlene was a regular employee since she continuously rendered
services that were necessary and desirable to Fujis business.

The Court of Appeals affirmed that NLRC ruling with modification that Fuji immediately reinstate Arlene to her position without
loss of seniority rights and that she be paid her backwages and other emoluments withheld from her. The Court of Appeals
agreed with the NLRC that Arlene was a regular employee, engaged to perform work that was necessary or desirable in the
business of Fuji, and the successive renewals of her fixed-term contract resulted in regular employment. The case of Sonza
does not apply in the case because Arlene was not contracted on account of a special talent or skill. Arlene was illegally
dismissed because Fuji failed to comply with the requirements of substantive and procedural due process. Arlene, in fact,
signed the non-renewal contract under protest as she was left without a choice.

Fuji filed a petition for review on certiorari under Rule 45 before the Supreme Court, alleging that Arlene was hired as an
independent contractor; that Fuji had no control over her work; that the employment contracts were renewed upon Arlenes
insistence; that there was no illegal dismissal because she freely agreed not to renew her fixed-term contract as evidenced by
her email correspondences.

Arlene filed a manifestation stating that the SC could not take jurisdiction over the case since Fuji failed to authorize Corazon
Acerden, the assigned attorney-in-fact for Fuji, to sign the verification.

RULING:
1. Arlene was not an independent contractor.

Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired because of her skills. Her salary
was higher than the normal rate. She had the power to bargain with her employer. Her contract was for a fixed term. It also
stated that Arlene was not forced to sign the non-renewal agreement, considering that she sent an email with another version
of her non-renewal agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and supervision over her work; (2) that she based
her work on instructions from Fuji; (3) that the successive renewal of her contracts for four years indicated that her work was
necessary and desirable; (4) that the payment of separation pay indicated that she was a regular employee; (5) that the Sonza
case is not applicable because she was a plain reporter for Fuji; (6) that her illness was not a ground for her dismissal; (7) that
she signed the non-renewal agreement because she was not in a position to reject the same.

Distinctions among fixed-term employees, independent contractors, and regular employees

Fixed Term Employment

1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or
improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no
moral dominance exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine applicable only in a few special cases wherein the
employer and employee are on more or less in equal footing in entering into the contract. The reason for this is evident: when
a prospective employee, on account of special skills or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the ordinary worker. Lesser limitations on the parties
freedom of contract are thus required for the protection of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brent are satisfied, this court will recognize the validity of the fixed-term contract.
(GMA Network, Inc. vs. Pabriga)
Independent Contractor

One who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own
account and under ones own responsibility according to ones own manner and method, free from the control and direction of
the principal in all matters connected with the performance of the work except as to the results thereof.

No employer-employee relationship exists between the independent contractors and their principals.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance
of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with
the provisions of this Code.

XXX
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to
protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.

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 person 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.

Department Order No. 18-A, Series of 2011, Section 3

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a
specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the principal.

This department order also states that there is a trilateral relationship in legitimate job contracting and subcontracting
arrangements among the principal, contractor, and employees of the contractor. There is no employer-employee relationship
between the contractor and principal who engages the contractors services, but there is an employer-employee relationship
between the contractor and workers hired to accomplish the work for the principal.162chanRoblesvirtualLawlibrary

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and talents that set them
apart from ordinary employees. There is no trilateral relationship in this case because the independent contractor himself or
herself performs the work for the principal. In other words, the relationship is bilateral.

XXX

There are different kinds of independent contractors: those engaged in legitimate job contracting and those who have unique
skills and talents that set them apart from ordinary employees.

Since no employer-employee relationship exists between independent contractors and their principals, their contracts are
governed by the Civil Code provisions on contracts and other applicable laws.
Regular Employees

Contracts of employment are different and have a higher level of regulation because they are impressed with public interest.
Article 13, Section 3 of the 1987 Constitution provides full protection to labor.

Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that : The relations between capital and labor are
not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and similar subjects.

In contracts of employment, the employer and the employee are not on equal footing. Thus, it is subject to regulatory review
by the labor tribunals and courts of law. The law serves to equalize the unequal. The labor force is a special class that is
constitutionally protected because of the inequality between capital and labor.176 This presupposes that the labor force is
weak.
The level of protection to labor should vary from case to caese. When a prospective employee, on account of special skills or
market forces, is in a position to make demands upon the prospective employer, such prospective employee needs less
protection than the ordinary worker.

The level of protection to labor must be determined on the basis of the nature of the work, qualifications of the employee, and
other relevant circumstances such as but not limited to educational attainment and other special qualifications.

Fujis argument that Arlene was an independent contractor under a fixed-term contract is contradictory. Employees under
fixed-term contracts cannot be independent contractors because in fixed-term contracts, an employer-employee relationship
exists. The test in this kind of contract is not the necessity and desirability of the employees activities, but the day certain
agreed upon by the parties for the commencement and termination of the employment relationship. For regular employees,
the necessity and desirability of their work in the usual course of the employers business are the determining factors. On the
other hand, independent contractors do not have employer-employee relationships with their principals.

To determine the status of employment, the existence of employer-employee relationship must first be settled with the use of
the four-fold test, especially the qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired result without dictating the means or
methods to be employed creates no employer-employee relationship; whereas those that control or fix the methodology and
bind or restrict the party hired to the use of such means creates the relationship.

In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence that she was hired for her unique skills
that would distinguish her from ordinary employees. Her monthly salary appeared to be a substantial sum. Fuji had the power
to dismiss Arlene, as provided for in her employment contract. The contract also indicated that Fuji had control over her work
as she was rquired to report for 8 hours from Monday to Friday. Fuji gave her instructions on what to report and even her
mode of transportation in carrying out her functions was controlled.

Therefore, Arlene could not be an independent contractor.

2. Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable
connection between the particular activity performed by the employee in relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual
business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its
relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a
specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade.

However, there may be a situation where an employees work is necessary but is not always desirable in the usual course of
business of the employer. In this situation, there is no regular employment.

Fujis Manila Bureau Office is a small unit213 and has a few employees. Arlene had to do all activities related to news
gathering.

A news producer plans and supervises newscast [and] works with reporters in the field planning and gathering information,
including monitoring and getting news stories, rporting interviewing subjects in front of a video camera, submission of news
and current events reports pertaining to the Philippines, and traveling to the regional office in Thailand. She also had to report
for work in Fujis office in Manila from Mondays to Fridays, eight per day. She had no equipment and had to use the facilities of
Fuji to accomplish her tasks.

The successive renewals of her contract indicated the necessity and desirability of her work in the usual course of Fujis
business. Because of this, Arlene had become a regular employee with the right to security of tenure.

Arlenes contract indicating a fixed term did not automatically mean that she could never be a regular employee. For as long as
it was the employee who requested, or bargained, that the contract have a definite date of termination, or that the fixed-
term contract be freely entered into by the employer and the employee, then the validity of the fixed-term contract will be
upheld.

3. Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor Code and could be dismissed
only for just or authorized causaes and after observance of due process.
The expiration of the contract does not negate the finding of illegal dismissal. The manner by which Fuji informed Arlene of
non-renewal through email a month after she informed Fuji of her illness is tantamount to constructive dismissal. Further,
Arlene was asked to sign a letter of resignation prepared by Fuji. The existence of a fixed-term contract should not mean that
there can be no illegal dismissal. Due process must still be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book VI, Rule 1, Section 8 of the
Omnibus Rules Implementing the Labor Code require two requirements to be complied with: (1) the employees disease
cannot be cured within six months and his continued employment is prohibited by law or prejudicial to his health as well as to
the health of his co-employees; and (2) certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months. The burden of proving compliance with these requisites is
on the employer. Non-compliance leads to illegal dismissal. blesvirtualLawlibrary

Arlene was not accorded due process. After informing her employer of her lung cancer, she was not given the chance to
present medical certificates. Fuji immediately concluded that Arlene could no longer perform her duties because of
chemotherapy. Neither did it suggest for her to take a leave. It did not present any certificate from a competent public health
authority.

Therefore, Arlene was illegally dismissed.

4. The Court of Appeals correctly awarded reinstatement, damages and attorneys fees.

The Court of Appeals awarded moral and exemplary damages and attorneys fees. It also ordered reinstatement, as the
grounds when separation pay was awarded in lieu of reinstatement were not proven.

The Labor Code provides in Article 279 that illegally dismissed employees are entitled to reinstatement, backwages including
allowances, and all other benefits.

Separation pay in lieu of reinstatement is allowed only (1) when the employer has ceased operations; (2) when the employees
position is no longer available; (3) strained relations; and (4) a substantial period has lapsed from date of filing to date of
finality.

The doctrine of strained relations should be strictly applied to avoid deprivation of the right to reinstatement. In the case at
bar, no evidence was presented by Fuji to prove that reinstatement was no longer feasible. Fuji did not allege that it ceased
operations or that Arlenes position was no longer feasible. Nothing showed that the reinstatement would cause an
atmosphere of antagonism in the workplace.

Moral damages are awarded when the dismissal is attended by bad faith or fraud or constitutes an act oppressive to labor, or
is done in a manner contrary to good morals, good customs or public policy. On the other hand, exemplary damages may be
awarded when the dismissal was effected in a wanton, oppressive or malevolent manner.

After Arlene had informed Fuji of her cancer, she was informed that there would be problems in renewing her contract on
account of her condition. This information caused Arlene mental anguish, serious anxiety, and wounded feelings. The manner
of her dismissal was effected in an oppressive approach with her salary and other benefits being withheld until May 5, 2009,
when she had no other choice but to sign the non-renewal contract.

With regard to the award of attorneys fees, Article 111 of the Labor Code states that [i]n cases of unlawful withholding of
wages, the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. In
actions for recovery of wages or where an employee was forced to litigate and, thus, incur expenses to protect his rights and
interest, the award of attorneys fees is legally and morally justifiablen. Due to her illegal dismissal, Arlene was forced to
litigate.

Therefore, the awards for reinstatement, damages and attorneys fees were proper.

Semblante and Pilar v. CA

G.R. No. 196426 : August 15, 2011

MARTICIO SEMBLANTE AND DUBRICK PILAR, Petitioner, v. COURT OF APPEALS, Respondent.

VELASCO, JR.,J.:

FACTS:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by respondents-spouses
Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue(the cockpit), as the official masiadorand sentenciador,
respectively, of the cockpit sometime in 1993.

As themasiador, Semblante calls and takes the bets from the gamecock owners and other bettors and orders the start of the
cockfight. He also distributes the winnings after deducting thearriba, or the commission for the cockpit. Meanwhile, as the
sentenciador, Pilar oversees the proper gaffing of fighting cocks, determines the fighting cocks physical condition and
capabilities to continue the cockfight, and eventually declares the result of the cockfight.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and
were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal
dismissal against respondents.

In answer, respondents denied that petitioners were their employees and alleged that they were associates of respondents
independent contractor, Tomas Vega. Respondents claimed that petitioners have no regular working time or day and they are
free to decide for themselves whether to report for work or not on any cockfighting day. In times when there are few
cockfights inGallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so respondents assert,
were only issued identification cards to indicate that they were free from the normal entrance fee and to differentiate them
from the general public.

Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of respondents as they performed work that was
necessary and indispensable to the usual trade or business of respondents for a number of years. The Labor Arbiter also ruled
that petitioners were illegally dismissed, and so ordered respondents to pay petitioners their backwages and separation pay.

Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And within the 10-day appeal period, he
filed the respondents appeal with the NLRC on September 24, 2004, but without posting a cash or surety bond equivalent to
the monetary award granted by the Labor Arbiter. It was only on October 11, 2004 that respondents filed an appeal bond
dated October 6, 2004. Hence, in a Resolution dated August 25, 2005, the NLRC denied the appeal for its non-perfection.

Subsequently, however, the NLRC, acting on respondents Motion for Reconsideration, reversed its Resolution on the postulate
that their appeal was meritorious and the filing of an appeal bond, albeit belated, is a substantial compliance with the rules.The
NLRC held in its Resolution of October 18, 2006 that there was no employer-employee relationship between petitioners and
respondents, respondents having no part in the selection and engagement of petitioners, and that no separate individual
contract with respondents was ever executed by petitioners.

The appellate court found for respondents, noting that referees and bet-takers in a cockfight need to have the kind of expertise
that is characteristic of the game to interpret messages conveyed by mere gestures. Hence, petitioners are akin to independent
contractors who possess unique skills, expertise, and talent to distinguish them from ordinary employees.

The CA refused to reconsider its Decision. Hence, petitioners came to this Court, arguing in the main that the CA committed a
reversible error in entertaining an appeal, which was not perfected in the first place.

ISSUE: Whether the CA erred in entertaining an appeal which was not perfected.

HELD:

LABOR LAW

Indeed, the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the
Decision of the Labor Arbiter. Article 223 of the Labor Code provides:

Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both partieswithin ten (10) calendar days from receipt of such decisions, awards, or orders.Such appeal
may be entertained only on any of the following grounds:

xxxx

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 bondissued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.

Time and again, however, this Court, considering the substantial merits of the case, has relaxed this rule on, and excused the
late posting of, the appeal bond when there are strong and compelling reasons for the liberality, such as the prevention of
miscarriage of justice extant in the caseor the special circumstances in the case combined with its legal merits or the amount
and the issue involved.After all, technical rules cannot prevent courts from exercising their duties to determine and settle,
equitably and completely, the rights and obligations of the parties. This is one case where the exception to the general rule lies.

While respondents had failed to post their bond within the 10-day period provided above, it is evident, on the other hand, that
petitioners are NOT employees of respondents, since their relationship fails to pass muster the four-fold test of employment
We have repeatedly mentioned in countless decisions:
(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 employees conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners selection and management;petitioners
compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by petitioners;and
petitioners performed their functions asmasiadorandsentenciadorfree from the direction and control of respondents. In the
conduct of their work, petitioners relied mainly on their expertise that is characteristic of the cockfight gambling, and were
never given by respondents any tool needed for the performance of their work.

Respondents, not being petitioners employers, could never have dismissed, legally or illegally, petitioners, since respondents
were without power or prerogative to do so in the first place. The rule on the posting of an appeal bond cannot defeat the
substantive rights of respondents to be free from an unwarranted burden of answering for an illegal dismissal for which they
were never responsible.

Strict implementation of the rules on appeals must give way to the factual and legal reality that is evident from the records of
this case.After all, the primary objective of our laws is to dispense justice and equity, not the contrary.

DENIED.

TEMIC AUTOMOTIVE PHILIPPINES, INC.,

Petitioner, vs.
TEMIC AUTOMOTIVE PHILIPPINES, INC. EMPLOYEES UNION-FFW,
Respondent. FACTS: Respondent Temic Automotive Philippines, Inc. Employees Union-FFW (
union) is the exclusive bargaining agent of the petitioner's rank-and-file employees. The petitioner, engaged in the
manufacture of electronic brake systems and comfort body electronics for automotive vehicles, contracts out some of the
work in the warehouse department to three independent service providers or forwarders, These forwarders also have their
own employees who hold the positions of clerk, material handler, system encoder and general clerk. The regular employees of
the petitioner and those of the forwarders share the same work area and use the same equipment, tools and computers all
belonging to the petitioner. This outsourcing arrangement gave rise to a union grievance on the issue of the scope and
coverage of the collective bargaining unit, contending contracting out services is the same as the workplace activities
undertaken by regular company rank-and-file employees covered by the bargaining unit who work under company control. The
union demanded that the forwarders' employees be absorbed into the petitioner's regular employee force and be given
positions within the bargaining unit. The petitioner, on the other hand, on the premise that the contracting arrangement with
the forwarders is a valid exercise of its management prerogative, posited that the union's position is a violation of its
management prerogative to determine who to hire and what to contract out, and that the regular rank-and-
file employees and their forwarders employees serving as its
clerks, material handlers, system encoders and general clerks do not have the same functions as regular company employees.
The issue was submitted to voluntary arbitration and later, to the jurisdiction of the Court of Appeals, to which both decided
that the regular employees should be considered regular employees of the company.

ISSUE: Whether the contracting out arrangement is valid.

HELD: Yes, the arrangement is valid. In

Meralco v. Quisumbing , the SC joined the universal recognition of outsourcing as a legitimate activity and held that a company
can determine in its best judgment whether it should contract out a part of its work for as long as the employer is motivated by
good fait;the contracting is not for purposes of circumventing the law; and does not involve or be the result of malicious or
arbitrary action. In this case, the petitioner's declared objective for the arrangement is to achieve greater economy and
efficiency in its operations a universally accepted business objective and standard that the union has never questioned, thus
negating the presence of bad faith. Also, no evidence was presented to show abuses and anything detrimental to the status of
the regular employees. The contract of the forwarding arrangement in the case at bar complies with the requirements of the
Labor Code and its IRR. The company controls its employees in the means, method and results of their work, in the same
manner that the forwarder controls its own employees in the means, manner and results of their work. Complications and
confusion result because the company at the same time controls the forwarder in the results of the latters work, without
controlling however the means and manner of the forwarder employees work.
OSE SONZA vs. ABS-CBN BROADCASTING CORPORATION
G.R. No. 138051
June 10, 2004

Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation (MJMDC).
ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza, as President and general manager,
and Tiangco as its EVP and treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonzas services
exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for
the first year and P317, 000 for the second and third year.

On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events concerning his
program and career. After the said letter, Sonza filed with the Department of Labor and Employment a complaint alleging that
ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month pay, signing bonus, travel allowance and
amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended that no employee-employer relationship existed
between the parties. However, ABS-CBN continued to remit Sonzas monthly talent fees but opened another account for the
same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC affirmed the
decision of the Labor Arbiter. CA also affirmed the decision of NLRC.

Issue: Whether or not there was employer-employee relationship between the parties.

Ruling: Case law has consistently held that the elements of an employee-employer relationship are selection and engagement
of the employee, the payment of wages, the power of dismissal and the employers power to control the employee on the
means and methods by which the work is accomplished. The last element, the so-called "control test", is the most important
element.

Sonzas services to co-host its television and radio programs are because of his peculiar talents, skills and celebrity status.
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. 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.
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. For violation of any
provision of the Agreement, either party may terminate their relationship. Applying the control test to the present case, we
find that SONZA is not an employee but an independent contractor.

The control test is the most important test our courts apply in distinguishing an employee from an independent contractor.
This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer
exercises, the more likely the worker is considered an independent contractor. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control.
ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and
airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows and their standing in
the ratings.

Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. A radio broadcast
specialist who works under minimal supervision is an independent contractor. Sonzas work as television and radio program
host required special skills and talent, which SONZA admittedly possesses.

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like Sonza
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. Individuals with special skills, expertise or talent enjoy the freedom to offer
their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent
contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an independent contractor.

ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE
LERASAN (G.R. No. 164156, September 26, 2006)

Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of
television and radio stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication
signals. The respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates were
employed by the Petitioner, assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting
Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees identification cards and were required
to work for a minimum of eight hours a day, including Sundays and holidays. They were under the control and supervision of
Assistant Station Manager Dante J. Luzon, and News Manager Leo Lastimosa.

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement
(CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of
Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the
petitioner before the NLRC. The Labor Arbiter directed the parties to submit their respective position paper however they
failed to file their position papers within the reglementary period, Labor Arbiter Jose G. Gutierrez dismissed the complaint
without prejudice for lack of interest to pursue the case. Respondents received a copy of the Order on May 16, 2001. Instead
of re-filing their complaint with the NLRC within 10 days from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to
Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case for Resolution. The Labor Arbiter granted
this motion in an Order dated June 18, 2001, and forthwith admitted the position paper of the complainants.

On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular
employees of petitioner; as such, they were awarded monetary benefits. On appeal to the NLRC, it ruled that respondents
were entitled to the benefits under the CBA because they were regular employees who contributed to the profits of petitioner
through their labor. Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both
procedural and substantive issues. CA Affirmed the ruling of the NLRC.

ISSUE
Whether the appellate court committed palpable and serious error of law when it affirmed the rulings of the NLRC, and
entertained respondents appeal from the decision of the Labor Arbiter despite the admitted lapse of the reglementary period
within which to perfect the appeal.

HELD
We agree with petitioners contention that the perfection of an appeal within the statutory or reglementary period is not only
mandatory, but also jurisdictional; failure to do so renders the assailed decision final and executory and deprives the appellate
court or body of the legal authority to alter the final judgment, much less entertain the appeal. However, this Court has time
and again ruled that in exceptional cases, a belated appeal may be given due course if greater injustice may occur if an appeal
is not given due course than if the reglementary period to appeal were strictly followed. The Court resorted to this
extraordinary measure even at the expense of sacrificing order and efficiency if only to serve the greater principles of
substantial justice and equity.

In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 223 of the Labor Code a liberal
application to prevent the miscarriage of justice. Technicality should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties. We have held in a catena of cases that technical rules are not
binding in labor cases and are not to be applied strictly if the result would be detrimental to the workingman.

Case Digest: Begino v. ABS-CBN

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA. CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN
CORPORATION (FORMERLY, ABS-CBN BROADCASTING CORPORATION) AND AMALIA VILLAFUERTE, Respondents.

G.R. No. 199166, 20 April 2015.

PEREZ, J.:

Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of Petitioners as cameramen, editors or reporters
for TV Broadcasting. Petitioners signed regularly renewed Talent Contracts (3 months - 1 year) and Project Assignment Forms
which detailed the duration, budget and daily technical requirements of a particular project. Petitioners were tasked with
coverage of news items for subsequent daily airings in Respondents TV Patrol Bicol Program.

The Talent Contract has an exclusivity clause and provides that nothing therein shall be deemed or construed to establish an
employer-employee relationship between the parties.

Petitioners filed against Respondents a complaint for regularization before the NLRC's Arbitration branch.

In support of their complaint, Petitioners claimed that they worked under the direct control of Respondent Villafuerte - they
were mandated to wear company IDs, they were provided the necessary equipment, they were informed about the news to be
covered the following day, and they were bound by the companys policy on attendance and punctuality.
Respondents countered that, pursuant to their Talent Contracts and Project Assignment Forms, Petitioners were hired as
talents to act as reporters, editors and/or cameramen. Respondents further claimed they never imposed control as to how
Petitioners discharged their duties. At most, they were briefed regarding the general requirements of the project to be
executed.

While the case was pending, Petitioners contracts were terminated, prompting the latter to file a second complaint for illegal
dismissal.

The Arbitration Branch ruled that Petitioners were regular employees, and ordered Respondents to reinstate the Petitioners.

The NLRC affirmed the ruling, but the CA overturned the decision.

ISSUE: W/N Petitioners are regular employees of Respondents.

RULING: Yes.

Of the criteria to determine whether there is an employer-employee relationship, the so-called "control test" is generally
regarded as the most crucial and determinative indicator of the said relationship.

Under this test, an employer-employee relationship is said to exist where the person for whom the services are performed
reserves the right to control not only the end result but also the manner and means utilized to achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the control and supervision of Respondents
which provided them with the equipment essential for the discharge of their functions. The exclusivity clause and prohibitions
in their Talent Contract were likewise indicative of Respondents' control over them, however obliquely worded.

Also,the presumption is that when the work done is an integral part of the regular business of the employer and when the
worker does not furnish an independent business or professional service, such work is a regular employment of such employee
and not an independent contractor.

Insular Life v. NLRC (Nov. 15, 1989)FACTS:

Insular Life (company) and Basiao entered into a contract by which Basiao was authorized to solicit forinsurance in accordance
with the rules of the company. He would also receive compensation, in the form of commissions. The contract also contained
the relations of the parties, duties of the agent and the acts prohibited tohim including the modes of termination.After 4 years,
the parties entered into another contract an Agency Managers Contact and to implementhis end of it, Basiao organized an
agency while concurrently fulfilling his commitment under the first contract. The company terminated the Agency Managers
Contract. Basiao sued the company in a civil action. Thus,the company terminated Basiaos engagement under the first
contract and stopped payment of his commissions.

ISSUE:
W/N Basiao had become the companys employee by virtue of the contract, thereby placing his claim forunpaid commissions

HELD:
No.Rules and regulations governing the conduct of the business are provided for in the Insurance Code. Theserules merely
serve as guidelines towards the achievement of the mutually desired result without dictating themeans or methods to be
employed in attaining it. Its aim is only to promote the result, thereby creating noemployer-employee relationship. It is usual
and expected for an insurance company to promulgate a set of rules toguide its commission agents in selling its policies which
prescribe the qualifications of persons who may be insured.None of these really invades the agents contractual prerogative to
adopt his own selling methods or to sellinsurance at his own time and convenience, hence cannot justifiable be said to
establish an employer-employeerelationship between Basiao and the company. The respondents limit themselves to pointing
out that Basiaos contract with the company bound him toobserve and conform to such rules. No showing that such rules were
in fact promulgated which effectivelycontrolled or restricted his choice of methods of selling insurance. Therefore, Basiao was
not an employee of the petitioner, but a commission agent, an independent contractwhose claim for unpaid commissions
should have been litigated in an ordinary civil action.Wherefore, the complain of Basiao is dismissed

Tongko v. The Manufacturers Life Insurance & de Dios

G.R. No. 167622, January 25, 2011
GREGORIO V. TONGKO, petitioner, vs. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE
DIOS, respondents.

BRION, J.:

FACTS:

Taking from the November 2008 decision, the facts are as follows:

Manufacturers Life Insurance, Co. is a domestic corporation engaged in life insurance business. De Dios was its President and
Chief Executive Officer. Petitioner Tongko started his relationship with Manulife in 1977 by virtue of a Career Agent's
Agreement.

Pertinent provisions of the agreement state that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between the Company and the Agent.

a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products offered by the
Company, and collect, in exchange for provisional receipts issued by the Agent, money due or to become due to the Company
in respect of applications or policies obtained by or through the Agent or from policyholders allotted by the Company to the
Agent for servicing, subject to subsequent confirmation of receipt of payment by the Company as evidenced by an Official
Receipt issued by the Company directly to the policyholder.

b) The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by
giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver,
extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be
construed for any previous failure to exercise its right under any provision of this Agreement.

c) Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party
fifteen (15) days notice in writing.

Sometime in 2001, De Dios addressed a letter to Tongko, then one of the Metro North Managers, regarding meetings wherein
De Dios found Tongko's views and comments to be unaligned with the directions the company was taking. De Dios also
expressed his concern regarding the Metro North Managers' interpretation of the company's goals. He maintains that Tongko's
allegations are unfounded. Some allegations state that some Managers are unhappy with their earnings, that they're earning
less than what they deserve and that these are the reasons why Tonko's division is unable to meet agency development
objectives. However, not a single Manager came forth to confirm these allegations. Finally, De Dios related his worries about
Tongko's inability to push for company development and growth.

De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents Contract. Tongko filed a
complaint with the NLRC against Manulife for illegal dismissal, alleging that he had an employer-employee relationship with De
Dios instead of a revocable agency by pointing out that the latter exercised control over him through directives regarding how
to manage his area of responsibility and setting objectives for him relating to the business. Tongko also claimed that his
dismissal was without basis and he was not afforded due process. The NLRC ruled that there was an employer-employee
relationship as evidenced by De Dios's letter which contained the manner and means by which Tongko should do his work. The
NLRC ruled in favor of Tongko, affirming the existence of the employer-employee relationship.

The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for determining control and found the
elements in this case to be lacking, basing its decision on the same facts used by the NLRC. It found that Manulife did not exert
control over Tongko, there was no employer-employee relationship and thus the NLRC did not have jurisdiction over the case.

The Supreme Court reversed the ruling of the Court of Appeals and ruled in favor of Tongko. However, the Supreme Court
issued another Resolution dated June 29, 2010, reversing its decision. Tongko filed a motion for reconsideration, which is now
the subject of the instant case.

ISSUE: Whether the Supreme Court erred in issuing the June 29, 2010 resolution, reversing its earlier decision that an
employer-employee relationship existed.

HELD: The petition is unmeritorious.

LABOR LAW Agency; Employer-employee relationships

The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the performance of the task of one
providing service both with respect to the means and manner, and the results of the service is the primary element in
determining whether an employment relationship exists. The Supreme Court ruled petitioners Motion against his favor since
he failed to show that the control Manulife exercised over him was the control required to exist in an employer-employee
relationship; Manulifes control fell short of this norm and carried only the characteristic of the relationship between an
insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.

In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of control specific to an insurance
agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor
Code.The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the companys insurance
products, his collection activities and his delivery of the insurance contract or policy. They do not reach the level of control into
the means and manner of doing an assigned task that invariably characterizes an employment relationship as defined by labor
law.

To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result.
Tested by this norm, Manulifes instructions regarding the objectives and sales targets, in connection with the training and
engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned
tasks.They are targeted results that Manulife wishes to attain through its agents. Manulifes codes of conduct, likewise, do not
necessarily intrude into the insurance agents means and manner of conducting their sales. Codes of conduct are norms or
standards of behavior rather than employer directives into how specific tasks are to be done.

In sum, the Supreme Court found absolutely no evidence of labor law control.

Petition is DENIED.
RAMY GALLEGO

VS

BAYER PHILIPPINES INC.

594 SCRA 730 (2009)

In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the
surrounding circumstances of the case are to be considered, each case to be determined by its own facts, and all the features
of the relationship assessed.

Petitioner Ramy Gallego was contracted by Bayer Philippines Inc. (BAYER) as crop protection technician. When Gallegos
employment came to a halt, BAYER reemployed Gallego through Product Image and Marketing Services, Inc. (PRODUCT
IMAGE) performing the same tasks as that of a crop protection technician.

After a few years, Gallego claims that he was directed to submit a resignation latter, but he refused. He was later on
transferred to Luzon; moreover, his co-workers allegedly spread rumors there that he was not anymore connected with BAYER.
Believing himself to be illegally dismissed, he filed with the National Labor Relations Commission (NLRC) claiming he is entitled
for reinstatement, backwages, and etc. BAYER denied that existence of an employer-employee relationship between BAYER
and Gallego since Gallego was actually under the control and supervision of PRODUCT IMAGE, an independent contractor.

The Labor Arbiter found BAYER, et al. guilty of illegal dismissal and ordered the reinstatement of Gallego. The NLRC reversed
the decision of the Labor Arbiter. Gallego then appealed to the Court of Appeals via Certiorari, which was dismissed. Hence,
this petition.

ISSUES:
Whether or not PRODUCT IMAGE is a labor-only contractor and BAYER should be deemed Gallegos principal employer

HELD:
Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out with a
contractor or subcontractor the performance of a specific job, work, or service within a definite or predetermined period,
regardless of whether such job, work or, service is to be performed or completed within or outside the premises of the
principal. Under this arrangement, the following conditions must be met: (a) the contractor carries on a distinct and
independent business and undertakes the contract work on his 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 his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the
agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor
and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social
welfare benefits.
In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the
surrounding circumstances of the case are to be considered, each case to be determined by its own facts, and all the features
of the relationship assessed.

In the case at bar, the Court finds substantial evidence to support the finding of the NLRC that PRODUCT IMAGE is a legitimate
job contractor.

The Court notes that PRODUCT IMAGE was issued by the Department of Labor and Employment (DOLE) Certificate of
Registration Numbered NCR-8-0602-176. The DOLE certificate having been issued by a public officer, it carries with it the
presumption that it was issued in the regular performance of official duty.Gallegos bare assertions fail to rebut this
presumption. Further, since the DOLE is the agency primarily responsible for regulating the business of independent job
contractors, the Court can presume, in the absence of evidence to the contrary, that it had thoroughly evaluated the
requirements submitted by PRODUCT IMAGE before issuing the Certificate of Registration.

Independently of the DOLEs Certification, among the circumstances that establish the status of PRODUCT IMAGE as a
legitimate job contractor are: (1) PRODUCT IMAGE had, during the period in question, a contract with BAYER for the promotion
and marketing of BAYER products; (2) PRODUCT IMAGE has an independent business and provides services nationwide to big
companies such as Ajinomoto Philippines and Procter and Gamble Corporation; and (3) PRODUCT IMAGEs total assets from
1998 to 2000 amounted to P405,639, P559,897, and P644,728, respectively. PRODUCT IMAGE also posted a bond in the
amount of P100,000 to answer for any claim of its employees for unpaid wages and other benefits that may arise out of the
implementation of its contract with BAYER.

PRODUCT IMAGE cannot thus be considered a labor-only contractor.

Coca-Cola Bottlers Phils., Inc. vs. Alan M. Agito, et al.

on 3:00 PM in Case Digests, Labor Law 0
G.R. No. 179546, February 13, 2009

FACTS:

Agito, et al. are salesmen assigned at the Lagro Sales Office of Coca-Cola for a number of years but were not regularized. Their
employment was terminated without just cause and due process. They filed complaints against Coca-Cola, Interserve, Peerless
Integrated Services, Inc. Better Builders, Inc., and Excellent Partners, Inc. However, they failed to state a reason for filing
complaints against Interserve, Peerless, Better Builders and Excellent Partners.

Coca-Cola averred that Agito, et al. were employees of Interserve who were tasked to perform contracted services in
accordance with the provision of the Contract of Services. The contract covering the period of April 1, 2002 to September 30,
2002 constituted legitimate job contracting.

To prove that Interserve is an independent contractor, Coca-Cola presented the following: (1) AOI of Interserve; (2) Certificate
of Registration of Interserve with BIR; (3) ITR with Audited Financial Statements of Interserve for 2001; and (4) Certificate of
Registration of Interserve as an independent contractor issued by DOLE.

As a result, Coca-Cola asserted that Agito, et al. were employees of Interserve since it was the latter which hired them, paid
their wages and supervised their work, as proven by: (1) PDFs are in the records of Interserve; (2) Contracts of Temporary
Employment with Interserve; and (3) payroll records of Interserve.

LA found for Coca-Cola and held that Interserve was a legitimate job contractor. The complaints against Peerless, Better
Building and Excellent Partners was dismissed for failure to pursue the case.

On appeal, NLRC affirmed LA's decision.

CA reversed the NLRC decision and ruled that Interserve was a labor-only contractor with insufficient capital and investments
for the services which it was contracted to perform. Additionally, CA determined that Coca-Cola had effective control over the
means and method of Agito, et al.'s work as evidenced by the Daily Sales Monitoring Report, the Conventional Route System
Proposed Set-Up, and the memoranda issued by the supervisor of petitioner addressed to workers. Respondents' tasks were
directly related and necessary to the main business of Coca-Cola. Finally, certain provisions of the Contract of Service between
Coca-Cola and Interserve suggested that the latter's undertaking did not involve a specific job but rather the supply of
manpower.

ISSUE: Whether or not Interserve is a legitimate job contractor

HELD:

Legitimate Contracting vs. Labor-Only Contracting

The relations which may arise in a situation, where there is an employer, a contractor, and employees of the contractor, are
identified and distinguished under Article 106 of the Labor Code:

Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in
accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of
workers established under this Code. In so prohibiting or restriction, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.

There is labor-only contracting where the person supplying workers to an employee 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.

The afore-quoted provision recognizes two possible relations among the parties: (1) the permitted legitimate job contract, or
(2) the prohibited labor-only contracting.

A legitimate job contract, wherein an employer enters into a contract with a job contractor for the performance of the formers
work, is permitted by law. Thus, the employer-employee relationship between the job contractor and his employees is
maintained. In legitimate job contracting, the law creates an employer-employee relationship between the employer and the
contractors employees only for a limited purpose, i.e., to ensure that the employees are paid their wages. The employer
becomes jointly and severally liable with the job contractor only for the payment of the employees wages whenever the
contractor fails to pay the same. Other than that, the employer is not responsible for any claim made by the contractors
employees.

On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent in recruiting and
supplying the principal employer with workers for the purpose of circumventing labor law provisions setting down the rights of
employees. It is not condoned by law.A finding by the appropriate authorities that a contractor is a labor-only contractor
establishes an employer-employee relationship between the principal employer and the contractors employees and the former
becomes solidarily liable for all the rightful claims of the employees.

Section 5 of the Rules Implementing Articles 106-109 of the Labor Code, as amended, provides the guidelines in determining
whether labor-only contracting exists:

Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies, or places
workers to perform a job, work or service for a principal, and any of the following elements are [is] present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal; or

ii) The contractor does not exercise the right to control the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended.

Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the
performance or completion of the job, work, or service contracted out.
The right to control shall refer to the right reversed to the person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.
(Emphasis supplied.)

When there is labor-only contracting, there is employer-employee relationship between the principal and the contractual
employee

When there is labor-only contracting, Section 7 of the same implementing rules, describes the consequences thereof:

Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be considered the employer
of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The
principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code,
including the failure to pay wages.

The principal shall be deemed the employer of the contractual employee in any of the following case, as declared by a
competent authority:

a. where there is labor-only contracting; or

b. where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.

According to the foregoing provision, labor-only contracting would give rise to: (1) the creation of an employer-employee
relationship between the principal and the employees of the contractor or sub-contractor; and (2) the solidary liability of the
principal and the contractor to the employees in the event of any violation of the Labor Code.

Even if employees are not performing activities indispensable to the business of the principal, labor-contracting may still exist if
the contractor does not demonstrate substantial capital or investment

The law clearly establishes an employer-employee relationship between the principal employer and the contractors employee
upon a finding that the contractor is engaged in labor-only contracting. Article 106 of the Labor Code categorically states: There
is labor-only contracting where the person supplying workers to an employee 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. Thus, performing
activities directly related to the principal business of the employer is only one of the two indicators that labor-only contracting
exists; the other is lack of substantial capital or investment. The Court finds that both indicators exist in the case at bar.

Interserve has no substantial capital; it is impossible to measure whether or not there is substantial capital because the
Contract between Coca-Cola and Interserve does not specify the work or the project that needs to be performed or completed.

At the outset, the Court clarifies that although Interserve has an authorized capital stock amounting toP2,000,000.00, only
P625,000.00 thereof was paid up as of 31 December 2001. The Court does not set an absolute figure for what it considers
substantial capital for an independent job contractor, but it measures the same against the type of work which the contractor
is obligated to perform for the principal. However, this is rendered impossible in this case since the Contract between
petitioner and Interserve does not even specify the work or the project that needs to be performed or completed by the latters
employees, and uses the dubious phrase tasks and activities that are considered contractible under existing laws and
regulations. Even in its pleadings, petitioner carefully sidesteps identifying or describing the exact nature of the services that
Interserve was obligated to render to petitioner. The importance of identifying with particularity the work or task which
Interserve was supposed to accomplish for petitioner becomes even more evident, considering that the Articles of
Incorporation of Interserve states that its primary purpose is to operate, conduct, and maintain the business of janitorial and
allied services. But respondents were hired as salesmen and leadman for petitioner. The Court cannot, under such ambiguous
circumstances, make a reasonable determination if Interserve had substantial capital or investment to undertake the job it was
contracting with petitioner.

Burden of proof of substantial capital rests in the contractor, or in its absence, the principal claiming it to be an independent
contractor

The contractor, not the employee, has the burden of proof that it has the substantial capital, investment, and tool to engage in
job contracting. Although not the contractor itself (since Interserve no longer appealed the judgment against it by the Labor
Arbiter), said burden of proof herein falls upon petitioner who is invoking the supposed status of Interserve as an independent
job contractor. Noticeably, petitioner failed to submit evidence to establish that the service vehicles and equipment of
Interserve, valued at P510,000.00 and P200,000.00, respectively, were sufficient to carry out its service contract with
petitioner. Certainly, petitioner could have simply provided the courts with records showing the deliveries that were
undertaken by Interserve for the Lagro area, the type and number of equipment necessary for such task, and the valuation of
such equipment. Absent evidence which a legally compliant company could have easily provided, the Court will not presume
that Interserve had sufficient investment in service vehicles and equipment, especially since respondents allegation that they
were using equipment, such as forklifts and pallets belonging to petitioner, to carry out their jobs was uncontroverted.

Interserve did not exercise the right to control the performance of the work of the respondents

The lack of control of Interserve over the respondents can be gleaned from the Contract of Services between Interserve (as the
CONTRACTOR) and petitioner (as the CLIENT).

Paragraph 3 of the Contract specified that the personnel of contractor Interserve, which included the respondents, would
comply with CLIENT as well as CLIENTs policies, rules and regulations. It even required Interserve personnel to subject
themselves to on-the-spot searches by petitioner or its duly authorized guards or security men on duty every time the said
personnel entered and left the premises of petitioner. Said paragraph explicitly established the control of petitioner over the
conduct of respondents. Although under paragraph 4 of the same Contract, Interserve warranted that it would exercise the
necessary and due supervision of the work of its personnel, there is a dearth of evidence to demonstrate the extent or degree
of supervision exercised by Interserve over respondents or the manner in which it was actually exercised. There is even no
showing that Interserve had representatives who supervised respondents work while they were in the premises of petitioner.

Also significant was the right of petitioner under paragraph 2 of the Contract to request the replacement of the CONTRACTORS
personnel. True, this right was conveniently qualified by the phrase if from its judgment, the jobs or the projects being done
could not be completed within the time specified or that the quality of the desired result is not being achieved, but such
qualification was rendered meaningless by the fact that the Contract did not stipulate what work or job the personnel needed
to complete, the time for its completion, or the results desired. The said provision left a gap which could enable petitioner to
demand the removal or replacement of any employee in the guise of his or her inability to complete a project in time or to
deliver the desired result. The power to recommend penalties or dismiss workers is the strongest indication of a companys
right of control as direct employer.

Paragraph 4 of the same Contract, in which Interserve warranted to petitioner that the former would provide relievers and
replacements in case of absences of its personnel, raises another red flag. An independent job contractor, who is answerable
to the principal only for the results of a certain work, job, or service need not guarantee to said principal the daily attendance
of the workers assigned to the latter. An independent job contractor would surely have the discretion over the pace at which
the work is performed, the number of employees required to complete the same, and the work schedule which its employees
need to follow.

As the Court previously observed, the Contract of Services between Interserve and petitioner did not identify the work needed
to be performed and the final result required to be accomplished. Instead, the Contract specified the type of workers
Interserve must provide petitioner (Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD) and their qualifications
(technical/vocational course graduates, physically fit, of good moral character, and have not been convicted of any crime). The
Contract also states that, to carry out the undertakings specified in the immediately preceding paragraph, the CONTRACTOR
shall employ the necessary personnel, thus, acknowledging that Interserve did not yet have in its employ the personnel needed
by petitioner and would still pick out such personnel based on the criteria provided by petitioner. In other words, Interserve
did not obligate itself to perform an identifiable job, work, or service for petitioner, but merely bound itself to provide the
latter with specific types of employees. These contractual provisions strongly indicated that Interserve was merely a recruiting
and manpower agency providing petitioner with workers performing tasks directly related to the latters principal business.

Certification issued by DOLE is not sufficient to prove independent contractorship

The certification issued by the DOLE stating that Interserve is an independent job contractor does not sway this Court to take it
at face value, since the primary purpose stated in the Articles of Incorporation of Interserve is misleading. According to its
Articles of Incorporation, the principal business of Interserve is to provide janitorial and allied services. The delivery and
distribution of Coca-Cola products, the work for which respondents were employed and assigned to petitioner, were in no way
allied to janitorial services. While the DOLE may have found that the capital and/or investments in tools and equipment of
Interserve were sufficient for an independent contractor for janitorial services, this does not mean that such capital and/or
investments were likewise sufficient to maintain an independent contracting business for the delivery and distribution of Coca-
Cola products.

Legitimate Contracting vs. Labor-only Contracting

When there is labor-only contracting, an employer-employee exists between the contractual employee and the principal
Even if employees are not performing activities indispensable to the business of the principal, labor-only contracting may still
exist if the contractor does not demonstrate substantial capital or investment
To determine whether or not there is substantial capital for purposes of legitimate contracting, one must examine the specific
job, work or service provided in the Service Agreement
The burden of proof that the contractor is a legitimate contractor rests with the contractor, or in its absence, the
principalCertification from DOLE is not sufficient to prove independent contractorship

San Miguel Brewery Union vs Ople

In 1979, SMC implemented its Complementary Distribution System (CDS) whereby wholesalers can directly get beer products
from any SMC offices. The SMB Union assailed this program because it violates the CBA particularly the established scheme
whereby route salesmen have been given specific territories to sell beer products. The CDS scheme would then lower the take
home pay of the route salesmen. SMB Union then sued SMC for unfair labor practices.

ISSUE: Whether or not the CDS is a violation of the CBA.

HELD: No. The SC ruled that the CDS is an exercise of management prerogatives whereby the management can implement
schemes to optimize their profit. Further, the CDS provides for a compensation clause as well for salesmen. San Miguel
Corporations offer to compensate the members of its sales force who will be adversely affected by the implementation of the
CDS by paying them a so-called back adjustment commission to make up for the commissions they might lose as a result of
the CDS proves the companys good faith and lack of intention to bust their union.

Ymbong vs. ABS-CBN

OCTOBER 23, 2012 ~ VBDIAZ
Ymbong vs. ABS-CBN

G.R. No. 184885

Facts:

Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN) in 1993 at its regional station
in Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when
ABS-CBN Cebu launched its AM station DYAB in 1995 where he worked as drama and voice talent, spinner, scriptwriter and
public affairs program anchor.

Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent, director and scriptwriter
for various radio programs aired over DYAB.

On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the Policy on Employees Seeking Public
Office. The pertinent portions read:

1. Any employee who intends to run for any public office position, must file his/her letter of resignation, at least thirty
(30) days prior to the official filing of the certificate of candidacy either for national or local election.

xxxx

3. Further, any employee who intends to join a political group/party or even with no political affiliation but who intends to
openly and aggressively campaign for a candidate or group of candidates (e.g. publicly speaking/endorsing candidate,
recruiting campaign workers, etc.) must file a request for leave of absence subject to managements approval. For this
particular reason, the employee should file the leave request at least thirty (30) days prior to the start of the planned leave
period.

x x x x [Emphasis and underscoring supplied.]

Because of the impending May 1998 elections and based on his immediate recollection of the policy at that time, Dante Luzon,
Assistant Station Manager of DYAB issued the following memorandum:

TO : ALL CONCERNED

FROM : DANTE LUZON

DATE : MARCH 25, 1998

SUBJECT : AS STATED

Please be informed that per company policy, any employee/talent who wants to run for any position in the coming election will
have to file a leave of absence the moment he/she files his/her certificate of candidacy.
The services rendered by the concerned employee/talent to this company will then be temporarily suspended for the entire
campaign/election period.

For strict compliance.

After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong
approached him and told him that he would leave radio for a couple of months because he will campaign for the
administration ticket. It was only after the elections that they found out that Ymbong actually ran for public office himself at
the eleventh hour. Ymbong, on the other hand, claims that in accordance with the March 25, 1998 Memorandum, he
informed Luzon through a letter that he would take a few months leave of absence from March 8, 1998 to May 18, 1998 since
he was running for councilor of Lapu-Lapu City.

As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for Naga, Cebu. According
to Luzon, he clarified to Patalinghug that he will be considered resigned and not just on leave once he files a certificate of
candidacy.

Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that they
cannot work there anymore because of company policy. This was stressed even in subsequent meetings and they were told
that the company was not allowing any exceptions. ABS-CBN, however, agreed out of pure liberality to give them a chance to
wind up their participation in the radio drama, Nagbabagang Langit, since it was rating well and to avoid an abrupt ending. The
agreed winding-up, however, dragged on for so long prompting Luzon to issue to Ymbong the memorandum dated September
14, 1998 automatically terminating them.

Issue:

1. whether Policy No. HR-ER-016 is valid

2. whether the March 25, 1998 Memorandum issued by Luzonsuperseded Policy No. HR-ER-016

3. whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed by ABS-CBN.

Held:

1. ABS-CBN had a valid justification for Policy No. HR-ER-016. Its rationale is embodied in the policy itself, to wit:

Rationale:

ABS-CBN BROADCASTING CORPORATION strongly believes that it is to the best interest of the company to continuously remain
apolitical. While it encourages and supports its employees to have greater political awareness and for them to exercise their
right to suffrage, the company, however, prefers to remain politically independent and unattached to any political individual or
entity.

Therefore, employees who [intend] to run for public office or accept political appointment should resign from their positions,
in order to protect the company from any public misconceptions. To preserve its objectivity, neutrality and credibility, the
company reiterates the following policy guidelines for strict implementation.

We have consistently held that so long as a companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, this Court will uphold them. In the instant case, ABS-CBN validly justified the
implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and
freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in
any way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.

It is worth noting that such exercise of management prerogative has earned a stamp of approval from no less than our
Congress itself when on February 12, 2001, it enacted Republic Act No. 9006, otherwise known as the Fair Election Act.
Section 6.6 thereof reads:

6.6. Any mass media columnist, commentator, announcer, reporter, on-air correspondent or personality who is a candidate for
any elective public office or is a campaign volunteer for or employed or retained in any capacity by any candidate or political
party shall be deemed resigned, if so required by their employer, or shall take a leave of absence from his/her work as such
during the campaign period: Provided, That any media practitioner who is an official of a political party or a member of the
campaign staff of a candidate or political party shall not use his/her time or space to favor any candidate or political party.
[Emphasis and underscoring supplied.]

2. The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN, has policy-making
powers in relation to his principal task of administering the networks radio station in the Cebu region, the exercise of such
power should be in accord with the general rules and regulations imposed by the ABS-CBN Head Office to its employees.
Clearly, the March 25, 1998 Memorandum issued by Luzon which only requires employees to go on leave if they intend to run
for any elective position is in absolute contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila
which requires the resignation, not only the filing of a leave of absence, of any employee who intends to run for public office.
Having been issued beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void and did not
supersede Policy No. HR-ER-016.

Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his recollection of the company policy when
he issued the March 25, 1998 Memorandum and stated therein that upon double-checking of the exact text of the policy
statement and subsequent confirmation with the ABS-CBN Head Office in Manila, he learned that the policy required
resignation for those who will actually run in elections because the company wanted to maintain its independence. Since the
officer who himself issued the subject memorandum acknowledged that it is not in harmony with the Policy issued by the
upper management, there is no reason for it to be a source of right for Ymbong.

3. As Policy No. HR-ER-016 is the subsisting company policy and not Luzons March 25, 1998 Memorandum, Ymbong is
deemed resigned when he ran for councilor.

We find no merit in Ymbongs argument that [his] automatic termination x x x was a blatant [disregard] of [his] right to due
process as he was never asked to explain why he did not tender his resignation before he ran for public office as mandated
by [the subject company policy]. Ymbongs overt act of running for councilor of Lapu-Lapu City is tantamount to resignation
on his part. He was separated from ABS-CBN not because he was dismissed but because he resigned. Since there was no
termination to speak of, the requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not
duty-bound to ask him to explain why he did not tender his resignation before he ran for public office as mandated by the
subject company policy.

Petition denied

Star Paper Corporation vs. Simbol | Puno Case Digest

Star Paper Corporation vs. Simbol
487 SCRA 228

FACTS: Petitioner was the employer of the respondents. Under the policy of Star Paper the employees are:

1. New applicants will not be allowed to be hired if in case he/she has a relative, up to the 3rd degree of relationship, already
employed by the company.

2. In case of two of our employees (singles, one male and another female) developed a friendly relationship during the course
of their employment and then decided to get married, one of them should resign to preserve the policy stated above.

Respondents Comia and Simbol both got married to their fellow employees. Estrella on the other hand had a relationship with
a co-employee resulting to her pregnancy on the belief that such was separated. The respondents allege that they were forced
to resign as a result of the implementation of the said assailed company policy.
The Labor Arbiter and the NLRC ruled in favor of petitioner. The decision was appealed to the Court of Appeals which reversed
the decision.

ISSUE: Whether the prohibition to marry in the contract of employment is valid

HELD: It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were
asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations.
Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the
Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere
fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the
employer can create policies based on an unproven presumption of a perceived danger at the expense of an employees right
to security of tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry
persons other than co-employees. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is
reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business
concern in imposing the questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based
upon stereotypes of married persons working together in one company.

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the petitioners.
The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the
legislatures silence that married persons are not protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule
that the questioned policy is an invalid exercise of management prerogative. Corollary, the issue as to whether respondents
Simbol and Comia resigned voluntarily has become moot and academic.

In the case of Estrella, the petitioner failed to adduce proof to justify her dismissal. Hence, the Court ruled that it was illegal.

Petition was denied.

Duncan Assoc. of Detailman-PTGWO vs. Glaxo Wellcome Phils., Inc.

G.R. No. 162994, September 17, 2004

FACTS:

Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract of employment signed by Tecson stipulates,
among others, that he agrees to study and abide by the existing company rules; to disclose to management any existing future
relationship by consanguinity or affinity with co-employees or employees with competing drug companies and should
management find that such relationship poses a prossible conflict of interest, to resign from the company. Company's Code of
Employee Conduct provides the same with stipulation that management may transfer the employee to another department in
a non-counterchecking position or preparation for employment outside of the company after 6 months.

Tecson was initially assigned to market Glaxo's products in the Camarines Sur-Camarines Norte area and entered into a
romantic relationship with Betsy, an employee of Astra, Glaxo's competition. Before getting married, Tecson's District Manager
reminded him several times of the conflict of interest but marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors
informed him of conflict of intrest. Tecson asked for time to comply with the condition (that either he or Betsy resign from
their respective positions). Unable to comply with condition, Glaxo transferred Tecson to the Butuan-Surigao City-Agusan del
Sur sales area. After his request against transfer was denied, Tecson brought the matter to Glaxo's Grievance Committee and
while pending, he continued to act as medical representative in the Camarines Sur-Camarines Norte sales area. On Nov. 15,
2000, the National Conciliation and Mediation Board ruled that Glaxo's policy was valid...

ISSUE:

Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor
company is valid

RULING:

On Equal Protection

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies, and other confidential programs and
information from competitors. The prohibition against pesonal or marital relationships with employees of competitor
companies upon Glaxo's employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. That Glaxo possesses the right to protect its economic interest cannot be denied.

It is the settled principle that the commands of the equal protection clause are addressed only to the state or those acting
under color of its authority. Corollarily, it has been held in a long array of US Supreme Court decisions that the equal protection
clause erects to shield against merely privately conduct, however, discriminatory or wrongful.

The company actually enforced the policy after repeated requests to the employee to comply with the policy. Indeed the
application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee.

On Constructive Dismissal

Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes
impossible, unreasonable or unlikely; when there is demotion in rank, or diminution in pay; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee. None of these conditions are present in the
instant case.