CASE DIGEST LABSTAN 1st EXAM
PEREZ VS POMAR
Ponente: TORRES, J.:
Facts:
This case is about the interpreting services rendered where there
was no agreement as to compensation.
Issue:
Whether or not the respondent is oblige to pay the continued
service rendered by the petitioner.
Held:
Yes, because from the testimonies at trial, it appears that Perez
indeed rendered services as interpreter of English. He obtained
passes and accompanied Pomar in his journeys in Laguna. But, it
doesn’t appear on record whether Perez was at the disposal of
Pomar for 6 months. No contract was filed or any other innominate
contract, but there was tacit and mutual consent as to the rendition
of services.
Pomar accepted the service, and Perez rendered it expecting that
the benefit would be reciprocal. An obligation arises from this
scenario. There was an innominate contract facio ut des. No salary
was fixed for the services, so the court must determine its value, to
be determined by the custom and frequent use of the place in
which such services were rendered. The court ruled to Perez.
Pomar should pay 200 Mexican pesos, less 50 pesos as to the
costs of the suit.
STERLING PRODUCTS INTERNATIONAL INC. V SOL
Ponente: Labrador
Facts:
This was the case about the radio manitoring work performed
outside the premises of Sterling Products office.
Issues/Held: 1) WON Sol is a regular employee – YES
2) WON Petitioners are guilty of ULP – NO
Ratio:
1) Sol was directed to listen to certain broadcasts, directing her, in
the instructions given her, when to listen and what to listen,
petitioners herein naming the stations to be listened to, the hours of
broadcasts, and the days when listening was to be done. Sol had to
follow these directions. The mere fact that while performing the
duties assigned to her she was not under the supervision of the
petitioners does not render her a contractor, because what she has
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to do, the hours that she has to work and the report that she has
to submit all — these are according to instructions given by the
employer.
Finally, the very act of respondent Sol in demanding vacation
leave, Christmas bonus and additional wages shows that she
considered herself an employee. A contractor is not entitled to a
vacation leave or to a bonus nor to a minimum wage.
2) Following the ruling in Royal Interocean Lines, et al. vs. Court
of Industrial Relations - as respondent Sol was merely an
employee and was not connected with any labor union, the
company cannot be considered as having committed acts
constituting unfair labor practice as defined in the Industrial Peace
Act, Rep. Act 875.
The respondent Sol has never been found to commit any of the
acts mentioned in paragraph (a) of Sec. 4. Respondent Sol was
not connected with any labor organization, nor has she ever
attempted to join a labor organization, or to assist, or contribute to
a labor organization. The company cannot, therefore, be
considered as having committed an unfair labor practice.
Not relevant issue: there is an employment contract between
petitioners and respondent Sol in which it was expressly agreed
that Sol could be dismissed upon fifteen days' advance notice, if
petitioners herein desire. Respondent Sol was dismissed on
January 13, 1959 and therefore the dismissal should be governed
by the provisions of Republic Act 1787
Sec. 1 of RA 1787 - . In cases of employment, without a definite
period, in a commercial, industrial, or agricultural establishment or
enterprise, the employer or the employee may terminate at any
time the employment with just cause; or without just cause in the
case of an employee by serving written notice on the employer at
least one month in advance, or in the case of an employer, by
serving such notice to the employee at least one month in
advance or one-half month for every year of service of the
employee, whichever is longer, a fraction of at least six months
being considered as one whole year.
XXX
Following are just causes for terminating an employment without
a definite period: a. The closing or cessation of operation of the
establishment or enterprise, unless the closing is for the purpose
of defeating the intention of this law.
The contract between the petitioners and the respondent Sol
providing that the respondent Sol can be dismissed upon fifteen
days' notice is therefore null and void. Pets are ordered to pay Sol
separation pay.
DY KEH BENG vs. INTERNATIONAL LABOR and MARINE
UNION OF THE PHILIPPINES, ET AL.
CASE DIGEST LABSTAN 1st EXAM
Ponente: DE CASTRO, J.:
FACTS:
A charge of unfair labor practice was filed against Dy Keh Beng,
proprietor of a basket factory, for discriminatory acts within the
meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act
No. 875, by dismissing Carlos N. Solano and Ricardo Tudla for
their union activities. After preliminary investigation was conducted,
a case was filed in the Court of Industrial Relations for in behalf of
the International Labor and Marine Union of the Philippines and two
of its members, Solano and Tudla.
What you focus on here is the payment of a piece rate basis.
ISSUE:
Whether there existed an employee employer relation between
petitioner Dy Keh Beng and the respondents Solano and Tudla .
RULING:
As to the contention that Solano was not an employee because he
worked on piece basis, this Court agrees with the Hearing
Examiner that circumstances must be construed to determine
indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. Units of time …
and units of work are in establishments like respondent (sic) just
yardsticks whereby to determine rate of compensation, to be
applied whenever agreed upon.
We cannot construe payment by the piece where work is done in
such an establishment so as to put the worker completely at liberty
to turn him out and take in another at pleasure.
At this juncture, it is worthy to note that Justice Perfecto, concurring
with Chief Justice Ricardo Paras who penned the decision in
"Sunrise Coconut Products Co. v. Court of Industrial Relations" (83
Phil..518, 523), opined that
judicial notice of the fact that the so-called "pakyaw" system
mentioned in this case as generally practiced in our country, is, in
fact, a labor contract -between employers and employees, between
capitalists and laborers.
Lecture: Mode of payment prescinds employer employee
relationship - it’s just neutral.
RJL MARTINEZ FISHING v. NLRC
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RJL Martinez owns about 60 deep-sea fishing boats. An issue
here are the workers that unload the fishing boats. This was the
time in Novotas when the fish ports was not yet constructed. So
the fishing boats come in and they cannot really hit the shore
because they will already be ajar. So, these unskilled workers,
they wade up to chest height and they would unload the fish. The
owner or the representative sits ashore.
According to RJL Martinez, these people who load and unload the
fishing vessels, their engagement is on a per loading basis or per
unloading basis. Why? Because after they have unloaded all the
fishing boats of RJL Martinez, they would go to other fishing boats
that dock and load and unload them. That means that they are
also under the control of these people. How can we be exercising
control? In other words, their basic thesis is the power of control
test, if it is to be met, must be continuous, and unbroken. If there
is an intervention of another equivalent employer for whom you do
work then there is no more successful completion of the control
test.
The Supreme Court did not accept the probative value of that
statement. The Supreme Court says, “RJL Martinez does not
have enough vessels that can occupy all these people who load
and unload the fishing vessel. Are you going to blame them if after
unloading the vessel, they still have time and they want it to be
filled and productive and be compensable for that time that they
are free? So if they go to other fishing vessels, it is so that they
will have a full days wage because you compensate them on a
per loading and unloading basis. The thing is they are loyal to you
because when you vessels come, they first serve your vessel
before they can go to other vessels. So they are your employees.
And it is you who should be blamed because you cannot provide
full-time work.”
There is still control on their part and they are basically their
employees. That is why they are entitled to thirteenth moth,
overtime, etc. That is the ruling of the Supreme Court.
CARO V. RILLORAZA
We have Mr. Caro who is the administrator of his wife’s
paraphernal property for commercial lease along Recto Street in
Manila. One day, one of the ownings(?). Caro engaged the
services of a master carpenter. The master carpenter brought
along 200 assistants so they did the repair. In the course of the
repair, one of the assistants fell and injured himself.
So, is Caro liable for the injury? Because it occurred while the
assistant was at work and during work hours. We go into the issue
of Workmen’s Compensation which is the old law.
When the employer is required to obtain insurance to answer for
work-related sickness, injury, death. That used to be Workmen’s
Compensation but now it is Employee’s Compensation. It is the
government who is the insurer. You pay P20.00 for each
employee. You have no counterpart in the employee. And then if
you meet the work-related sickness, injury, death then it is the
ECC; Employee’s Compensation Commission that will pay. This
is the new system.
But in the old system, it is the insurer of the employer.
ISSUE: Is the assistant an employee of Caro?
Caro’s Allegations: He is not an employee because I do not pay
carpenters everyday. My relationship with them is casual. He’s
not my employee because my engagement with them ends as
soon as the repair is done. He’s the employee of the master
carpenter.
CASE DIGEST LABSTAN 1st EXAM
HELD: The Supreme Court said the assistant is an employee of
Caro. Because when you lease out commercial spaces you have
the obligation to make those spaces habitable and rentable. So you
need to have regular maintenance carpentry workforce.
So if mag pa rent kag bicycles It is usual and necessary to your
business to have bicycle repair if you rent out bicycles. If you rent
houses for commercial purposes, you need carpenters who do
carpentry work because now and then there will be repairs.
So that is why the Supreme Court said there is employer-employee
relationship who is performing activities which are usual and
necessary to the trade or business.
UY CHAO V. AGUILAR AND RAMOS
Uy Chao is renting a commercial space. He is selling glass, sheet
of glass and all kinds of glass. It so happened that the orbing/orning
(?) of his entrance is was about to fall. So he engaged the services
of a master carpenter who had 2 assistants to repair the orning.
While they were repairing one of the assistants fell. So same facts
as the Caro case.
ISSUE: Who is liable for the work-related accident injury? Is Uy
Chao liable? He is if Aguilar is his employee.
HELD: Now if based on the Caro ruling, he is liable. But then the
Supreme Court said he is not liable. Because the relationship of Uy
Chao with Aguilar and Ramos is casual. Uy Chao’s business is
selling glass. A carpentry work is not usual and necessary to the
business of selling glass. The relationship is causal. It begins with
the repair work and ends at the time the repair work is completed. It
is because it is just an adjunct to the usual and necessary business
of Uy Chao which is selling glass.
CABE V. TUMANG
We have a couple. They have a plan for their dream house. They
engaged a master carpenter to execute the plan of their dream
house. The master carpenter gathered carpenters, masons,
plumbers, to do the necessary work for the dream house. But then
the couple suspects the master carpenter and finally decides to
terminate the services of the master carpenter. When they
announced that they no longer need the contractor and his services
are terminated, the contractor asked for reimbursement of the
payment of salaries of the carpenters. The spouses refused to pay.
So he goes to the Regional Director of Labor. Files a complaint for
the wages of these employees that were seconded to the
construction site. He asks for reimbursement which did not reach a
thousand pesos.
The RD awarded the contractor with the reimbursement price. The
NLRC affirmed the decisions. When they reached the SC the SC
said neither the RD and NLRC had jurisdiction and there was no
explanation. Shortest case in the SCRA.
THE SC made it clear that it doesn’t give the reason why. The
Labor Code only deals with labor not with materials. The moment
you ask for reimbursement of materials it ceases to be a labor issue.
It becomes a civil contract issue. That is why the SC said it is so
clear that the labor region office of the NLRC has no jurisdiction.
Snow White Ice Cream vs. Garcia
Facts: Snow White was engaged in the selling of ice cream
through push carts. (kinsay tag iya sa ice cream cart, sa ice, sa
3
asin, sa ice cream? si snow white!)
Garcia was a peddler. He was paid 2 centavos for every ice
cream he sold at 5 centavos each.
While preparing his pushcart, a block of ice dropped on Garcia’s
foot. After 1 week he returned to work. But while he was pushing
his cart along his usual route, the same foot was caught in a
barbed wire and became infected. His leg was amputated. Later
on Garcia died.
Snow White denied emploeyer-employee relationship under the
Workmens Compensation law. Ana sila, he was an independent
contractor. He buys it from them at 3 cents and sells it for 5.
Issue: can his wife collect workmen’s compensation from snow
white ice cream?
Ruling: SC said he is not an independent contractor. There is
er-ee relationship. Snow White supplied push carts, ice, ice
cream, salt and cap. There was no transfer of ownership of the ice
cream products because at the end of the day, he can return the
ice drop so ownership was not transferred to him.
Mafinco Trading vs. Ople
Facts: Truck carrying sarsaparilla. they had a fleet of trucks with
their own drivers subsequently the drivers agreed to resign as
they were given early retirement. Sarsaparilla put up mafinco
which employed these drivers and made them sign peddler’s
contract.
Peddling Contract:
(a)There is an option that the peddler has a choice to can hire
their own driver and assistant helper and if he does not drive, he
will be the third member of the team that constitutes one truck.
(b)Peddler would buy and sell the softdrinks;
(c)Peddler would post a bond:
1.in favor of Mafinco for any damage to its trucks or unpaid
salaries of the peddler’s workers and
2.another bond for the social security benefits of the
peddler’s workers;
(d)Peddler would secure its own business permits and licenses;
(e)Mafinco would provide the trucks, fuel and maintenance; and
(f)Peddler would liquidate his accounts each day.
Mafinco drivers sought to form a union
Q: is there an employer and employee relationship?
A: There is NO employer employee relationship
The relationship is as it was defined in the contract. When the
terms of the agreement are reduced to writing, there is no other
evidence to define the relationship except the terms of the
agreement. This is a conclusive presumption following the
PAROLE EVIDENCE RULE.
Rationale: if you can still invoke other sources outside the
contract, what is the use of the contract?
In Snowhite Ice Cream vs Garcia, ice drop ang sulod sa cart pero
sa Mafinco Trading vs Ople, soft drinks. Pareho sila gadala sa
ilang gibaligya. Unlike in the case of Snowhite vs Garcia, in
Mafinco Trading vs Ople, the court ruled that there is no EE-ER
relationship. The relationship is as it is defined in the peddler’s
contract. Why is that the ruling? According to the Supreme Court,
when the terms of an agreement have been reduced into writing,
there is no evidence that will be accepted to define the
relationship except what is found in the terms of the contract (4
corners of the contract). The reason is that if you can still invoke
other circumstance outside of the contract, then what is the use of
CASE DIGEST LABSTAN 1st EXAM
the contract. That is now the conclusive presumption under the
Parol Evidence Rule.
The SC resorted to that conclusive presumption because there are
2 subsidiary contract found in the main contract — 1) the surety
contract, the peddler must provide for a bond to answer for his
liability if he does not deliver the proceeds of the soft drinks he
withdrew from Mafinco; 2) another bond to answer for
underpayment or nonpayment of wages. A surety is a nominate
contract under the civil code and the the jurisdiction of contracts
under the Civil Code is exclusive and original with the regular
courts. The Department of Labor only has jurisdiction over
contracts involving only ER-EE relationships. As to other contracts,
it has no jurisdiction. It is not a court of general jurisdiction; it is a
special tribunal for the ER-EE relationship.
ISMAEL VS CIR
PONENTE: CORONA
JURISDICTION OF THE OMBUDSMAN OVER GOCCS
IS CONFINED ONLY TO THOSE WITH ORIGINAL
CHARTERS
The 1987 Constitution states the powers and functions of the Office
of the Ombudsman. Specifically, Article XI, Section 13(2) provides:
Sec. 13. The Office of the Ombudsman shall have the following
powers, functions, and duties:
xxx xxx xxx
(2) Direct, upon complaint or at its own instance, any public official
or employee of the Government, or any subdivision, agency or
instrumentality thereof, as well as any government-owned or
controlled corporation with original charter, to perform and expedite
any act or duty required by law, or to stop, prevent, and correct any
abuse or impropriety in the performance of duties. (italics supplied)
xxx xxx xxx
Based on the foregoing provision, the Office of the Ombudsman
exercises jurisdiction over public officials/ employees of GOCCs
with original charters. This being so, it can only investigate and
prosecute acts or omissions of the officials/employees of
government corporations. Therefore, although the government
later on acquired the controlling interest in PAL, the fact remains
that the latter did not have an "original charter" and its
officers/employees could not be investigated and/or prosecuted by
the Ombudsman.
In Juco v. National Labor Relations Commission,9 we ruled that the
phrase "with original charter" means "chartered by special law as
distinguished from corporations organized under the Corporation
4
Code." PAL, being originally a private corporation seeded by
private capital and created under the general corporation law,
does not fall within the jurisdictional powers of the Ombudsman
under Article XI, Section 13(2) of the Constitution. Consequently,
the latter is devoid of authority to investigate or prosecute
petitioners.
INVESTMENT PLANNING CORPORATION OF THE
PHILIPPINES, petitioner-appellant,
vs.
SOCIAL SECURITY SYSTEM,
Ponente: MAKALINTAL, J.:
FACTS: Petitioner is a domestic corporation engaged in business
management and sale of securities. It has two classes of agents
who sell its investment plans: 1). Salaried employees who keep
definite hours and work under control and supervision of the
company, and 2). Registerd representatives who work on
commission basis. In 1960, the petitioner applied to the Social
Security System, the respondent, for exemption of the registered
representatives from the compulsory coverage of the Social
Security Act but later denied.
ISSUE: Whether or not the petitioner’s, registered representatives
are employees within the meaning of the Social Security Act?
RULING: NO. Wherefore the employee was defined by the Social
Security Act as: Any person who performs services for an
employer in which either or both mental and physical efforts are
used and who receives compensation for such services, where
there is an employer-employee relationship: Provided, That a
self-employed professional shall be both employee and employer
at the same time. (As amended by Sec. 4, R.A. 2658 and Sec. 2,
P.D. No. 1636, S-1979)
The representatives are in reality commission agents. They
cannot be considered employees for they were just paid not by
the investor but in a form of a commission, their services may be
terminated at any certain time, and there is no element of control
for they do not devote their time exclusively to or solely for the
petitioner; the time and the effort they spend in their work depend
upon entirely upon their own will and initiative.
SARA VS. AGARRADO AND NLRC
Nature of the Case
A petition for certiorari challenging the jurisdiction of the labor
tribunal, claim for unpaid commissions, and reimbursement of
sums of money.
CASE DIGEST LABSTAN 1st EXAM
Facts
Agarrado was a former attendant in the clinic of Dr. Sara. Years
later, Agarrado, Dr. Sara and Arabia entered into a verbal
agreement for Agarado to buy and sell palay, paid on commission
for every sack mill rice sold and for every kilo of palay purchased.
Agarrado was to spend her own money to carry out the task, but
may borrow money subject to reimbursement by petitioners. Later,
private respondent filed a complaint before the NLRC Regional
Arbitration Branch for unpaid commissions and reimbursements.
Petitioners contend that the labor arbiter had no jurisdiction on the
premise that there was no employer-employee (E2e) relationship
between the private parties so that claims were cognizable by the
regular courts. The labor arbiter ordered petitioner to pay all claims.
On appeal, labor arbiters decision was affirmed.
Thus, this petition.
Issue(s)
(1). Does E2e relationship exist between the parties?
Held
(1). No.
In determining E2e, the four-fold test applis, to wit: [1] the selection
and engagement of the employee; [2] the payment of wages; [3]
the power of dismissal; and [4] the power to control the employee's
conduct. Indeed, the first requisite was present but the verbal
agreement negates the four others. Noticeably absent is the most
important test, the power of control, for the means and methods
carried out by Agarrado were totally independent of the petitioners.
Agarrado relied on her own resources to effectuate her obligations.
She was not subject to definite hours of work. She could delegate
her responsibilities to others and at the same time engage in other
means of livelihood. It can only be said that Agarrado was an
independent contractor. By virtue of which, Agarrado is not an
employee of the petitioners, and thus no E2e relationship exists
between the parties. The absence of which therefore deprives the
labor arbiter of any jurisdiction.
CARUNGCUNG VS NLRC | INSULAR LIFE VS NLRC
These two cases are centered around the insurance business. For
cost-cutting purpose, the insurance companies no longer took up
their own insurance branches; they do it through an insurance
system, through a very experienced person who has passed the
insurance commissioner’s exam and became a licensed insurance
agent. Do not confuse them with the insurance disers (housewives
or teachers) who sell insurance; they cannot sell insurance
because they cannot sign contracts. It is only the insurance agent
who can bind an insurance company. Kung naa gani makuha aning
5
teachers or housewives, dal on dayon na nila sa agent kay ang
agent ang mupirma sa insurance policy; then after the buyer
signs, here is now perfected contract of insurance.
Many of these insurance agent enters into contract with the
insurance company. Tagaan sila ug budget that are not sisiw
(millions) as training budget for sales men or sales personnel. He
has then a commission out of the policies that are sold.
In the case of Carungcong *father was not sure*, the agent was
given a budget and one of the items in the budget that she played
around with was the Christmas party budget. And then sales men,
who were on commission who were invited to the party, said that
according to the report of the office, the agent gave all these
different gifts to the sales people and there was this venue for the
Christmas dinner. So the the company finally severed its
relationship with the agent. She went then to the Labor arbiter and
filed a case for illegal dismissal. So the issue was whether or not
she was an employee. In one instance the SC says you cannot be
an employee because you are asking for too much (about 2
million worth of unpaid commission). Naa bay emploeyado na
ing-ana? The SC says “This is the Labor Code; this is about daily
paid workers”. So the SC said that the contract was agency and
the agent was hired to represent the insurance company.
CITIZENS LEAGUE v. ABBAS
That is a Davao case. If you still see around those abbreviated
jeepneys, they were used to be called Acs (Auto-Calesa). Kanang
mga AC (e.g. Route 4 na mga jeep) nag form sila ug union. Pag
form nila ug union, gusto man sila mubo nga rental. So the
operators refused to grant their request. So, they declared a
strike. What did the operators do?
The operators went to the regular courts and asked for an
injunction to stop them from going on a strike, Who was the
judge? The judge was Macapanton Abbas. The father of the
Abbas now who is the lawyer of the MILF. I think the grandson of
this Abbas is the COMELEC Commissioner, the Chairperson of
COMELEC.
Abbas issued the injunction. “You are leaseholders, you cannot
go on strike. You are lessees. Nagbayad gud mog abang”. Pag
abot sa Supreme Court, the Supreme Court said, “That is not
lease! That is employer-employee relationship”. Why is it
employer-employee relationship? It’s so obvious. Naa may
rent-a-car dinha. Ug nag lease ka anang rent-a-car, di ka
suroy-suroy ka na sa tibuok Region XI. Bisan asa ka suroy ka na
kay gi abangan man nimo.
Pero kanang abang na gi bayad nimo sa anang Boundary
System, you are confined to the franchise route of the operator.
Ug Davao-Calinan ra na, mao ra na imong agian. And, the lease
price is calculated that if you just drive for the period of the lease,
let us say 12 hours, makuha nimo ang boundary ug naa pa kay
sobra aron ma gasolinahan na nimo and sakyanan unya naa pa
gyud kay mahabilin kanang murag imong sweldo for that day.
The lease price is calculated such as there is the equivalent of
your day’s pay. Only the terminology is different but the Supreme
Court says that we are not bound by the terminologies. The legal
characterization of the relationship is not altered by the use of the
regular pedestrian word lease. It is not lease. It is their payment to
the operator who is responsible for the franchise, for the
maintenance of this vehicle and for his share in providing the
vehicle to the driver who drives it.
CASE DIGEST LABSTAN 1st EXAM
ALIPIO R. RUGA vs.NATIONAL LABOR RELATIONS
COMMISSION and DE GUZMAN FISHING ENTERPRISES G.R.
No. L-72654-61, 22 January 1990
FACTS:
Petitioners were the fishermen-crew members of 7/B Sandyman II,
one of several fishing vessels owned and operated by private
respondent De Guzman Fishing Enterprises which is primarily
engaged in the fishing business.They were paid in percentage
commission basis in cash by one Mrs. Pilar de Guzman, cashier of
private respondent, 13% of the proceeds of the sale of the
fish-catch if the total proceeds exceeded the cost of crude oil
consumed during the fishing trip, otherwise, 10% of the total
proceeds of the sale.
After some time, they were dismissed alleging that they sold some
of their fish-catch at midsea to the prejudice of private respondent.
Consequently, they filed illegal dismissal case to the DOLE
Arbitration Branch. De Guzman said that there was no
employer-employee relationship between them; rather it was a joint
venture. After the parties failed to reach an amicable settlement,
the Labor Arbiter heard the case and dismissed the cases filed by
the petitioners on finding that it was really a joint venture. NLRC
affirmed.
ISSUE:
6
Whether or not the fishermen-crew members of the trawl fishing
vessel 7/B Sandyman II are employees of its owner-operator, De
Guzman Fishing Enterprises, and if so, whether or not they were
illegally dismissed from their employment.
RULING:
Yes. From the four (4) elements of employer-employee
relationship, the Court has generally relied on the so-called
right-of-control test where the person for whom the services are
performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end.
According to the testimony of Alipio Ruga, they are under the
control and supervision of private respondent’s operations
manager. Matters dealing on the fixing of the schedule of the
fishing trip and the time to return to the fishing port were shown to
be the prerogative of private respondent. While performing the
fishing operations, petitioners received instructions via a
single-side band radio from private respondent’s operations
manager who called the patron/pilot in the morning.
Even on the assumption that petitioners indeed sold the fish-catch
at midsea the act of private respondent virtually resulting in their
dismissal evidently contradicts private respondent’s theory of
“joint fishing venture” between the parties herein. A joint venture,
including partnership, presupposes generally a parity of standing
between the joint co-venturers or partners, in which each party
has an equal proprietary interest in the capital or property
contributed and where each party exercises equal lights in the
conduct of the business. It would be inconsistent with the principle
of parity of standing between the joint co-venturers as regards the
conduct of business, if private respondent would outrightly
exclude petitioners from the conduct of the business without first
resorting to other measures consistent with the nature of a joint
venture undertaking, Instead of arbitrary unilateral action, private
respondent should have discussed with an open mind the
advantages and disadvantages of petitioners’ action with its joint
co-venturers if indeed there is a “joint fishing venture” between
the parties.
VILLAMARIA VS. CA AND BUSTAMANTE
G.R. No. 165881, April 19, 2006
CALLEJO, SR., J.:
Facts:
Petitioner Villamaria and respondent Bustamante executed a
contract entitled “Kasunduan ng Bilihan ng Sasakyan sa
Pamamagitan ng Boundary-Hulog”
Under the “Kasunduan”, respondent was required to remit P550
daily to petitioner, with the amount representing the “boundary”
and the partial payment for the purchase of the jeepney. Any
CASE DIGEST LABSTAN 1st EXAM
excess would be kept by the driver as his daily wage. Under the
“Kasunduan”, the petitioner retained ownership with the material
possession vested in the driver. Also in the “Kasunduan” if the
driver failed to remit P550 for a week, the agreement would be of
no force and effect with the driver to return the jeepney to the
owner. If still allowed to drive, owner and driver would revert to a
daily P550 Boundary only.
Sometime in 1999, petitioner issued a “Paalala” to all their drivers
reminding them about the “Kasunduan”
July 24, 2000, respondent Bustamante was barred by petitioner to
drive the vehicle that was already taken back.
Respondent filed an illegal dismissal complaint. Villamaria
countered that there was no dismissal because the “Kasunduan”
transformed the employer – employee relationship to that of a
buyer – seller.
The Labor Arbiter decided in favor of petitioner with the reason that
the “Kasunduan” was in effect between the parties and with the
“Paalala” it was shown that respondent had violated the terms of
the contract and is not entitled to damages.
Respondent appealed to NLRC which then was then dismissed not
because of the arbiter’s decision but because of jurisdictional
issues pertaining to the “Kasunduan” which gives way to the
juridical relationship as vendor – vendee meaning that the Labor
Arbiter had no jurisdiction over the case. Respondent’s motion for
reconsideration was also denied.
Issue:
Whether or not the employer – employee relationship exists even
with the “Kasunduan”?
Ruling:
The juridical relationship of employer – employee was not negated
by the “Kasunduan”, considering that the petitioner retained control
of respondent’s conduct as driver of the vehicle.
BESA VS TRAJANO
Facts:
Private respondent KAMPIL, a legitimate labor union, filed a
petition for Certification Election to which herein petitioner Besa
opposed on the ground that no employer-employee relationship
existed between him and the petition’s signatories. The
Med-Arbiter and BLR Director both ruled in favor of the union which
granted the holding of the certification election. Meanwhile,
7
petitioner Besa filed actions before the Court and with the
Med-Arbiter contending that the 17 shoeshiners who are
members of the union cannot be considered employees and thus
has no standing to vote in the certification election.
Issue:
Whether or not there is employer-employee relationship between
Besa and the 17 shoeshiners-union members.
Ruling: NO.
Respondent BESA does not exercise any degree of control or
supervision over their person and their work. All these are not
obtaining in the case of a piece worker as he is in fact an
employee in contemplation of law, distinct from the shoe shiner in
this instance who, in relation to respondent MAMERTO B. BESA,
is a partner in the trade.
These shoe shiners are not employees of the company, but are
partners instead. This is due to the fact that the owner/manager
does not exercise control and supervision over the shoe shiners.
That the shiners have their own customers from whom they
charge the fee and divide the proceeds equally with the owner,
which make the owner categorized them as on purely commission
basis. The attendant circumstances clearly show that there is no
employer-employee relationship existing.
RABAGO VS NLRC
We disagree.
As the Court sees it, the wage orders do not apply to the direct
employees of PTS who in fact are members of the Government
Service Insurance System. The complainants in G.R. No. 82868
unquestionably belong to the private sector and for this reason
are covered by the Social Security System. They are the indirect
employees of the PTS and as such are entitled to hold it liable,
solidarily with their direct employer, for their unpaid wage
differentials. In this sense, the PTS is correctly classified as an
employer coming under the private sector. The reference to it as
belonging to the public sector relates only to its direct employees
"for purposes of coverage under the Employees' Compensation
Commission," not to its indirect employees coming from the
private sector.
The issues regarding the separation pay and the service incentive
leave pay are factual. We have said often enough that the
findings of fact of quasi-judicial agencies which have acquired
expertise on the specific matters entrusted to their jurisdiction are
accorded by this Court not only respect but even finality if they are
supported by substantial evidence.[4]
CASE DIGEST LABSTAN 1st EXAM
We are satisfied that the complainants were able to establish by
Exhibit "B" their length of service to entitle them to service incentive
leave with pay. The argument that the affidavit is hearsay
because the affiants were not presented for cross-examination is
not persuasive because the rules of evidence are not strictly
observed in proceedings before administrative bodies like the
NLRC, where decisions may be reached on the basis of position
papers only. It is also worth noting that ABC has not presented
any evidence of its own to disprove the complainant's claim. As
the Solicitor General correctly points out, it would have been so
easy to submit the complainants' employment records, which were
in the custody of ABC, to show that they had served for less than
one year.
A slight modification must be made, though, in the case of Norma
Moreno Mangabat, who was denied the service incentive leave
with pay, possibly through an oversight. Exhibit "B" shows that
her employment was from "7/79 to 12/81 and 3/84 to 7/84." Section
3 of Rule V, Book III of the Omnibus Rules Implementing the Labor
Code, provides that the term "at least one year service" shall mean
service within 12 months, whether continuous or broken, reckoned
from the date the employee started working.
The submission that the five complainants awarded separation pay
were not entitled thereto because their terms expired with the
contract with PTS is also not acceptable. ABC never offered any
evidence that the employment of the claimants was co-terminal
with the janitorial contract. We agree that the termination of ABC's
contract with PTS resulted in a partial closure or cessation of
operations of ABC that called for the application (if only by analogy)
of Article 283 of the Labor Code providing in part as follows:
x x x In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
Our conclusion is that Ace Building Care and the Philippine
Tuberculosis Society are solidarily liable to the complainants for
their differential pay under Wage Orders Nos. 5 and 6, PTS being
considered in the circumstances of this case to be the indirect
employer of workers in the private sector. ABC is liable for the
payment of the separation pay and incentive leave pay of the
complainants mentioned in the challenged decisions, with the
modification only that Norma Moreno Mangabat shall also be
entitled to service incentive leave with pay.
Kimberly Clark Independent Labor Union Vs. Drilon
This court take judicial notice of the general practice adopted in
several government and private institutions and industries of hiring
a janitorial service on an independent contractor basis.
NERI VS. NLRC
GR Nos. 97008-09, July 23, 1993
8
FACTS:
Petitioners Virginia Neri and Jose Cabelin were hired by Building
Care (BCC), a corporation engaged in providing technical,
maintenance, engineering, housekeeping, security and other
specific services to its clientele. They were assigned to
respondent Far East Bank and Trust Company (FEBTC), with
Neri as a radio/telex operator and Cabelin as janitor/messenger.
Petitioners then instituted an action with the Regional Arbitration
Branch No. 10 to compel FEBTC to recognize and accept them
as regular employees. The Labor Arbiter denied the complaint for
lack of merit, declaring that BCC was considered an independent
contractor because it proved it had substantial capital of P1M.
Neri and Cabelin, however, contend that BCC is engaged in LOC
because it failed to adduce evidence purporting to show that it
invested in the form of tools, equipment, machineries, work
premises and other materials which are necessary in the conduct
of its business. Moreover, they argued that they performed duties
which are directly related to the principal business of FEBTC.
ISSUE: Whether or not BCC is engaged in LOC.
HELD:
BCC is an independent contractor. One is not required to possess
both a) substantial capital and b) investment in the form of tools,
equipment, machinery, work premises, among others, to be
considered a job contractor. Possession of either attribute is
sufficient for the purposes of complying with one of the conditions
for the establishment of permissible job contracting. In this case,
BCC proved it had substantial capital of P1M.
On the issue of control, petitioners do not deny that they were
selected and hired by BCC before being deployed in FEBTC.
BCC likewise acknowledges that petitioners are its employees.
The record is replete with evidence disclosing the BCC
maintained supervision and control over petitioners through its
Housekeeping and Special Services Division. Petitioners reported
for work wearing the prescribed uniform of BCC: leaves for
absence were filed directly with the BCC and salaries were drawn
only from BCC. As a matter of fact, Neri even secured a certificate
from BCC that she was employed by the latter. More importantly,
under the terms and conditions of the contract, it was BCC alone
which had the power to reassign petitioners. These are
indications that BCC carries an independent business according
to its own manner and method, free from the control and
supervision of its principal in all matters except as to the results
thereof.
The Court has already taken judicial notice of the general practice
adopted in several government and private institutions and
industries of hiring independent contractors to perform special
services ranging from janitorial, security and even technical or
other specific services such as those performed by Neri and
Cabelin. While these services may be considered directly related
to the principal business of the employer, nevertheless they are
CASE DIGEST LABSTAN 1st EXAM
not necessary in the conduct of the principal business of the
employer.
VINOYA VS NLRC
FACTS: Petitioner Vinoya was hired by RFC as sales
representative. He avers that he was transferred by RFC to PMCI,
an agency which provides RFC with additional contractual workers.
In PMCI, he was reassigned to RFC as sales representative and
then later informed by the personnel manager of RFC that his
services were terminated. RFC maintains that no
employer-employee relationship existed between petitioner and
itself. Petitioner filed complaint for illegal dismissal. RFC alleges
that PMCI is an independent contractor as the latter is a highly
capitalized venture.
ISSUE: Whether or not petitioner was an employee of RFC and
thereby, illegally dismissed.
HELD: Yes. PMCI was a labor-only contractor. Although the Neri
doctrine stated that it was enough that a contractor had substantial
capital to show it was an independent contractor, the case of Fuji
Xerox clarified the doctrine stating that an independent business
must undertake the performance of the contract according to its
own manner and method free from the control of the principal. In
this case, PMCI did not even have substantial capitalization as only
a small amount of its authorized capital stock was actually paid-in.
Also, PMCI did not carry on an independent business or undertake
the performance of its contract according to its own manner and
method. Furthermore, PMCI was not engaged to perform a specific
and special job or service, which is one of the strong indicators that
is an independent contractor. Lastly, in labor-only contracting, the
employees supplied by the contractor perform activities, which are
directly related to the main business of its principal. It is clear that in
this case, the work of petitioner as sales representative was directly
related to the business of RFC. Since due to petitioner’s length of
service, he attained the status of regular employee thus cannot be
terminated without just or valid cause. RFC failed to prove that his
dismissal was for cause and that he was afforded procedural due
process. Petitioner is thus entitled to reinstatement plus full
backwages from his dismissal up to actual reinstatement.
LAPANDAY VS CA
FACTS: Commando Security Service Agency provided security
guards to Lapanday Agricultural Development Corporation under a
contract of service. Subsequently, a wage order was issued, with
the stipulation that the increase in wages for security services
would be borne by the client/principal, in this case Lapanday. The
9
latter refused to amend the contract to conform to the wage order,
and the said contract ran through its natural life and expired,
without the required adjustments having been made. The security
agency then filed a case for the collection of a sum of money with
the regional Trial Court that had jurisdiction over the case.
Lapanday opposed, stating the NLRC was the proper forum for
the case.
ISSUE: Where is the proper venue of the case, the RTC or the
NLRC?
HELD: The RTC. There was no employer-employee relationship
in this case, since Commando simply sought to collect a sum of
money and damages for breach of contract. The service contract
had long since expired. Hence, reference must be made to the
Civil, not Labor Code.
USA VS RODRIGO JOINTLY DECIDED IN USA VS GINTO
This is a case of Filipino cook hired in a US base in Camp John
Hay (CJH) in Baguio City, it has a golf course, a swimming pool,
restaurant, and those that frequent it are US embassy personnel
and US Armed forces officers and members. It is an R&R place.
Now this cook was terminated, he then files an illegal dismissal
complaint with money claims against Camp John Hay
commander who is an American. The commander calls in and
engages ACCRA as its lawyer. The ACCRA files immediately a
motion to dismiss on the ground of immunity from suit. He claims
that the establishment CJH is purposely put up to serve its armed
forces member and officers. R&R, or entertainment for the armed
forces members is a sovereign function. It is not just going up to
war, it is also building up morale that is part of sovereign function.
So it claims immunity from suit. But the Labor Arbiter did not
accept that. The counsel of CJH commander went to NLRC who
also upheld the Labor Arbiter.
In the SC, the SC said that this court takes judicial notice that
although CJH is principally for the armed forces of US members
and officers, it is also open to general public. So it is engaging in a
proprietary not just a sovereign function. Why? Because the
summer residences of the justices of the SC is just up the hill, and
these justices go down the hill and eat steak in CJH that is why
they said it is a matter of judicial notice.
So when you go down to that level of an ordinary citizen by
entering into an employer-employee contract to pursue a
sovereign function at the same time partaking a proprietary
function, you cannot hide behind from the immunity from
suit doctrine.
Q: So, what is your remedy if immunity from suit of a sovereign is
applicable? Wa kay bayri ug minimum wage sa Indonesian
Ambassador. What is your remedy kay di man ka kaadto sa Labor
Arbiter?
A: Your remedy is diplomatic. You go to the Department of
Foreign Affairs. You explain your case to Sec. Locsin na wa kay
bayri. And the Secretary will write a letter and present the matter
to the Indonesian Ambassador.
They are not obliged to enroll their employees with the SSS, di
man sila mapugos. Although most embassies will enroll their
employees with the SSS to solve their problems because they go
back to them to ask for a loan if they have sickness and
CASE DIGEST LABSTAN 1st EXAM
accidents. So they find it beneficial to enroll but they are not
obliged.
JUSMAG PHILIPPINES V. NLRC
GR NO. 108813, 15 DECEMBER 1994
DOCTRINES:
A suit against JUSMAG is one against the United States
Government, and in the absence of any waiver or consent of the
latter to the suit, the complaint against JUSMAG cannot prosper
Immunity of State from suit is one of the universally recognized
principles of international law that the Philippines recognizes and
adopts as part of the law of the land
FACTS:
Joint United States Military Assistance Group (JUSMAG) assails
the January 29, 1993 Resolution of the NATIONAL LABOR
RELATIONS COMMISSION (public respondent), in NLRC NCR
CASE NO. 00-03-02092-92, reversing the July 30, 1991 Order of
the Labor Arbiter, and ordering the latter to assume jurisdiction
over the complaint for illegal dismissal filed by FLORENCIO
SACRAMENTO (private respondent) against petitioner.
Private respondent was one of the seventy-four (74) security
assistance support personnel (SASP) working at
JUSMAG-Philippines. He had been with JUSMAG from December
18, 1969, until his dismissal on April 27, 1992. When dismissed, he
held the position of Illustrator 2 and was the incumbent President of
JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES
ASSOCIATION (JPFCEA), a labor organization duly registered
with the Department of Labor and Employment. His services were
terminated allegedly due to the abolition of his position. He was
also advised that he was under administrative leave until April 27,
1992, although the same was not charged against his leave.
On March 31, 1992, private respondent filed a complaint with the
Department of Labor and Employment on the ground that he was
illegally suspended and dismissed from service by JUSMAG. He
asked for his reinstatement. JUSMAG then filed a Motion to
Dismiss invoking its immunity from suit as an agency of the United
States. It further alleged lack of employer-employee relationship
and that it has no juridical personality to sue and be sued.
ISSUE:
Whether JUSMAG was immune from suit as an agency of the
United States.
RATIO:
YES, from the foregoing, it is apparent that when JUSMAG took
the services of private respondent, it was performing a
governmental function on behalf of the United States pursuant to
the Military Assistance Agreement dated March 21, 1947. Hence,
we agree with petitioner that the suit is, in effect, one against the
10
United States Government, albeit it was not impleaded in the
complaint. Considering that the United States has not waived or
consented to the suit, the complaint against JUSMAG cannot
prosper.
In this jurisdiction, we recognize and adopt the generally
accepted principles of international law as part of the law of the
land. Immunity of State from suit is one of these universally
recognized principles. In international law, “immunity” is
commonly understood as the exemption of the state and its
organs from the judicial jurisdiction of another state. This is
anchored on the principle of the sovereign equality of states under
which one state cannot assert jurisdiction over another in violation
of the maxim par in parem non habet imperium (an equal has no
power over an equal)
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract
does not, per se, mean that sovereign states may, at all times, be
sued in local courts. The complexity of relationships between
sovereign states, brought about by their increasing commercial
activities, mothered a more restrictive application of the doctrine.
Thus, in United States of America vs. Ruiz, we clarified that our
pronouncement in Harry Lyons, supra, with respect to the waiver
of State immunity, was obiter and “has no value as an imperative
authority.” As it stands now, the application of the doctrine of
immunity from suit has been restricted to sovereign or
governmental activities (jure imperii). The mantle of state
immunity cannot be extended to commercial, private and
proprietary acts (jure gestionis).
SEAFDEC AOC vs. NLRC
FACTS: SEAFDEC-AQD is a department of an international
organization, the Southeast Asian Fisheries Development Center,
organized through an agreement in 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam, Indonesia and the
Philippines with Japan as the sponsoring country.
Juvenal Lazaga was employed as a Research Associate on a
probationary basis by SEAFDEC-AQD. Lacanilao in his capacity
as Chief of SEAFDEC-AQD sent a notice of termination
to Lazaga informing him that due to the financial constraints being
experienced by the department, his services shall be terminated.
SEAFDEC-AQD's failure to pay Lazaga his separation pay forced
him to file a case with the NLRC. The Labor Arbiter and NLRC
ruled in favor of Lazaga. Thus SEAFDEC-AQD appealed,
claiming that the NLRC has no jurisdiction over the case since it is
immune from suit owing to its international character and the
complaint is in effect a suit against the State which cannot be
maintained without its consent.
ISSUES:
1. Does the NLRC have jurisdiction over SEAFDEC-AQD?
2. Is SEAFDEC-AQD estopped for its failure to raise the issue of
jurisdiction at the first instance?
HELD:
1. SEAFDEC-AQD is an international agency beyond the
jurisdiction of public respondent NLRC. Being an
CASE DIGEST LABSTAN 1st EXAM 11
intergovernmental organization, SEAFDEC including its Relations, granting the appeal and revoking the Med-Arbiter's
Departments (AQD), enjoys functional independence and freedom order mandating the holding of a certification election.
from control of the state in whose territory its office is located.

Permanent international commissions and administrative bodies

have been created by the agreement of a considerable number of ISSUE:
States for a variety of international purposes, economic or social
1. whether or not employees of an electric cooperative who are at
and mainly non-political. In so far as they are autonomous and
the same time members of the cooperative, may be allowed to
beyond the control of any one State, they have a distinct juridical
form or join a labor union in the electric cooperative for purposes
personality independent of the municipal law of the State where
of collective bargaining.
they are situated. As such, according to one leading authority "they
must be deemed to possess a species of international personality
of their own."

One of the basic immunities of an international organization is

immunity from local jurisdiction, i.e., that it is immune from the legal
writs and processes issued by the tribunals of the country where it
is found. The obvious reason for this is that the subjection of such
an organization to the authority of the local courts would afford a
convenient medium thru which the host government may interfere
in there operations or even influence or control its policies and
decisions of the organization; besides, such subjection to local
jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states.
BATANGAS I ELECTRIC COOPERATIVE V. YOUNG GR NO
62386
Topic: Workers-Members of a Cooperative
FACTS:
1. This is a petition for certiorari under Rule 65 of the Rules of Court
2. On June 1, 1981, the Batangas-I Electric Cooperative Union
(hereinafter referred to as UNION) filed with the Regional Office No.
IV-A, Ministry of Labor and Employment (now Department of Labor
and Employment), at San Pablo City, a petition for certification
election.
RULING:
1. No. A cursory analysis of Section 35, Presidential Decree 269,
as amended, readily shows that employees of an electric
cooperative who are themselves members of the cooperative
have no right to form or join a labor organization for purposes of
collective bargaining.
In the first instance, a cooperative is established primarily for the
mutual aid and protection of the members thereof. It was never
intended to operate like an ordinary company or corporation. A
cooperative is a non-profit organization, so that if ever there are
gains, income or benefits derived therefrom, the same are equally
divided among its members. For all legal intents and purposes,
therefore, members of a cooperative are part-owners thereof.
In the instant case, petitioner strongly contended that they are not
co-owners of the cooperative because the only benefits that they
derive therefrom are in the form of electrical services and that
they never exercise the attributes of ownership recognized under
Article 428 of the New Civil Code. We do not concur. The fact that
these employees/members enjoy free electrical services which
are not available to non-members is a clear indication that these
employees are co-owners of the cooperative. Petitioner must be
reminded that benefits from cooperative accruing to co-owners
may not come only in the form of monetary benefits but also in the
form of services.

3. The UNION alleged, inter alia, that it is a legitimate labor DISPOSITIVE: BATANGAS-I ELECTRIC COOPERATIVE, INC
organization; that the Batangas-I Electric Cooperative Inc. won.
BATELEC has 150 employees, more or less; that the UNION
The petition is DISMISSED and the challenged decision dated
desires to represent the regular rank and file employees of
November 27, 1981 of respondent Romeo A. Young, OIC of the
BATELEC for purposes of collective bargaining; that there is no
Bureau of Labor Relations is AFFIRMED.
other union existing in BATELEC except the UNION; that there is
no certified collective bargaining agreement in the said cooperative;
and that there has been no certification election conducted in
BATELEC during the last twelve (12) months preceding the filing of DOCTRINE:
the petition.

4. On August 20, 1981, Med-Arbiter Paterno D. Adap issued a

resolution (pp. 21-23, Rollo) which gave due course to the petition “employees who at the same time are members of an electric
and ordered the holding of a certification election. On August 31, cooperative are not entitled to form or join unions for purposes of
1981, BATELEC filed a motion for reconsideration (pp. 24-30, Rollo) collective bargaining agreement, for certainly an owner cannot
of the Med-Arbiter's resolution contending, inter alia, that there was bargain with himself or his co-owners.”
a legal impediment to the holding of a certification election
considering that the formation of a union in a cooperative is illegal
and invalid, the officers and members of the union being the
SUMIFRU Corp. vs NAMASUFA-NAFLU-KMU
owners thereof. This motion was treated as an appeal from the
Med-Arbiter's resolution of August 20, 1981

5. On November 27, 1981, a resolution (pp. 38-40, Rollo) was There is this case called SUMIFRU Corp. vs
issued by Romeo A. Young, Officer in Charge, Bureau of Labor NAMASUFA-NAFLU-KMU. It is in line with contracting and
CASE DIGEST LABSTAN 1st EXAM
subcontracting. This is the decision which gives you the reason
why in Compostela, there was a big strike of the banana workers.
The business of cavendish bananas for export is a large scale farm
operation, but since the advent of agrarian reform, after the leeway
of 10 years + 10 years, finally, the DAR implemented agrarian
reform.
The big estates like Hijo Plantation, they were divided up, the
landowners became small landowners because the original
workers became beneficiaries because many of them were left less
- 3 hectares per beneficiaries.
But in the banana companies (Del Monte, Lapanday, Unifrutti),
Sumifru is a late comer wherein it inherited the Soriano farms. They
were preparing for the implementation of the Agrarian Reform, their
solution was in aid to the beneficiaries who agreed to the
growership agreement. In other words, the small farms entered into
a contract with the banana company wherein the contract is
denominated with several name (grower’s contract, exclusive
seller’s contract) but the whole idea is the banana company will
support the inputs to the growers as long as the growers will sell
exclusively to the banana companies their produce. That went on
for 10 or 15 years but the growers said “we cannot manage the
workforce” so it was still the workforce of the banana corporation
that did the critical phases like harvesting. So, that became
problematic.
The banana corporation were still accumulating a lot of manpower
(high-skilled, semi-skilled), the ratio of workers to cultivated plant
was 1 worker per hectare. So if there is 35,000 hectares, there
must be at least 35, 000 workers. Now that being the case,
naglisod na man, naay nakahunahuna (magsubil?) sa banana
company. Ingon sa consultant sa banana company kay
magbuhat ug cooperative. Ang workers iparesign then himoag
members sa cooperative. Unya in a cooperative, mao muservice sa
growers, tawgon sila sa mga growers tagaan nilag schedule ang
mga growers depende sa ilahang pahinganglan. Unya ang growers,
mudeduct gikan sa banana corporation kay naa pa silay
dawatunon tagaan man nilag saging. Mudeduct sila para panweldo
sa mga workers na provided by the cooperative. Ostensibly, the
employers are the growers. So daghan mga employers ang
cooperative. Tan awa ra gud murag manpower agency.
Karon nigawas na man ang decision, SC says the banana
company is the employer. The SC affirms the decision of the arbiter
that the control test is met. “In affirming the arbiter, the DOLE
Secretary relied on the document sent by the parties and
ascertained that Sumifru indeed exercised control over the workers.
The DOLE Secretary found that the element of control is present
because Sumifru required monitoring sheets and imposed
disciplinary action for noncompliance such as the no helmet rule,
the no id rule etc. Gikan man ang rules sa banana corporation and
dili gikan sa growers. After this decision came out, the workers
demanded from the Sumifru magbargaining pero dili man musugot
ang Sumifru. Sira ang Sumi, then ang Japan kay nagwithdraw na
lang kay samok na kaayo. This decision has wide ranging effects
since Lapanday, Unifrutti, etc employs cooperative. Since
cooperative is their way to circumvent or prevent the unionization of
the workers. (826 SCRA 438)
Tabas vs. California Manufacturing
12
This is a case 25 years ago where the SC came up with the ruling
that merchandisers cannot be contracted out. When a product is
launched, extra new personnel are need to do the launching. If
there is a special offer, there is an agency na mag-specialize and
do house-to-house offers. They are not regular force. They are
from a manpower agency. The question arise because the special
campaign to launch them product goes for about 1 year but the
probationary period is only 6 months lang man. Can they be
contracted out? In the case, they entered into a manpower supply
agreement and in the agreement it was specified, that the real
employer is the manpower agency and the agency holds the
principal free and without liability as to any claims the may rise
from this contract to supply manpower.
Q: What is the validity of that agreement that ER-EE relationship
is already owned by the manpower agency and that the indirect
employer is relieved all obligation and responsibilities of the
manpower agency or employer?
A: That particular provision in the contract, the SC says, is void
because it involves third parties that are not privy to the contract.
EE-ER relation according to the SC in that case is a question of
law and not a question of fact. And yet when you go to LVN
Musicians Guild case, the SC said that EE-ER relationship is a
question of facts. So what is correct?
RULE:
When there is only 1 putative employer, it is a question of fact.
However, once you have contracting and subcontracting, and
there are a possibility of multiple employers, then it becomes a
questions of law.
What if the indirect employer is the government?
What if muingon ang indirect employer na “Government man ko
(NFA for example)” They have a security guard and then here’s a
wage order that was issued which says that the increase here
must be borne by the principal and not the manpower agency.
NFA says “Human na among budget. Usaon nato pag-increase
na ang magbuot man sa budget kay ang Congress. Dili mi
kabayad. Besides we are not covered by the labor code because
this is private and we are government.”
The SC says that they are covered and liable. The employee after
securing a favorable decision may go to Congress and request for
a law appropriating money to fulfill this final and executory
decision. The court says that the government cannot be saved
because it is the law that imposes ER-ER relation in this instance.
FONTERRA BRANDS PHILS.,
INC., Petitioner, v. LEONARDO1 LARGADO AND TEOTIMO
ESTRELLADO, Respondents.
G.R. No. 205300, March 18, 2015
Facts:
CASE DIGEST LABSTAN 1st EXAM
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
(Largado) and Teotimo Estrellado (Estrellado). The engagement of
their services began on September 15, 2003 and May 27, 2002,
respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its
promotions contract, effective June 5, 2006. Fonterra then 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 submitted their job applications with
A.C. Sicat, which hired them for a term of five (5) months,
beginning June 7, 2006 up to November 6, 2006.
When respondents’ 5-month contracts with A.C. Sicat were about
to expire, they allegedly sought renewal thereof, but were allegedly
refused. This prompted respondents 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.
The Labor Arbiter dismissed the complaint and ruled that: (1)
respondents were not illegally dismissed. As a matter of fact, they
were the ones who refused to renew their contract and that they
voluntarily complied with the requirements for them to claim their
corresponding monetary benefits in relation thereto; and (2) they
were consecutively employed by Zytron and A.C. Sicat, not by
Fonterra. The dispositive portion of the
Issue/s:
(1) Whether or not respondents were illegally dismissed.
(2) Whether or not Zytron and A.C. Sicat are labor-only contractors,
making Fonterra the employer of herein respondents.
Held:
(1)
No. Respondents voluntarily terminated their employment with
Zytron, contrary to their allegation that their 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.
As regards to the Labor Arbiter’s conclusion that respondents were
the ones who refused to renew their contracts with Zytron, and the
13
NLRC’s 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.
According to the SC, 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 Zytron’s 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 Fonterra’s 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 “[t]o continuously work as
merchandisers of Fonterra products, [respondents] submitted
their job applications to A.C. Sicat xxx.”6 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.
(2)
No. Zytron and A.C. Sicat were not labor-only contractors.
Respondents were fixed-term employees. As previously held by
this Court, fixed-term employment contracts are not limited, as
they are under the present Labor Code, to those by nature
seasonal or for specific projects with predetermined dates of
completion; they also include those to which the parties by free
choice have assigned a specific date of termination.11 The
determining factor of such contracts is not the duty of the
employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.
In the case at bar, it is clear that respondents were employed by
A.C. Sicat as project employees. In their employment contract
with the latter, it is clearly stated that “[A.C. Sicat is] temporarily
employing [respondents] as TMR[s] effective June 6[, 2006] under
the following terms and conditions: The need for your service
being only for a specific project, your temporary employment will
be for the duration only of said project of our client, namely to
promote FONTERRA BRANDS products xxx which is expected to
be finished on or before Nov. 06, 2006.”
Respondents, by accepting the conditions of the contract with A.C.
Sicat, were well aware of and even acceded to the condition that
their employment thereat will end on said pre-determined date of
termination. They cannot now argue that they were illegally
dismissed by the latter when it refused to renew their contracts
CASE DIGEST LABSTAN 1st EXAM 14
after its expiration. This is so since the non-renewal of their
contracts by A.C. Sicat is a management prerogative, and failure of
respondents to prove that such was done in bad faith militates
against their contention that they were illegally dismissed. The
expiration of their contract with A.C. Sicat simply caused the natural
cessation of their fixed-term employment there at.
CASE DIGEST LABSTAN 1st EXAM
RVM VS. NLRC
This memorandum leaves no room for doubt that CDSPB, as
represented by the director, exercised absolute control and
supervision over the school's administration. Under it, the authority
to hire, discipline and terminate the employment of personnel is
vested in the director, as academic and administrative head of the
school.
CDSPB contends, however, that ¾
...[T]he designation of the parish priest as director was not
unilateral but by mutual agreement between the diocese of Malolos
and [petitioner]. This being the case, the parish priest's designation
as such director merely makes him, in effect, a member of the
school administration which is under the actual and direct control
and supervision of the congregation.[16]
The argument has no merit. As this Court has consistently ruled,
the power of control is the most decisive factor[17] in determining
the existence of an employer-employee relationship. In
Encyclopedia Britannica (Phils.), Inc. v. NLRC,[18] we held:
In determining the existence of an employer-employee relationship
the following elements must be present: (1) selection and
engagement of the employee; (2) payment of wages; (3) power of
dismissal; and (4) the power to control the employee's conduct. Of
the above, control of employee's conduct is commonly regarded as
the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship. Under the control
test, an employer-employee relationship exists where the person
for whom the services are performed reserves the right to control
not only the end to be achieved, but also the manner and means to
be used in reaching that end.
In this case, CDSPB reserved the right to control and supervise the
operations of the Girls' Department. As noted by the labor arbiter
himself and affirmed by the NLRC, although CDSPB "actually
exercised minimal supervision over petitioner, [it] could exercise
substantial supervision and control as it did when [it] preterminated
the Agreement." There was, therefore, no basis in finding that
petitioner had a "greater degree of autonomy and independence in
running the affairs" of the school. The presence of the school
director, whose vast powers have already been noted, negates any
suggestion or semblance of autonomy.
Nor is there any merit in the claim that "actual and effective control"
was exercised by petitioner since the designation of the parish
priest as director was "a mere formality, as he did perform functions
which are purely ministerial and figurative in nature."[19] Time and
again we have held that "the 'control test' only requires the
existence of the right to control the manner of doing the work not
necessarily the actual exercise of the power by him, which he can
delegate."[20] Indeed, although the letters of appointment were
signed by the principal/representative of petitioner, they bore the
name/letterhead of CDSPB and clearly indicated therein that the
employees were hired as teachers/personnel by CDSPB, and not
15
by RVM. Moreover, CDSPB itself admits that its name not
petitioner's appears in the employees' payroll ledger cards.[21]
One other crucial fact to consider is that private
respondents-complainants continued to render services beyond
April 10, 1987, the termination date of the Agreement. If they were
employees of petitioner and not of CDSPB, their services should
have been terminated the moment the Agreement was no longer
in effect. Instead, CDSPB continued to honor their respective
employment contracts/appointment papers and avail of their
services even after petitioner turned over the school's
administration to CDSPB. Indeed, it does not appear that there
was a break or change in the employment status of private
respondents-complainants, neither are they claiming separation
pay from petitioner, unlike in cases where there is a supposed
change in employers.[22]
Based on the Agreement and other evidence on record, it thus
appears that petitioner was merely the agent or administrator of
CDSPB, and that private respondents are its employees. In
Ponce v. NLRC,[23] this Court held:
Under Section 8, Rule VIII, Book III, of the Omnibus Rules
Implementing the Labor Code, an independent contractor is one
who undertakes "job contracting," i.e., a person who (a) carries on
an independent business and undertakes the contract work on his
own account under his own responsibility according to his own
manner and method, free from the control and direction of his
employer or principal in all matters connected with the
performance of the work except as to the results thereof, and (b)
has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials
which are necessary in the conduct of the business.
Jurisprudential holdings are to the effect that in determining the
existence of an independent contractor relationship, several
factors might be considered such as, but not necessarily confined
to, whether or not the contractor is carrying on an independent
business; the nature and extent of the work; the skill required; the
term and duration of the relationship; the right to assign the
performance of specified pieces of work, the control and
supervision of the work to another; the employer's power with
respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply premises,
tools, appliances, materials and labor; and the mode, manner and
terms of payment.
As above stated, petitioner was subject to the control and
supervision of CDSPB in running the Girls' Department. Petitioner
has not been shown to have substantial capital or investment
necessary in the conduct of the business. Under the Agreement,
the ownership of the parcel of land and the building thereon
remained with CDSPB. Tested by the standards announced in
Ponce, petitioner cannot be considered an independent
contractor.
CDSPB nonetheless argues that petitioner should be made liable
to pay the salaries for the month of May 1987 since petitioner
collected the revenues for school year 1986-1987 from which said
salaries should be sourced.[24] Petitioner, on the other hand,
claims that it has been its "uniform and traditional practice in its
administration of various schools throughout the Philippines to fix
the school budget from May 1 to April 30."[25]
CASE DIGEST LABSTAN 1st EXAM
It is unnecessary to pass upon this claim. The fact that CDSPB is
the direct and only employer of private respondents makes it solely
liable to pay the salaries for the month of May 1987 to the
concerned employees. Whether or not said salaries should come
from the fees collected by its agent (petitioner) for the previous year
is a matter to be litigated between CDSPB and RVM. Here, the only
issue is who is the employer of private respondents.
Filipinas Synthetic Fiber Corporation vs. NLRC, et al.
G.R. No. 113347
June 14, 1996
BELLOSILLO, J.:
Facts:
On 4 April 1991 FILSYN, a domestic corporation engaged in the
manufacture of polyester fiber, contracted with De Lima Trading
andGeneral Services (DE LIMA) for the performance of specific
janitorial services Pursuant to the agreement Felipe Loterte, among
others, was deployed at FILSYN to take care of the plants and
maintain general cleanliness around the premises.On 24 February
1992 Loterte sued FILSYN and DE LIMA as alternative
defendants for illegal dismissal, underpayment of
wages,non-payment of legal holiday pay, service incentive leave
pay and 13th month pay alleging that he was first assigned to
perform janitorial work at FILSYN in 1981 by the La Saga General
Services; that the La Saga was changed to DE LIMA on August
1991; that when a movement todemand increased wages and 13th
month pay arose among the workers on December 1991 he was
accused by a certain Dodie La Flores of havingposted in the
bulletin board at FILSYN an article attributing to management a
secret understanding to block the demand; and, for
denyingresponsibility, his gate pass was unceremoniously
cancelled on 6 February 1992 and he was subsequently dismissed.
Loterte was classified by the Labor Arbiter as a regular employee
on the ground that he performed tasks usually necessary or
desirablein the main business of FILSYN for more than ten (10)
years or since 1981. FILSYN was declared to be the real employer
of Loterte and DELIMA as a mere labor contractor. Hence,
FILSYN was adjudged liable for Loterte's reinstatement, payment
of salary differentials and back wages and other benefits. Hence,
this petition for certiorari by FILSYN.
Issue:
Whether or not there exists an employer-employee relationship
between FILSYN and private respondent Felipe Loterte.
Decision:
16
DE LIMA is an independent job contractor, therefore no direct
employer-employee relationship exists between petitioner
FILSYN andprivate respondent Felipe Loterte. The relationship
between petitioner Filipinas Synthetic Fiber Corporation and
private respondent DeLima Trading and General Services (DE
LIMA) is one of job contractorship.Under the Labor Code, two (2)
elements must exist for a finding of labor-only contracting: (a) the
person supplying workers to anemployer does not have
substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and (b) theworkers
recruited and placed by such persons are performing activities
directly related to the principal business of such employer.These
two (2) elements do not exist in the instant case. As pointed out
by petitioner, private respondent DE LIMA is a going concernduly
registered with the Securities and Exchange Commission with
substantial capitalization of P1,600,000.00, P400,000.00 of which
is actuallysubscribed. Hence, it cannot be considered as engaged
in labor-only contracting being a highly capitalized venture.
Moreover, while the janitorial services performed by Felipe
Loterte pursuant to the agreement between FILSYN and DE LIMA
may be considered directly related to the principal business of
FILSYN which is the manufacture of polyester fiber, nevertheless,
they are not necessary in its operation. On the contrary,they are
merely incidental thereto, as opposed to being integral, without
which production and company sales will not suffer. Judicial
notice hasalready been taken of the general practice in private as
well as in government institutions and industries of hiring janitorial
services on anindependent contractor basis.Respondent De Lima
Trading and General Services (DE LIMA) are ordered to reinstate
private respondent FELIPE LOTERTE to hisformer position or its
equivalent without loss of seniority rights. And private respondent
De Lima Trading and General Services (DE LIMA) isordered
jointly and severally with petitioner Filipinas Synthetic Fiber
Corporation to pay private respondent FELIPE LOTERTE his
salary differentials, 13th month pay, service incentive leave pay,
and backwages without prejudice to FILSYNseeking
reimbursement from DELIMA for whatever amount the former
may pay or have paid the latter.
DY KEH BENG (piece rate)
According to Dy Keh Beng, however, Solano was not his
employee for the following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the order
given him by Dy;
(3) When there were no orders needing his services there was
nothing for him to do;
(4) When orders came to the shop that his regular workers could
not fill it was then that Dy went to his address in Caloocan and
fetched him for these orders; and
(5) Solano's work with Dy's establishment was not continuous. ,
According to petitioner, these facts show that respondents Solano
and Tudla are only piece workers, not employees under Republic
Act 875, where an employee 8 is referred to as shall include any
employee and shag not be limited to the employee of a particular
employer unless the Act explicitly states otherwise and shall
include any individual whose work has ceased as a consequence
CASE DIGEST LABSTAN 1st EXAM 17
of, or in connection with any current labor dispute or because of
any unfair labor practice and who has not obtained any other
substantially equivalent and regular employment. DECISION

while an employer includes any person acting in the interest of an

employer, directly or indirectly but shall not include any labor
organization (otherwise than when acting as an employer) or
anyone acting in the capacity of officer or agent of such labor
BELLOSILLO, J.:
organization.

Petitioner really anchors his contention of the non-existence of

employee-employer relationship on the control test. He points to
the case of Madrigal Shipping Co., Inc. v. Nieves Baens del
Rosario, et al., L-13130, October 31, 1959, where the Court ruled
that:
The test ... of the existence of employee and employer relationship
is whether there is an understanding between the parties that one
is to render personal services to or for the benefit of the other and
recognition by them of the right of one to order and control the other
in the performance of the work and to direct the manner and
method of its performance.
ISSUE:
On 7 April 1986 COCA COLA entered into a contract of janitorial
services with Bacolod Janitorial Services (BJS) stipulating 3
among others —
That the First Party (COCA COLA) desires to engage the services
of the Second Party (BJS), as an Independent Contractor, to
perform and provide for the maintenance, sanitation and cleaning
services for the areas hereinbelow mentioned, all located within
the aforesaid building of the First Party . . .

1.Whether there existed an employee employer relation between

petitioner Dy Keh Beng and the respondents Solano and Tudla .
RULING:
While this Court upholds the control test under which an
employer-employee relationship exists "where the person for whom
the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such
end, " it finds no merit with petitioner's arguments as stated above.
It should be borne in mind that the control test calls merely for the
existence of the right to control the manner of doing the work, not
the actual exercise of the right. Considering the finding by the
Hearing Examiner that the establishment of Dy Keh Beng is
"engaged in the manufacture of baskets known as kaing, it is
natural to expect that those working under Dy would have to
observe, among others, Dy's requirements of size and quality of the
kaing. Some control would necessarily be exercised by Dy as the
making of the kaing would be subject to Dy's specifications.
Parenthetically, since the work on the baskets is done at Dy's
establishments, it can be inferred that the proprietor Dy could easily
exercise control on the men he employed.
Nevertheless, considering that about eighteen (18) years have
already elapsed from the time the complainants were dismissed,
and that the decision being appealed ordered the payment of
backwages to the employees from their respective dates of
dismissal until finally reinstated, it is fitting to apply in this
connection the formula for backwages worked out by Justice
Claudio Teehankee in "cases not terminated sooner." The formula
cans for fixing the award of backwages without qualification and
deduction to three years, "subject to deduction where there are
mitigating circumstances in favor of the employer but subject to
increase by way of exemplary damages where there are
aggravating circumstances. Considering there are no such
circumstances in this case, there is no reason why the Court should
not apply the abovementioned formula in this instance.
1. The scope of work of the Second Party includes all floors,
walls, doors, vertical and horizontal areas, ceiling, all windows,
glass surfaces, partitions, furniture, fixtures and other interiors
within the aforestated covered areas.
In addition, the Second Party will also do the following once a
week, to wit: 1) Cleaning, waxing and polishing of lobbies and
offices; 2) Washing of windows, glasses that require cleaning; 3)
Thorough disinfecting and cleaning of toilets and washrooms.
Every year thereafter a service contract was entered into between
the parties under similar terms and conditions until about May
1994. 4
On 26 October 1989 COCA COLA hired private respondent
Ramon Canonicato as a casual employee and assigned him to
the bottling crew as a substitute for absent employees. In April
1990 COCA COLA terminated Canonicato’s casual employment.
Later that year COCA COLA availed of Canonicato’s services,
this time as a painter in contractual projects which lasted from
fifteen (15) to thirty (30) days.
On 1 April 1991 Canonicato was hired as a janitor by BJS 6 which
assigned him to COCA COLA considering his familiarity with its
premises. On 5 and 7 March 1992 Canonicato started painting the
facilities of COCA COLA and continued doing so several months
thereafter or so for a few days every time until 6 to 25 June 1993.
7

Goaded by information that COCA COLA employed previous BJS

COCA COLA BOTTLERS PHILS., INC., Petitioners, v.
NATIONAL LABOR RELATIONS COMMISSION and RAMON B.
CANONICATO, Respondents.
employees who filed a complaint against the company for
regularization pursuant to a compromise agreement, 8
Canonicato submitted a similar complaint against COCA COLA to
the Labor Arbiter on 8 June 1993. 9 The complaint was docketed
as RAB Case No. 06-06-10337-93.chanrobles law library
CASE DIGEST LABSTAN 1st EXAM
Without notifying BJS, Canonicato no longer reported to his COCA
COLA assignment starting 29 June 1993. On 15 July 1993 he sent
his sister Rowena to collect his salary from BJS. 10 BJS released
his salary but advised Rowena to tell Canonicato to report for work.
Claiming that he was barred from entering the premises of COCA
COLA on either 14 or 15 July 1993, Canonicato met with the
proprietress of BJS, Gloria Lacson, who offered him assignments in
other firms which he however refused. 11
On 23 July 1993 Canonicato amended his complaint against COCA
COLA by citing instead as grounds therefor illegal dismissal and
underpayment of wages. He included BJS therein as a
co-respondent. 12 On 28 September 1993 BJS sent him a letter
advising him to report for work within three (3) days from receipt,
otherwise, he would be considered to have abandoned his job.
RULING:
We perceive at the outset the disposition of the NLRC that janitorial
services are necessary and desirable to the trade or business of
petitioner COCA COLA. But this is inconsistent with our
pronouncement in Kimberly Independent Labor Union v. Drilon 18
where the Court took judicial notice of the practice adopted in
several government and private institutions and industries of hiring
janitorial services on an "independent contractor basis." In this
respect, although janitorial services may be considered directly
related to the principal business of an employer, as with every
business, we deemed them unnecessary in the conduct of the
employer’s principal business. 19
This judicial notice, of course, rests on the assumption that the
independent contractor is a legitimate job contractor so that there
can be no doubt as to the existence of an employer-employee
relationship between the contractor and the worker. In this situation,
the only pertinent question that may arise will no longer deal with
whether there exists an employment bond but whether the
employee may be considered regular or casual as to deserve the
application of Art. 280 of the Labor
Code.chanroblesvirtuallawlibrary:red
It is an altogether different matter when the very existence of an
employment relationship is in question. This was the issue
generated by Canonicato’s application for regularization of his
employment with COCA COLA and the subsequent denial by the
latter of an employer-employee relationship with the applicant. It
was error therefore for the NLRC to apply Art. 280 of the Labor
Code in determining the existence of an employment relationship of
the parties herein, especially in light of our explicit holding in Singer
Sewing Machine Company v. Drilon 20 that —
. . . [t]he definition that regular employees are those who perform
activities which are desirable and necessary for the business of the
employer is not determinative in this case. Any agreement may
provide that one party shall render services for and in behalf of
another for a consideration (no matter how necessary for the
latter’s business) even without being hired as an employee. This is
precisely true in the case of an independent contractorship as well
as in an agency agreement. The Court agrees with the petitioner’s
18
argument that Article 280 is not the yardstick for determining the
existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of determining
the right of an employee to certain benefits, to join or form a union,
or to security of tenure. Article 280 does not apply where the
existence of an employment relationship is in dispute.
In determining the existence of an employer-employee
relationship it is necessary to determine whether the following
factors are present: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power to dismiss;
and, (d) the power to control the employee’s conduct. 21 Notably,
these are all found in the relationship between BJS and
Canonicato and not between Canonicato and petitioner COCA
COLA. As the Solicitor-General manifested 22 —
In the instant case, the selection and engagement of the janitors
for petitioner were done by BJS. The application form and letter
submitted by private respondent (Canonicato) to BJS show that
he acknowledged the fact that it was BJS who did the hiring and
not petitioner . . .
BJS paid the wages of private respondent, as evidenced by the
fact that on July 15, 1993, private respondent sent his sister to
BJS with a note authorizing her to receive his pay.
Power of dismissal is also exercised by BJS and not petitioner.
BJS is the one that assigns the janitors to its clients and transfers
them when it sees fit. Since BJS is the one who engages their
services, then it only follows that it also has the power to dismiss
them when justified under the circumstances.
Lastly, BJS has the power to control the conduct of the janitors.
The supervisors of petitioner, being interested in the result of the
work of the janitors, also give suggestions as to the performance
of the janitors, but this does not mean that BJS has no control
over them. The interest of petitioner is only with respect to the
result of their work. On the other hand, BJS oversees the totality
of their performance.
The power of the employer to control the work of the employee is
said to be the most significant determinant. Canonicato disputed
this power of BJS over him by asserting that his employment with
COCA COLA was not interrupted by his application with BJS
since his duties before and after he applied for regularization were
the same, involving as they did, working in the maintenance
department and doing painting tasks within its facilities.
Canonicato cited the Labor Utilization Reports of COCA COLA
showing his painting assignments. These reports, however, are
not expressive of the true nature of the relationship between
Canonicato and COCA COLA; neither do they detract from the
fact that BJS exercised real authority over Canonicato as its
employee.
CASE DIGEST LABSTAN 1st EXAM
Moreover, a closer scrutiny of the reports reveals that the painting
jobs were performed by Canonicato sporadically, either in a few
days within a month and only for a few months in a year. 23 This
infrequency or irregularity of assignments countervails
Canonicato’s submission that he was assigned specifically to
undertake the task of painting the whole year round. If anything, it
hews closely to the assertion of BJS that it assigned Canonicato to
these jobs to maintain and sanitize the premises of petitioner
COCA COLA pursuant to its contract of services with the company.
24
It is clear from these established circumstances that NLRC should
have recognized BJS as the employer of Canonicato and not
COCA COLA. This is demanded by the fact that it did not disturb,
and therefore it upheld, the finding of the Labor Arbiter that BJS
was truly a legitimate job-contractor and could by itself hire its own
employees. The Commission could not have reached any other
legitimate conclusion considering that BJS satisfied all the
requirements of a job-contractor under the law, namely, (a) the
ability to carry on an independent business and undertake the
contract work on its own account under its own responsibility
according to its own manner and method, free from the control and
direction of its principal or client in all matters connected with the
performance of the work except as to the results thereof; and, (b)
the substantial capital or investment in the form of tools, equipment,
machinery, work premises, and other materials which are
necessary in the conduct of its business.25cralaw:red
It is to be noted that COCA COLA is not the only client of BJS
which has its roster of clients like San Miguel Corporation,
Distilleria Bago Incorporated, University of Negros
Occidental-Recolletos, University of St. La Salle, Riverside College,
College Assurance Plan Phil., Inc., and Negros Consolidated
Farmers Association, Inc. 26 This is proof enough that BJS has the
capability to carry on its business of janitorial services with big
establishments aside from petitioner and has sufficient capital or
materials necessary therefor. 27 All told, there being no
employer-employee relationship between Canonicato and COCA
COLA, the latter cannot be validly ordered to reinstate the former
and pay him back wages.
BAUTISTA VS INCIONG
Petitioner was employed by Associated Labor Unions(ALU) as
organizer. Bautista went on leave and when he went back to work,
he was informed that he was already terminated. The Director ruled
in favor of Bautista. The Deputy Minister of Labor, however, set
aside the order of the Director finding that his membership
coverage with the SSS which shows that respondent ALU is the
one paying the employer’s share in the premiums is not conclusive
proof that respondent is the petitioner’s employer because such
payments were performed by the respondent as a favor for all
those who were performing full time union activities with it to entitle
them to SSS benefits. He then ruled that there was no
emplore-employee relationship between ALU and Bautista by the
fact that ALU is not an entity for profit but a duly registered labor
union whose sole purpose is the representation of its bonafide
organization units.
19
ISSUE:
Whether or not there can be employer-employee relationship
between a labor union and its member.
HELD:
Yes, the mere fact that the respondent is a labor union does not
mean that it cannot be considered an employer of the persons
who work for it.
Moreover, the four elements in determining the existence of an
employer-employee relationship was present in the case at bar.
The Regional Director correctly found that the petitioner was an
employee of the respondent union as reflected in the latter’s
individual payroll sheets and shown by the petitioner’s
membership with the Social Security System (SSS) and the
respondent union’s share of remittances in the petitioner’s favor.
Bautista was selected and hired by the union. ALU had the power
to dismiss him as indeed it dismissed him. And definitely, the
Union tightly controlled the work of Bautista as one of its
organizers.
CENTRAL NEGROS ELECTRIC COOPERATIVE VS DOLE
Facts:
On August 15, 1987, CENECO entered into a collective
bargaining agreement with CURE, a labor union representing its
rank-and-file employees, providing for a term of three years
retroactive to April 1, 1987 and extending up to March 31, 1990.
On December 28, 1989, CURE wrote CENECO proposing that
negotiations be conducted for a new collective bargaining
agreement (CBA).
On January 18, 1990, CENECO denied CURE’s request on the
ground that, under applicable decisions of the Supreme Court,
employees who at the same time are members of an electric
cooperative are not entitled to form or join a union.
Prior to the submission of the proposal for CBA renegotiation,
CURE members, in a general assembly held on December 9,
1989, approved Resolution No. 35 whereby it was agreed that ‘tall
union members shall withdraw, retract, or recall the union
members’ membership from Central Negros Electric Cooperative,
Inc. in order to avail (of) the full benefits under the existing
Collective Bargaining Agreement entered into by and between
CENECO and CURE, and the supposed benefits that our union
may avail of under the renewed CBA.
CASE DIGEST LABSTAN 1st EXAM
However, the withdrawal from membership was denied by
CENECO on February 27, 1990 under Resolution No. 90.
Issue: WON the employees of CENECO who withdrew their
membership from the cooperative are entitled to form or join CURE
for purposes of the negotiations for a collective bargaining
agreement proposed by the latter.
Held:
The right of the employees to self-organization is a compelling
reason why their withdrawal from the cooperative must be allowed.
As pointed out by CURE, the resignation of the member-
employees is an expression of their preference for union
membership over that of membership in the cooperative. The
avowed policy of the State to afford fall protection to labor and to
promote the primacy of free collective bargaining mandates that the
employees’ right to form and join unions for purposes of collective
bargaining be accorded the highest consideration.
Thus, member employees of a cooperative may withdraw as
members of the cooperative in order to join labor union.
Membership in a cooperative is voluntary; inherent in it is the right
not to join.
NOTES: (San Jose Electric Service Cooperative vs. Ministry of
Labor)
1. A cooperative, therefore, is by its nature different from an
ordinary business concern being run either, by persons,
partnerships or corporations. Its owners and/or members are the
ones who run and operate the business while the others are its
employees.
2. An employee therefore of such a cooperative who is a member
and co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his
co-owners. Employees of cooperatives who are themselves
members of the cooperative have no right to form or join labor
organizations for purposes of collective bargaining for being
themselves co-owners of the cooperative.
3. However, in so far as it involves cooperatives with employees
who are not members or co-owners thereof, certainly such
employees are entitled to exercise the rights of all workers to
organization, collective bargaining, negotiations and others as are
enshrined in the Constitution and existing laws of the country.
AIR SERVICES COOP VS CA
It is a well settled legal principle that in the interpretation of a
contract, the entirety thereof must be taken into consideration to
ascertain the meaning of its provisions.12 The various stipulations
in the contract must be read together to give effect to all.13 After a
20
careful examination of the records, the Court finds merit in the
contention of Orient Air that the Agreement, when interpreted in
accordance with the foregoing principles, entitles it to the 3%
overriding commission based on total revenue, or as referred to
by the parties, "total flown revenue."
As the designated exclusive General Sales Agent of American Air,
Orient Air was responsible for the promotion and marketing of
American Air's services for air passenger transportation, and the
solicitation of sales therefor. In return for such efforts and services,
Orient Air was to be paid commissions of two (2) kinds: first, a
sales agency commission, ranging from 7-8% of tariff fares and
charges from sales by Orient Air when made on American Air
ticket stock; and second, an overriding commission of 3% of tariff
fares and charges for all sales of passenger transportation over
American Air services. It is immediately observed that the
precondition attached to the first type of commission does not
obtain for the second type of commissions. The latter type of
commissions would accrue for sales of American Air services
made not on its ticket stock but on the ticket stock of other air
carriers sold by such carriers or other authorized ticketing
facilities or travel agents. To rule otherwise, i.e., to limit the basis
of such overriding commissions to sales from American Air ticket
stock would erase any distinction between the two (2) types of
commissions and would lead to the absurd conclusion that the
parties had entered into a contract with meaningless provisions.
Such an interpretation must at all times be avoided with every
effort exerted to harmonize the entire Agreement.
An additional point before finally disposing of this issue. It is clear
from the records that American Air was the party responsible for
the preparation of the Agreement. Consequently, any ambiguity in
this "contract of adhesion" is to be taken "contra proferentem", i.e.,
construed against the party who caused the ambiguity and could
have avoided it by the exercise of a little more care. Thus, Article
1377 of the Civil Code provides that the interpretation of obscure
words or stipulations in a contract shall not favor the party who
caused the obscurity.14 To put it differently, when several
interpretations of a provision are otherwise equally proper, that
interpretation or construction is to be adopted which is most
favorable to the party in whose favor the provision was made and
who did not cause the ambiguity.15 We therefore agree with the
respondent appellate court's declaration that:
Any ambiguity in a contract, whose terms are susceptible of
different interpretations, must be read against the party who
drafted it.16
We now turn to the propriety of American Air's termination of the
Agreement. The respondent appellate court, on this issue, ruled
thus:
It is not denied that Orient withheld remittances but such action
finds justification from paragraph 4 of the Agreement, Exh. F,
which provides for remittances to American less commissions to
which Orient is entitled, and from paragraph 5(d) which
specifically allows Orient to retain the full amount of its
commissions. Since, as stated ante, Orient is entitled to the 3%
override. American's premise, therefore, for the cancellation of
the Agreement did not exist. . . ."
CASE DIGEST LABSTAN 1st EXAM
We agree with the findings of the respondent appellate court. As
earlier established, Orient Air was entitled to an overriding
commission based on total flown revenue. American Air's
perception that Orient Air was remiss or in default of its obligations
under the Agreement was, in fact, a situation where the latter acted
in accordance with the Agreement—that of retaining from the sales
proceeds its accrued commissions before remitting the balance to
American Air. Since the latter was still obligated to Orient Air by
way of such commissions. Orient Air was clearly justified in
retaining and refusing to remit the sums claimed by American Air.
The latter's termination of the Agreement was, therefore, without
cause and basis, for which it should be held liable to Orient Air.
On the matter of damages, the respondent appellate court modified
by reduction the trial court's award of exemplary damages and
attorney's fees. This Court sees no error in such modification and,
thus, affirms the same.
It is believed, however, that respondent appellate court erred in
affirming the rest of the decision of the trial court.1âwphi1 We refer
particularly to the lower court's decision ordering American Air to
"reinstate defendant as its general sales agent for passenger
transportation in the Philippines in accordance with said GSA
Agreement."
By affirming this ruling of the trial court, respondent appellate court,
in effect, compels American Air to extend its personality to Orient
Air. Such would be violative of the principles and essence of
agency, defined by law as a contract whereby "a person binds
himself to render some service or to do something in
representation or on behalf of another, WITH THE CONSENT OR
AUTHORITY OF THE LATTER .17 (emphasis supplied) In an
agent-principal relationship, the personality of the principal is
extended through the facility of the agent. In so doing, the agent, by
legal fiction, becomes the principal, authorized to perform all acts
which the latter would have him do. Such a relationship can only be
effected with the consent of the principal, which must not, in any
way, be compelled by law or by any court. The Agreement itself
between the parties states that "either party may terminate the
Agreement without cause by giving the other 30 days' notice by
letter, telegram or cable." (emphasis supplied) We, therefore, set
aside the portion of the ruling of the respondent appellate court
reinstating Orient Air as general sales agent of American Air.
CASE: PNB VS. CABANSAG
Ponente: J. Panganiban
Facts:
21
Florence Cabansag went to Singapore as a tourist. While she was
there, she looked for a job and eventually applied with the
Singapore Branch of the Philippine National Bank. PNB is a
private banking corporation organized and existing under
Philippine laws. She was eventually employed and was issued an
employment pass. In her job offer, it was stated, among others,
that she was to be put on probation for 3 months and termination
of her employment may be made by either party after 1 day notice
while on probation, and 1 month notice or 1 month pay in lieu of
notice upon confirmation. She accepted the terms and was issued
an OEC by the POEA. She was commended for her good work.
However, she was informed by Ruben Tobias, the bank president,
that she would have to resign in line with some cost cutting and
realignment measures of the company. She refused but was
informed by Tobias that if she does not resign, he will terminate
her instead.
Issues:
W/N the arbitration branch of the NLRC has jurisdiction
W/N the arbitration of the NLRC in the NCR is the proper venue
W/N Cabansag was illegally dismissed
Ruling:
Labor arbiters have original and exclusive jurisdiction over claims
arising from employer-employee relations including termination
disputes involving all workers, including OFWs. Here, Cabansag
applied for and secured an OEC from the POEA through the
Philippine Embassy. The OEC authorized her working status in a
foreign country and entitled her to all benefits and processes
under our statutes. Although she may been a direct hire at the
commencement of her employment, she became an OFW who
was covered by Philippine labor laws and policies upon
certification by the POEA. When she was illegally terminated, she
already possessed the POEA employment certificate.
A migrant worker “refers to a person who is to be engaged, is
engaged or has been engaged in a remunerated activity in a state
of which he or she is not a legal resident; to be used
interchangeably with overseas Filipino worker.” Here, Cabansag
was a Filipino, not a legal resident of Singapore, and employed by
petitioner in its branch office in Singapore. She is clearly an
OFW/migrant worker. Thus, she has the option where to file her
Complaint for illegal dismissal. She can either file at the Regional
Arbitration Branch where she resides or the RAB where the
employer is situated. Thus, in filing her Complaint before the RAB
CASE DIGEST LABSTAN 1st EXAM
office in Quezon City, she has made a valid choice of proper
venue.
The appellate court was correct in holding that respondent was
already a regular employee at the time of her dismissal, because
her three-month probationary period of employment had already
ended. This ruling is in accordance with Article 281 of the Labor
Code: “An employee who is allowed to work after a probationary
period shall be considered a regular employee.” Indeed, petitioner
recognized respondent as such at the time it dismissed her, by
giving her one month’s salary in lieu of a one-month notice,
consistent with provision No. 6 of her employment Contract.
RAVAGO vs ESSO EASTERN MARINE Case Digest
[G.R. No. 158324. March 14, 2005]
ROBERTO RAVAGO, petitioner, vs. ESSO EASTERN MARINE,
LTD. and TRANS-GLOBAL MARITIME AGENCY, INC.,
respondents.
FACTS: The respondent Esso is a foreign company based in
Singapore and engaged in maritime commerce. It is represented in
the Philippines by its manning agent and co-respondent
Trans-Global, a corporation organized under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman
on board various Esso vessels. On February 13, 1970, Ravago
commenced his duty as S/N wiper on board the Esso Bataan under
a contract that lasted until February 10, 1971. Thereafter, he was
assigned to work in different Esso vessels where he was
designated diverse tasks, such as oiler, then assistant engineer.
He was employed under a total of 34 separate and unconnected
contracts, each for a fixed period, by three different companies,
namely, Esso Tankers, Inc. (ETI), EEM and Esso International
Shipping (Bahamas) Co., Ltd. (EIS), Singapore Branch. Ravago
worked with Esso vessels until August 22, 1992, a period spanning
more than 22 years.
Shortly after completing his latest contract with Esso, Ravago was
granted a vacation leave with pay. Preparatory to his embarkation
under a new contract, he was ordered to report for a Medical
Pre-Employment Examination, which, according to the records, he
passed. He, likewise, attended a Pre-Departure Orientation
Seminar conducted by the Capt. I.P. Estaniel Training Center, a
division of Trans-Global.
One night, a stray bullet hit Ravago on the left leg while he was
waiting for a bus ride in Cubao, Quezon City. He fractured his left
proximal tibia and was hospitalized at the Philippine Orthopedic
Hospital. Ravago’s wife, Lolita, informed the petitioners of the
incident for purposes of availing medical benefits. As a result of his
injury, Ravago’s doctor opined that he would not be able to cope
with the job of a seaman and suggested that he be given a desk job.
For this reason, the company physician found him to have lost his
dexterity, making him unfit to work once again as a seaman.
Consequently, instead of rehiring Ravago, Esso paid him his
Career Employment Incentive Plan (CEIP) as of and his final tax
refund. However, Ravago filed a complaint for illegal dismissal with
22
prayer for reinstatement, backwages, damages and attorney’s
fees against Trans-Global and Esso with the POEA Adjudication
Office.
Respondents denied that Ravago was dismissed without notice
and just cause. Rather, his services were no longer engaged in
view of the disability he suffered which rendered him unfit to work
as a seafarer. This fact was further validated by the company
doctor and Ravago’s attending physician. They averred that
Ravago was a contractual employee and was hired under 34
separate contracts by different companies.
Ravago insisted that he was fit to resume pre-injury activities and
that he was not a mere contractual employee because the
respondents regularly and continuously rehired him for 23 years
and, for his continuous service, was awarded a CEIP payment
upon his termination from employment.
ISSUE: Whether or not petitioner Ravago is a regular employee of
respondent Esso.
HELD: The SC held that seafarers are contractual, not regular,
employees. Seamen and overseas contract workers are not
covered by the term “regular employment” as defined in Article
280 of the Labor Code.
Petition is denied.
NFA VS MASADA
The contention is meritorious.
In construing the word "wage" in Section 6 of RA 6727, reference
must be had to Section 4 (a) of the same Act. It states:
SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum
wage rates for all workers and employees in the private sector,
whether agricultural or non-agricultural, shall be increased by
twenty-five pesos (P25) per day … (Emphasis supplied)
The term "wage" as used in Section 6 of RA 6727 pertains to no
other than the "statutory minimum wage" which is defined under
the Rules Implementing RA 6727 as the lowest wage rate fixed by
law that an employer can pay his worker.26 The basis thereof
under Section 7 of the same Rules is the normal working hours,
which shall not exceed eight hours a day. Hence, the prescribed
increases or the additional liability to be borne by the principal
under Section 6 of RA 6727 is the increment or amount added to
the remuneration of an employee for an 8-hour work.
CASE DIGEST LABSTAN 1st EXAM
Expresio unius est exclusio alterius. Where a statute, by its terms,
is expressly limited to certain matters, it may not, by interpretation
or construction, be extended to others.27 Since the increase in
wage referred to in Section 6 pertains to the "statutory minimum
wage" as defined herein, principals in service contracts cannot be
made to pay the corresponding wage increase in the overtime pay,
night shift differential, holiday and rest day pay, premium pay and
other benefits granted to workers. While basis of said remuneration
and benefits is the statutory minimum wage, the law cannot be
unduly expanded as to include those not stated in the subject
provision.
The settled rule in statutory construction is that if the statute is clear,
plain and free from ambiguity, it must be given its literal meaning
and applied without interpretation. This plain meaning rule or verba
legis derived from the maxim index animi sermo est (speech is the
index of intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express its
intention or will and preclude the court from construing it differently.
The legislature is presumed to know the meaning of the words, to
have used words advisedly, and to have expressed its intent by use
of such words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there should be no
departure.28
The presumption therefore is that lawmakers are well aware that
the word "wage" as used in Section 6 means the statutory minimum
wage. If their intention was to extend the obligation of principals in
service contracts to the payment of the increment in the other
benefits and remuneration of workers, it would have so expressly
specified. In not so doing, the only logical conclusion is that the
legislature intended to limit the additional obligation imposed on
principals in service contracts to the payment of the increment in
the statutory minimum wage.
The general rule is that construction of a statute by an
administrative agency charged with the task of interpreting or
applying the same is entitled to great weight and respect. The
Court, however, is not bound to apply said rule where such
executive interpretation, is clearly erroneous, or when there is no
ambiguity in the law interpreted, or when the language of the words
used is clear and plain, as in the case at bar. Besides,
administrative interpretations are at best advisory for it is the Court
that finally determines what the law means.29 Hence, the
interpretation given by the labor agencies in the instant case which
went as far as supplementing what is otherwise not stated in the
law cannot bind this Court.
It is not within the province of this Court to inquire into the wisdom
of the law for indeed, we are bound by the words of the statute.30
The law is applied as it is. At any rate, the interest of the employees
will not be adversely affected if the obligation of principals under
the subject provision will be limited to the increase in the statutory
minimum wage. This is so because all remuneration and benefits
other than the increased statutory minimum wage would be
shouldered and paid by the employer or service contractor to the
workers concerned. Thus, in the end, all allowances and benefits
as computed under the increased rate mandated by RA 6727 and
the wage orders will be received by the workers.
Moreover, the law secures the welfare of the workers by imposing a
solidary liability on principals and the service contractors. Under the
23
second sentence of Section 6 of RA 6727, in the event that the
principal or client fails to pay the prescribed wage rates, the
service contractor shall be held solidarily liable with the former.
Likewise, Articles 106, 107 and 109 of the Labor Code provides:
ART. 106. Contractor or Subcontractor. – Whenever an employer
enters into contract with another person for the performance of
the former’s work, the employees of the contractor and of the
latter’s 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
wage 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.
…
ART. 107. Indirect Employer. – The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer,
contracts with an independent contractor for the performance of
any work, task, job or project.
ART. 109. Solidary Liability. – The provisions of existing laws to
the contrary notwithstanding, every employer or indirect employer
shall be held responsible with his contractor or subcontractor for
any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under this Chapter,
they shall be considered as direct employers.
Based on the foregoing interpretation of Section 6 of RA 6727, the
parties may enter into stipulations increasing the liability of the
principal. So long as the minimum obligation of the principal, i.e.,
payment of the increased statutory minimum wage is complied
with, the Wage Rationalization Act is not violated.
In the instant case, Article IV.4 of the service contract provides:
IV.4. In the event of a legislated increase in the minimum wage of
security guards and/or in the PADPAO rate, the AGENCY may
negotiate for an adjustment in the contract price. Any adjustment
shall be applicable only to the increment, based on published and
circulated rates and not on mere certification.31
In the same vein, paragraph 3 of NFA Memorandum AO-98-03-
states:
3. For purposes of wage adjustments, consider only the rate
based on the wage Order issued by the Regional Tripartite Wage
Productivity Board (RTWPB). Unless otherwise provided in the
CASE DIGEST LABSTAN 1st EXAM
Wage Order issued by the RTWPB, the wage adjustment shall be
limited to the increment in the legislated minimum wage;32
The parties therefore acknowledged the application to their
contract of the wage orders issued by the RTWPB pursuant to RA
6727. There being no assumption by NFA of a greater liability than
that mandated by Section 6 of the Act, its obligation is limited to the
payment of the increased statutory minimum wage rates which, as
admitted by respondent, had already been satisfied by NFA.33
Under Article 1231 of the Civil Code, one of the modes of
extinguishing an obligation is by payment. Having discharged its
obligation to respondent, NFA no longer have a duty that will give
rise to a correlative legal right of respondent. The latter’s complaint
for collection of remuneration and benefits other than the increased
minimum wage rate, should therefore be dismissed for lack of
cause of action.
The same goes for respondent’s claim for administrative cost and
margin. Considering that respondent failed to establish a clear
obligation on the part of NFA to pay the same as well as to
substantiate the amount thereof with documentary evidence, the
claim should be denied.
VILLAVILLA VS CA
It is thus clear that the arrangement between the boat owner and
the crew members, one of whom was petitioners' -son, partook of
the nature of a joint venture: the crew members did not receive
fixed compensation as they only shared in their catch; they
ventured to the sea irrespective of the instructions of the boat
owners, i.e., upon their own best judgment as to when, how long,
and where to go fishing; the boat owners did not hire them but
simply joined the fishing expedition upon invitation of the ship
master, even without the knowledge of the boat owner. In short,
there was neither right of control nor actual exercise of such right
on the part of the boat owner over his crew members.
Consequently, respondent Court of Appeals is correct in upholding
the application by respondent Social Security Commission of the
ruling in Pajarillo v. Social Security System[18] where We held:
"x x x an employee is defined as a 'person who performs services
for an employer in which either or both mental and physical efforts
are used and who receives compensation for such services, where
there is an employer-employee relationship' (Sec. 8[d], Rep. Act
1161 as amended by Rep. Act 2658). In the present case, neither
the pilots nor the crew-members receive compensation from
boat-owners. They only share in their own catch produced by their
own efforts. There is no showing that outside of their one third
share, the boat-owners have anything to do with the distribution of
the rest of the catch among the pilots and the crew-members. The
latter perform no service for the boat-owners, but mainly for their
own benefit.
"In the undertaking in question, the boat-owners obviously are not
responsible for the wage, salary, or fee of the pilot and
crew-members. Their sole participation in the venture is the
furnishing or delivery of the equipment used for fishing, after which,
they merely wait for the boat's return and receive their share in the
catch, if there is any. For his part, a person who joins the outfit is
24
entitled to a share or participation in the fruit of the fishing trip. If it
gives no return, the men get nothing. It appears to us therefore
that the undertaking is in the nature of a joint venture, with the
boat-owner supplying the boat and its equipments (sic), and the
pilot and crew-members contributing the necessary labor, and the
parties getting specific shares for their respective contributions.
xxxx
"Add to this extreme difficulty, if not impossibility of determining
the monthly wage or earning of these fishermen for the purpose of
fixing the amount of their and the supposed-employer's
contributions (See Secs. 18 and 19, Ibid.), and there in every
reason to exempt the parties to this kind of undertaking from
compulsory registration with the Social Security System."
Certainly, petitioners' reliance on Negre v. Workmen's
Compensation Commission, supra, and RJL Fishing Corp. v.
NLRC, supra, is misplaced. The observations of respondent
Social Security Commission are more persuasive and correct.
Thus -
"The case of Jose Negre vs. Workmen's Compensation, et. al.,
135 SCRA 651, invoked by the petitioners-appellants in support
of their claim that there existed an employer-employee
relationship between their son Arturo Villavilla and private
respondent Reynaldo Mercado cannot be applied to the instant
case for the simple reason that the facts in the aforesaid case are
different from those in the case at bar. A look at the Jose Negre
case will show that it made referral to the case of Abong vs.
Workmen's Compensation Commission, 54 SCRA 379, wherein
this Honorable Court stated, and we beg to quote:
xxxx
'In Abong vs, Workmen's Compensation Commission (54 SCRA
379) we held that fisherman crew-members Manuel and Miguel
are employees and not industrial partners.'
xxxx
"It isto be noted, however, that inthe case of Abong vs.
Workmen's Compensation Commission, this Honorable Court
stated and we again beg to quote:
xxxx
'As pointed by the Commissions finding, the fundamental bases
showing that petitioner Dr. Agustin R. Abong is the employer, are
present, namely, the selection and engagement of the employee;
the payment of wages; the power of dismissal and the employer's
a power to control the employees conduct. These powers were
lodged in petitioner Abong, thru his agent, Simplicio Panganiban,
whom he alleges to be his partner. On this score alone, the
petition for review must fail. It is well-settled that
employer-employee relationship involves findings of facts which
are conclusive and binding and not subject to review by this Court.
(underscoring supplied).'
xxxx
"Interestingly, the aforementioned fundamental bases for the
existence of employer-employee relationship are not present in
the case at bar. As mentioned earlier, private respondent
Reynaldo Mercado had no connection with the selection and
CASE DIGEST LABSTAN 1st EXAM
engagement of Arturo Villavilla (pp. 38-39, T.S.N. 12-6-83);
exercised no power of dismissal over Arturo Villavilla; neither had
he any power of control or had reserved the right to control Arturo
Villavilla as to the result of the work to be done as well as the
means and methods by which the same is to be accomplished, and
there was no such uniform salary involved (pp. 41-43, T.S.N.
12-6-83)."
In the case before Us, it is clear that there was no
employer-employee relationship between petitioners's son Arturo
and private respondent Mercado, much less private respondent
Cosuco. As such, Arturo could not be made subject of compulsory
coverage under the Social Security Act; hence, private
respondents cannot be said to have violated said law when they did
not register him with the Social Security System. A fortiori,
respondents as well as intervenor are not answerable to petitioners
for any death benefits under the law.
Culled from the foregoing, the inexorable conclusion is that
respondent Court of Appeals did not err in sustaining the judgment
of respondent Social Security Commission.
It may not be amiss to mention that while petitioners merely raise
factual questions which are not proper under Rule 45 of the Rules
of Court, We nevertheless went to great lengths in dissecting the
facts of this case if only to convince Us that petitioners, who are
pauper litigants and seeking claims under a social legislation, have
not been denied its benefits. For, We are not unaware that in this
jurisdiction all doubts in the implementation and interpretation of
provisions of social legislations should be resolved in favor of the
working class. But, alas, justice is not fully served by sustaining the
contention of the poor simply because he is poor. Justice is done
by properly applying the law regardless of the station in life of the
contending parties.
WHEREFORE, finding no reversible error in the questioned
judgment of the appellate court, the same is AFFIRMED. No costs.
SO ORDERED.
G.R. No. 195190 July 28, 2014
ROYALE HOMES MARKETING CORPORATION vs. FIDEL P.
ALCANTARA
Case Doctrine: Not every form of control that a hiring party imposes
on the hired party is indicative of employee-employer relationship.
Rules and regulations that merely serve as guidelines towards the
achievement of a mutually desired result without dictating the
means and methods of accomplishing it do not establish
employer-employee relationship.
Facts: Royale Homes, a corporation engaged in marketing real
estates, appointed Alcantara as its Marketing Director for a fixed
period of one year. His work consisted mainly of marketing Royale
Homes’ real estate inventories on an exclusive basis. Royale
Homes reappointed him for several consecutive years, the last of
which covered the period January 1 to December 31, 2003.
Alcantara filed a Complaint for Illegal Dismissal against Royale.
Alcantara alleged that he is a regular employee of Royale Homes
25
since he is performing tasks that are necessary and desirable to
its business and that the acts of the executive officers of Royale
Homes amounted to his dismissal from work without any valid or
just cause and in gross disregard of the proper procedure for
dismissing employees.
Royale Homes, on the other hand, vehemently denied that
Alcantara is its employee. It argued that the appointment paper of
Alcantara is clear that it engaged his services as an independent
sales contractor for a fixed term of one year only. He never
received any salary, 13th month pay, overtime pay or holiday pay
from Royale Homes as he was paid purely on commission basis.
In addition, Royale Homes had no control on how Alcantara would
accomplish his tasks and responsibilities as he was free to solicit
sales at any time and by any manner which he may deem
appropriate and necessary. According to Royale Homes,
Alcantara decided to leave the company after his wife, who was
once connected with it as a sales agent, had formed a brokerage
company that directly competed with its business, and even
recruited some of its sales agents. Two months after he
relinquished his post, however, Alcantara appeared in Royale
Homes and submitted a letter claiming that he was illegally
dismissed.
The Labor Arbiter rendered a Decision holding that Alcantara is
an employee of Royale Homes and that the pre-termination of his
contract was against the law. The NLRC rendered its
Decision, ruling that Alcantara is not an employee but a mere
independent contractor of Royale Homes. It based its ruling
mainly on his employment contract. The CA promulgated its
Decision granting Alcantara’s Petition and reversing the NLRC’s
Decision. Applying the four-fold and economic reality tests, it held
that Alcantara is an employee of Royale Homes.
Issue: Whether or not Alcantara was an independent contractor or
an employee of Royale Homes.
Held: The primary evidence of the nature of the parties’
relationship in this case is the written contract that they signed
and executed in pursuance of their mutual agreement. While the
existence of employer-employee relationship is a matter of law,
the characterization made by the parties in their contract as to the
nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties’ written contract
unequivocally states their intention at the time they entered into it.
In this case, the contract, duly signed and not disputed by the
parties, conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as
well as his sales agents. It is clear that they did not want to be
bound by employer-employee relationship at the time of the
signing of the contract.
In determining the existence of an employer-employee
relationship, this Court has generally relied on the four-fold test, to
wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the
employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished.
However, not every form of control is indicative of
employer-employee relationship. A person who performs work for
another and is subjected to its rules, regulations, and code of
ethics does not necessarily become an employee. As long as the
level of control does not interfere with the means and methods of
accomplishing the assigned tasks, the rules imposed by the hiring
party on the hired party do not amount to the labor law concept of
control that is indicative of employer-employee relationship. In
Insular Life Assurance Co., Ltd. v. National Labor Relations
Commission it was pronounced that:
Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
CASE DIGEST LABSTAN 1st EXAM
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address
both the result and the means used to achieve it.
Notably, Alcantara was not required to observe definite working
hours. Except for soliciting sales, Royale Homes did not assign
other tasks to him. He had full control over the means and methods
of accomplishing his tasks as he can "solicit sales at any time and
by any manner which [he may] deem appropriate and necessary."
He performed his tasks on his own account free from the control
and direction of Royale Homes in all matters connected therewith,
except as to the results thereof. This Court is, therefore, convinced
that Alcantara is not an employee of Royale Homes, but a mere
independent contractor.
DELOS REYES VS ESPINELI
At the outset, we must resolve the question of existence of a
contract, the petitioner alleging, as he does, that his consent,
express or implied, had never been given. His position, simply
stated, is that at the time the respondents were taken into his land
by Belarmino, the latter was a mere laborer and therefore with-out
the requisite authority to contract in his behalf, and it was on-ly later
that he was promoted to the position of overseer. How-ever, in his
"Amended Complaint" of April 22, 1968,[4] the petitio-ner prayed
that "judgment be rendered ... finding the defendants guilty of a
breach of their contractual obligation with the plaintiff," and in the
body thereof he incorporated statements from which it can plainly
be seen that a contractual relationship existed between the parties.
Verily, there was and still is a contractual relationship between the
petitioner and the respondents. In our view the pith of the problem
is, actually, whether the relationship is that of agricultural share
tenancy (as averred by the respondents) or that of farm employer
and agricultural laborer (as asserted by the pe-titioner). On a
determination of this question depends the respec-tive rights of the
parties, more particularly the proper assess-ment of the share of
the respondents under the law.
Of fundamental relevance in this discussion are definitions of basic
terms.
"Agricuitural tenancy" is the physical possession by a per-son of
land devoted to agriculture belonging to, or legally pos-sessed by,
another for the purpose of production through the la-bor of the
former and of the members of his immediate farm household, in
consideration of which the former agrees to share the harvest with
the latter, or to pay a price certain or ascer-tainable, either in
produce or in money, or in both.[5] "Share te-nancy" exists
whenever two persons agree on a joint undertaking for agricultural
production wherein one party furnishes the land and the other his
labor, with either or both contributing any one or several of the
items of production, the tenant cultivating the land personally with
the aid of labor available from members of his immediate farm
household, and the produce thereof to be di-vided between the
landholder and the tenant in proportion to their respective
contributions.[6] And a "share tenant" is a person who, himself and
with the aid available from within his immediate farm household,
cultivates the land belonging to or possessed by ano-ther, with the
latter's consent for purposes of production, shar-ing the produce
with the landholder.[7]
26
It is to be readily deduced from the foregoing definitions that aside
from the usual essential requisites of a contract,[8] the
characteristics of a share tenancy contract are: (1) the parties
are a landholder, who is a natural or juridical person and is the
owner, lessee, usufructuary or legal possessor of agricultural
land,[9] and a tenant who, himself and with the aid available from
within his immediate farm household, cultivates the land which is
the subject-matter of the tenancy; (2) the subject-matter is
agricultural land; (3) the purpose of the contract is agricultural
pro-duction; and (4) the cause or consideration is that the
landholder and the share tenant would divide the agricultural
produce bet-ween themselves in proportion to their respective
contributions.
While the Agricultural Tenancy Act did not define the term
"agricultural laborer" or "agricultural worker," the Agricultural Land
Reform Code does. A "farm worker" is "any agri-cultural wage,
salary or piece worker but is not limited to a farm worker of a
particular farm employer unless this Code ex-plicitly states
otherwise, and any individual whose work has ceased as a
consequence of, or in connection with, a current agrarian dispute
or an unfair labor practice and who has not ob-tained a
substantially equivalent and regular employment." The term
includes "farm laborer and/ or farm employees.[10] An
"agricultural worker" is not a whit different from a "farm worker."
From the definition of a "farm worker" thus fashioned, it is quite
apparent that there should be an employer-employee relationship
between the "farm employer"[11] and the farm worker. In
determining the existence of an employer-employee relation-ship,
the elements that are generally considered are the follow-ing:
(1) the selection and engagement of the employee; (2) the
pay-ment of wages; (3) the power of dismissal; and (4) the
employer's power to control the employee's conduct. It is this
last element that constitutes the most important index of the
existence of the relationship."[12]
This is not to say that agricultural workers or farm la-borers are
industrial workers. Not by any means, although they may both
appear in the same establishment. The difference lies in the
kind of work they do. Those whose labor is devoted to purely
agricultural work are agricultural laborers. All others are
industrial workers.[13] Nonetheless, they belong to the same
class. Both are workers. Both are employees.
We are here primarily interested in the basic differences between
a farm employer-farm worker relationship and an agri-cultural
sharehold tenancy relationship. Both, of course, are leases, but
there the similarity ends. In the former, the lease is one of labor,
with the agricultural laborer as the lessor of his services, and the
farm employer as the lesse thereof.[14] In the latter, it is the
landowner who is the lessor, and the sharehold tenant is the
lessee of agricultural land. As lessee he has possession of the
leased premises.[15] But the relationship is more than a mere
lease. It is a special kind of lease, the law refer-ring to it as a
"joint urdertaking."[16] For this reason, not only the tenancy laws
are applicable, but also, in a suppletory way, the law on leases,
the customs of the place and the civil code provisions on
partnership.[17] The share tenant works for that joint venture.
The agricultural laborer works for the farm em-ployer, and for his
labor he receives a salary or wage, regardless of whether the
employer makes a profit.[18] On the other hand, the share tenant
participates in the agricultural produce. His share is necessarily
dependent on the amount of the harvest.
CASE DIGEST LABSTAN 1st EXAM
Since the relationship between farm employer and agricul-tural
laborer is that of employer and employee, the decisive fac-tor is the
control exercised by the former over the latter. On the other hand,
the landholder has the "right to require the tenant to follow those
proven farm practices which have been found to con-tribute
towards increased agricultural production and to use fer-tilizer of
the kind or kinds shown by proven farm practices to be adapted to
the requirements of the land." This is but the right of a partner to
protect his interest, not the control exercised by an employer. If
landholder and tenant disagree as to farm practices, the former
may not dismiss the latter. It is the court that shall settle the
conflict according to the best interests of both parties.[19]
The record is devoid of evidentiary support for the notion that the
respondents are farm laborers. They do not observe set hours of
work. The petitioner has not laid down regulations under which
they are supposed to do their work. The argument tendered is
that they are guards. However, it does not appear that they are
under obligation to report for duty to the petitioner or his agent.
They do not work in shifts. Nor has the petitioner pres-cribed the
manner by which the respondents were and are to per-form their
duties as guards. We do not find here that degree of control and
supervision evincive of an employer-employee rela-tionship.
Furthermore, if the respondents are guards, then they are not
agricultural laborers, because the duties and functions of a guard
are not agricultural in nature.[20] It is the Industrial Court that has
jurisdiction over any dispute that might arise between employer and
employee. Yet, the petitioner filed his complaint against the
respondents in the Court of Agrarian Relations.
We now proceed to determine if there are present here the salient
characteristics of an agricultural share tenancy con-tract. The
subject-matter is coconut land, which is considered agricultural
land under both the Agricultural Land Tenancy Act[21] and the
Agricultural Land Reform Code.[22] The purpose of the contract is
the production of coconuts; the respondents would receive 1/7 of
the harvest. The petitioner is the landholder of the coconut
plantation.
The crucial factors are that the tenant must have physical
possession of the land for the purpose of production[23] and he
must personally cultivate the land. If the tenant does not cultivate
the land personally he cannot be considered a tenant even if he is
so designated in the written agreement of the parties.[24]
"Cultivation" is not limited to the plowing and harrowing of the land.
It includes the various phases of farm labor described and provided
by law, the maintenance, repair and weeding of dikes, paddies and
irrigation canals in the holding Moreover, it covers attending to the
care of the growing plants.[25] Where the parties agreed that they
would "operate a citrus nursery upon the condition that they would
divide the budded citrus in the propor-tion of 1/3 share of
respondents and 2/3 as share of petitioner," and that the "petitioner
would furnish all the necessary seedlings and seeds, as well as the
technical know-how in the care, cultivation, budding and balling of
the budded citrus, while respon-dents would furnish the land
necessary for the nursery, the farm labor that may be needed to
plant and cultivate, and all the che-micals, fertilizers, and bud tapes
that may be necessary for such cultivation," then "the tenancy
agreement entered into bet-ween the parties has relation to the
possession of agricultural land to be devoted to the production of
agricultural products thru the labor of one of the parties, and as
27
such comes within the pur-view of the term 'agricultural tenancy'
as defined in section 3 of Republic Act No. 1199 as
amended."[26]
In one instance,[27] the landholder claimed that his care-taker
was not an agricultural tenant because he "does not till or
cultivate the land in order to grow the fruit bearing trees because
they are already full grown," and "he does not even do the actual
gathering of the fruits" but "merely supervises the gathering, and
after deducting the expenses, he gives one-half of the fruits to
plaintiff all in consideration of his stay in the land." This Court's
answer was to the point:
"Anyone who has had fruit trees in his yard will disagree with the
above description of the rela-tionship. He knows the caretaker
must water the trees, even fertilize them for better production,
up-root weeds and turn the soil, sometimes fumigate to eliminate
plant pests, etc. Those chores obvious-ly mean 'working or
cultivating' the land. Besides, it seems that defendant planted
other crops, [i. e. cultivated the lot] giving the landowner his
corres-ponding share."
The Court of Appeals made some essential findings of fact. The
respondents were called "kasama." They have plowing
im-plements. The respondent Pedro Amante even used to have
a ca-rabao which he subsequently exchanged for a horse.
Almost all of the respondents have banana plantations on the
land. They live in the landholding. They are charged with the
obligation to clean their respective landholdings. Certain
portions of the land are planted to palay.
These factual findings may not be reviewed by the Supreme
Court.[28] Furthermore, the said facts are supported by the
testimony of the petitioner himself, who admitted that the
respondents are his "kasama," although he tried to minimize the
effect of this admission by alleging that although called "kasama,"
the respon-dents "do not perform the work of a 'kasama'" and that
in Quezon the "kasama" "plow the land, they plant rice, but here
in Laguna, they do not do anything." The appellate court was
correct in concluding that "kasama" means "tenant,"[29] not
worker or laborer, which is translated into our national language
as "manggagawa."[30] Respecting farm implements, the
petitioner admitted that "they have the implements," but again he
tried to minimize the signifi-cance of his statement by adding that
"they have not used it in the farm." However, the report of the
CAR clerk of court, based on his ocular inspection, pertinently
states that he found "certain por-tions planted with palay.
Undeniably, the petitioner considers it one of the duties of the
respondents to clear and clean the land. Additionally, in his
com-plaint the petitioner claimed that "the defendants have
abandoned their posts at the plaintiff's plantation and have
likewise failed and refused to comply with their contractual
obligation with the plaintiff to keep the areas respectively
assigned to them clean and clear of undergrowths and cogonal
grass at all times, with the result that it is now impossible for the
plaintiff to harvest the mature coconuts as these would only be
lost amid the under-growth and cogonal which have now grown to
unreasonable heights, thereby causing further damage and
prejudice to the plaintiff." (emphasis supplied)
The petitioner clearly expected the respondents to perform the
duties of a tenant, especially, to maintain the land clean and clear
CASE DIGEST LABSTAN 1st EXAM
"at all times," which not only would facilitate harvesting but, more
importantly, would necessarily result in greater production.
Therefore, the parties to the contract understood, in sum and
substance, that the respondents were to "cultivate" the land.
Whether the latter had been remiss in the performance of their
contractual obligations, does not affect the nature of the contract
which the appellate court analyzed and found to be that of share
tenancy. It is the principal features and stipulations which
deter-mine the true essence of a contract.[33] Considering then
that the respondents are duty bound to cultivate their respective
holdings (of which they have possession), and that they share in
the har-vest, the Court of Appeals' conclusion must be upheld.
This, es-pecially in the light of the facts that the respondents raise
secon-dary crops and have their homes in their respective
holdings.
The petitioner having entered into a share tenancy con-tract with
the respondents, it certainly cannot be seriously claim-ed that the
relationship of landlord and tenant is unjustifiably be-ing imposed
on him without due process of law. It was the peti-tioner himself
who voluntarily entered into the relationship, and, therefore, should
shoulder the consequences thereof, one of which is that the
tenants must be given, as they are entitled to, a 30% share in the
produce.
GUARDEX ENTERPRISES V. NLRC
Facts:
A claim for alleged unpaid commissions of an agent is what is
basically involved in the action at bar.
The two parties in this case are: Marcelina A. Escandor (engaged
in the manufacture and sale of fire-fighting equipment and the
building or fabrication of fire trucks under Guardex Enterprises) and
Jumbee Orbeta (a “freelance” salesman).
It appears that Orbeta somehow learned that Escandor had offered
to fabricate a fire truck for Rubberworld (Phil) Inc. He wrote to
Escandor inquiring about the amount of commission for the sale of
a fire truck. Escandor wrote back on the same day to advise that it
was P15,000 per unit. Four days later, Orbeta offered to “follow up”
Escandor’s pending proposal to sell a fire truck to Rubberworld,
and asked for P250 as representation expenses. Escandor agreed
and gave him the money. When no word was received by Escandor
from Orbeta after 3 days, she herself inquired in writing from
Rubberworld about her offer of sale of a fire truck. After 7 months,
Escandor finally concluded a contract with Rubberworld for the
latter’s purchase of a fire truck. At this point, Orbeta suddenly
reappeared and asked for his commission for the sale of the fire
truck to Rubberworld. Escandor refused, saying that he had
nothing to do with the offer, negotiation and consummation of the
sale.
Issue:
Whether or not Orbeta (acting as an agent) is entitled to
commission as regards the sale of a fire truck to Rubberworld?
Held:
No. He is not entitled to any commission.
28
Ratio:
Even finding that under these circumstances, an agency had
indeed been constituted will not save the day for Orbeta, because
nothing in the record tends to prove that he succeeded in carrying
out its terms or ever as much as attempted to do so. The
evidence in fact clearly indicates otherwise. The terms of
Escandor’s letter – assuming that it was indeed an “authority to
sell,” as Orbeta insists – are to the effect that entitlement to the
P15,000 commission is contingent on the purchase by a customer
of a fire truck, the implicit condition being that the agent would
earn the commission if he was instrumental in bringing the sale
about. Orbeta certainly had nothing to do with the sale of the fire
truck, and is not therefore entitled to any commission at all.
Furthermore, even if Orbeta is considered to have been
Escandor’s agent for the time he was supposed to “follow up” the
offer to sell, such agency would have been deemed revoked upon
the resumption of direct negotiations between Escandor and
Rubberworld, Orbeta having in the meantime abandoned all
efforts (if indeed any were exerted) to secure the deal in
Escandor’s behalf.
SSS VS CA
Hence this petition.
The First Division of this Court without giving due course to said
petition resolved to require the respondents to comment (Rollo, p.
64). Private respondent filed its Comment on August 9, 1977
(Rollo, p. 69).
Thereafter, this Court resolved to give due course to the petition
and required the parties to submit simultaneous memoranda
(Rollo, p. 74). On September 23, 1977, private respondent and
petitioner filed their respective memoranda (Rollo, pp. 80-118).
The issue raised by the petitioner before this Court is the very
same issue resolved by the Court of Appeals-that is, whether or
not Romeo Carreon is an employee or an independent contractor
under the contract aforequoted. Corollary thereto the question as
to whether or not the Mafinco case is applicable to this case was
raised by the parties.
The Court took cognizance of the fact that the question of whether
or not an employer-employee relationship exists in a certain
situation continues to bedevil the courts. Some businessmen with
the aid of lawyers have tried to avoid the bringing about of an
employer-employee relationship in some of their enterprises
because that juridical relation spawns obligations connected with
workmen's compensation, social security, medicare, minimum
wage, termination pay and unionism.
For this reason, in order to put the issue at rest, this Court has laid
down in a formidable line of decisions the elements to be
generally considered in determining the existence of an
employer-employee relationship, as follows: a) selection and
CASE DIGEST LABSTAN 1st EXAM
engagement of the employee; b) the payment of wages; c) the
power of dismissal; and d) the employer's power to control the
employee with respect to the means and method by-which the work
is to be accomplished. The last which is the so-called "control test"
is the most important element (Brotherhood Labor Unity Movement
of the Phils. vs. Zamora, 147 SCRA 49 [1987]; Dy Ke Beng vs.
International Labor and Marine Union of the Phil., 90 SCRA 162
[1979]; Mafinco Trading Corp. vs. Ople, 70 SCRA 141 [1976];
Social Security System vs. Court of Appeals, 37 SCRA 579 [1971]).
Applying the control test, that is, whether the employer controls or
has reserved the right to control the employee not only as to the
result of the work to be done but also as to the means and method
by which the same is to be accomplished, the question of whether
or not there is an employer-employee relationship for purposes of
the Social Security Act has been settled in this jurisdiction in the
case of Investment Planning Corp. vs. SSS, 21 SCRA 924 (1967).
In other words, where the element of control is absent; where a
person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work,
and in turn is compensated according to the result of his effort, the
relationship of employer-employee does not exist. (SSS vs. Court
of Appeals, 30 SCRA 210 [1969]).
It is the contention of petitioner that the Mafinco case which has
been the sole basis of the Court of Appeals' finding that Romeo
Carreon is an independent contractor is not applicable in the
instant petition, there being no substantial parallelism between said
contract and the contract of purchase and sale in this case. It
pointed out that there are in the Mafinco contract provisions which
by express implication point to the status of the peddler as an
independent contractor such as: a) that should the peddler employ
a driver or helpers, the latter shall be his employee/s and his/their
compensation shall be for the peddler's account; that the peddler
shall comply with the provisions of the Social Security Act and all
applicable laws (par. 2); b) peddler is responsible for damage to
property, death or injuries to persons covered by his own acts or
omissions or those of his driver or helpers (par. 3); c) peddler is
required to secure at his own expense all necessary licenses and
permits and to bear all expenses which may be incurred in the sale
of soft drinks (par. 5); d) the peddler is to furnish a performance
bond of P l,000.00 in favor of Mafinco to assure performance by the
peddler of his obligation to his employee under the Social Security
Act (par. 11), which provisions are notably absent in the contract in
the case at bar (Rollo, pp. 103-104).
It further contends that the Court of Appeals in an effort to justify its
holding picked out only paragraphs 1, 2, 4, 6 and 9 of the Mafinco
contract and thereafter concluded that the two contracts are similar.
Private respondent on the other hand, avers that the Mafinco
contract is applicable to the case at bar. The two contracts need
not embody almost the same provisions in order that they may be
considered similar. It is enough that the aspect of similarity arising
from the terms and condition be considered because of their
relevance to the issue, is relatively much stronger than the
dissimilarity.
Private respondent likewise maintains that the decision was
correctly concluded not only on the similarity of the two contracts
but also on factual evidence adduced at the trial and since
respondent Court has already examined the facts and passed
judgment on the basis thereof, its decision is no longer subject to
review. Stated otherwise, the Court of Appeals "looked behind the
29
contract" but found the evidence insufficient to justify a finding
that the terms of the contract were not followed. That the
evidence for Carreon and SSS failed to pierce" the contract (Rollo,
p. 83).
Private respondent's contention is untenable.
The distinction between a question of law and a question of fact is
explained in our jurisprudence in Ramos vs. Pepsi Cola Bottling
Co. (19 SCRA 289, 292 [1967]), to wit:
For a question to be one of law it must involve no examination of
the probative value of the evidence presented by the litigants or
any of them and the distinction is well-known. There is a question
of law in a given case when the doubt or difference arises as to
what the law is in a certain state of facts; there is a question of
fact when the doubt arises as to the truth or the falsehood of
alleged facts.
cited in G.R. No. L-39767, Lorenzo Hernandez vs. The Court of
Appeals, March 31, 1987.
In the case at bar, it is evident that the basic contention is what
the law is in the given state of facts. More than that, the
well-settled rule that the finding of facts of the Court of Appeals is
conclusive on the parties, admits of exceptions among which are:
(1) when the findings of fact of the Court of Appeals are contrary
to those of the trial court and (2) when the findings of fact of the
Court of Appeals are premised on the supposed absence of
evidence and are contradicted by evidence on record (Sacay vs.
Sandiganbayan, 142 SCRA 609 [1986]; Manlapaz vs. Court of
Appeals, 147 SCRA 239 [1987]).
In this case, the Court of Appeals ruled that there is not enough
evidence to show that the contract between Carreon and QTC
was not reflective of their agreement to warrant reformation. As
earlier pointed out, the Court of Appeals did not consider the
entirety of the contract but only portions thereof which led to the
conclusion that Carreon was an independent contractor.
Thus, after a study of the records and applying the "control tests,"
there appears to be no question that the existence of an
employer-employee relationship between Romeo Carreon and
QTC has been established, based on the following "undisputed"
facts as pointed out by the Solicitor General, to wit: (a) QTC
assigned a definite sales territory for Romeo Carreon; (b) QTC
provided Romeo Carreon with a delivery truck for the exclusive
use of the latter in his sales activities; (c) QTC dictated the price
of the cigarettes sold by Romeo Carreon; (d) QTC prescribed
what brand of cigarettes Romeo Carreon could sell; (e) QTC
determined the persons to whom Romeo Carreon could sell, (f)
QTC issued circulars and memoranda relative to Romeo
Carreon's sales activities; (g) QTC required Romeo Carreon to
submit to it daily, weekly and monthly reports; (h) QTC grounded
Romeo Carreon for six months in 1966; (i) Romeo Carreon was
supervised by sales coordinators of QTC; (j) Romeo Carreon was
subject to payment of damages and loss even of accrued rights
for any violation of instructions made by QTC in relation to his
sales activities; and (k) Romeo Carreon was paid an allowance by
QTC. All these indicate control and supervision over Carreon's
work.
CASE DIGEST LABSTAN 1st EXAM 30

Moreover, it is elementary that findings of administrative agencies

are generally accorded not only. respect but also of finality (Rosario
Bros, Inc. vs. Ople, 131 SCRA 72 [1984]).
CASE DIGEST LABSTAN 1st EXAM
G.R. No. 85750 Sep 28, 1990] INTERNATIONAL CATHOLIC
IMMIGRATION COMMISSION vs HON. PURA CALLEJA
G.R. No. 85750 — the International Catholic Migration
Commission (ICMC) Case.
FACTS: ICMC was one of those accredited by the Philippine
Government to operate a refugee processing center in Morong,
Bataan. It was incorporated in New York, USA, at the request of the
Holy See, as a non-profit agency involved in international
humanitarian and voluntary work.
Trade Unions of the Philippines and Allied Services (TUPAS) filed
with the then Ministry of Labor and Employment a Petition for
Certification Election among the rank and file members employed
by ICMC The latter opposed the petition on the ground that it is an
international organization registered with the United Nations and,
hence, enjoys diplomatic immunity.
Subsequently, the Philippine Government, through the DEFORAF,
granted ICMC the status of a specialized agency with
corresponding diplomatic privileges and immunities.
ICMC then sought the immediate dismissal of the TUPAS Petition
for Certification Election invoking the immunity expressly granted
but the same was denied by respondent BLR Director who, again,
ordered the immediate conduct of a pre-election conference.
B. G.R. No. 89331 — (The International Rice Research Institute
[IRRI] Case).
FACTS: IRRI was initially organized and registered with the
Securities and Exchange Commission as a private corporation
subject to all laws and regulations. However, by virtue of Pres.
Decree No. 1620, promulgated on 19 April 1979, IRRI was granted
the status, prerogatives, privileges and immunities of an
international organization.
The Organized Labor Association in Line Industries and Agriculture
(OLALIA), is a legitimate labor organization with an existing local
union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan,
for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct
Certification Election the Department of Labor and Employment
(DOLE).
IRRI opposed the petition invoking Pres. Decree No. 1620
conferring upon it the status of an international organization and
granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.
ISSUE: Whether or not the grant of diplomatic privileges and
immunites to ICMC/IRRI extends to immunity from the application
of Philippine labor laws.
31
HELD (BOTH CASES): There can be no question that diplomatic
immunity has, in fact, been granted ICMC and IRRI.
The grant of immunity from local jurisdiction to ICMC and IRRI is
clearly necessitated by their international character and
respective purposes. The objective is to avoid the danger of
partiality and interference by the host country in their internal
workings. The exercise of jurisdiction by the Department of Labor
in these instances would defeat the very purpose of immunity,
which is to shield the affairs of international organizations, in
accordance with international practice, from political pressure or
control by the host country to the prejudice of member States of
the organization, and to ensure the unhampered performance of
their functions.
ICMC’s and IRRI’s immunity from local jurisdiction by no means
deprives labor of its basic rights.
For, ICMC employees are not without recourse whenever there
are disputes to be settled. Section 31 of the Convention on the
Privileges and Immunities of the Specialized Agencies of the
United Nations 17 provides that “each specialized agency shall
make provision for appropriate modes of settlement of: (a)
disputes arising out of contracts or other disputes of private
character to which the specialized agency is a party.” Moreover,
pursuant to Article IV of the Memorandum of Agreement between
ICMC the the Philippine Government, whenever there is any
abuse of privilege by ICMC, the Government is free to withdraw
the privileges and immunities accorded.
Neither are the employees of IRRI without remedy in case of
dispute with management as, in fact, there had been organized a
forum for better management-employee relationship as
evidenced by the formation of the Council of IRRI Employees and
Management (CIEM) wherein “both management and employees
were and still are represented for purposes of maintaining mutual
and beneficial cooperation between IRRI and its employees.” The
existence of this Union factually and tellingly belies the argument
that Pres. Decree No. 1620, which grants to IRRI the status,
privileges and immunities of an international organization,
deprives its employees of the right to self-organization.
G.R. No. L-77629May 9, 1990
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY,
vs drilon
REGALADO, J.:
Before us are two consolidated petitions for certiorari filed by the
above-named petitioner union (hereinafter referred to as
KILUSAN-OLALIA, for conciseness) and individual complainants
therein, to wit (a) G.R. 77629, which seeks to reverse and set
aside the decision, dated November 13, 1986, 1 and the
resolution, dated January 9, 1987, 2 respectively handed down by
the two former Ministers of Labor, both rendered in BLR Case No.
NS-5-164-86; and (b) G.R. No. 78791, which prays for the
CASE DIGEST LABSTAN 1st EXAM 32
reversal of the resolutions of the National Labor Relations the representation issue pending in Region IV in which the
Commission, dated May 25, 1987 3 and June 19,1987 4 issued in Med-Arbiter is also enjoined to decide the same the soonest
Injunction Case No. 1442 thereof. possible time. 8

Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed
a three-year collective bargaining agreement (CBA) with United
Kimberly-Clark Employees Union-Philippine Transport and General
Workers' Organization (UKCEU-PTGWO) which expired on June
30, 1986.
In obedience to said assumption order, KILUSAN-OLALIA
terminated its strike and picketing activities effective June 1, 1986
after a compliance agreement was entered into by it with
KIMBERLY. 9

On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was

Within the 60-day freedom period prior to the expiration of and handling the certification election case (RO4-OD-M-4-1586),
during the negotiations for the renewal of the aforementioned CBA, issued an order 10 declaring the following as eligible to vote in the
some members of the bargaining unit formed another union called certification election, thus:
"Kimberly Independent Labor Union for Solidarity, Activism and
Nationalism-Organized Labor Association in Line Industries and
Agriculture (KILUSAN-OLALIA)." 1. The regular rank-and-file laborers/employees of the
respondent company consisting of 537 as of May 14, 1986 should
be considered qualified to vote;
On April 21, 1986, KILUSAN-OLALIA filed a petition for certification
election in Regional Office No. IV, Ministry of Labor and
Employment (MOLE), docketed as Case No. RO4-OD-M-415-86. 5 2. Those casuals who have worked at least six (6) months as
KIMBERLY and (UKCEU-PTGWO) did not object to the holding of appearing in the payroll months prior to the filing of the instant
a certification election but objected to the inclusion of the so-called petition on April 21, 1986; and
contractual workers whose employment with KIMBERLY was
coursed through an independent contractor, Rank Manpower
Company (RANK for short), as among the qualified voters.
3. Those contractual employees who are allegedly in the
employ of an independent contractor and who have also worked
for at least six (6) months as appearing in the payroll month prior
Pending resolution of the petition for certification election by the to the filing of the instant petition on April 21, 1986.
med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7,
1986 with the Bureau of Labor Relations, docketed as BLR Case
No. NS-5-164-86, 6 charging KIMBERLY with unfair labor practices
During the pre-election conference, 64 casual workers were
based on the following alleged acts: (1) dismissal of union
challenged by KIMBERLY and (UKCEU-PTGWO) on the ground
members (KILUSAN-OLALIA); (2) non-regularization of
that they are not employees, of KIMBERLY but of RANK. It was
casuals/contractuals with over six months service; (3)
agreed by all the parties that the 64 voters shall be allowed to cast
non-implementation of appreciation bonus for 1982 and 1983; (4)
their votes but that their ballots shall be segregated and subject to
non-payment of minimum wages; (5) coercion of employees; and
challenge proceedings. The certification election was conducted
(6) engaging in CBA negotiations despite the pendency of a
on July I., 1986, with the following results: 11
petition for certification election. This was later amended to
withdraw the charge of coercion but to add, as new charges, the
dismissal of Roque Jimenez and the non-payment of backwages of
the reinstated Emerito Fuentes .7 1. KILUSAN-OLALIA = 246 votes

Conciliation proceedings conducted by the bureau proved futile, 2. (UKCEU-PTGWO) = 266 votes
and KILUSAN-OLALIA declared a strike at KIMBERLY's premises
in San Pedro, Laguna on May 23, 1986.
3. NO UNION = 1 vote

On May 26, 1986, KIMBERLY petitioned MOLE to assume

jurisdiction over the labor dispute. On May 30, 1986, finding that 4. SPOILED BALLOTS = 4 votes
the labor dispute would adversely affect national interest, then
Minister Augusto S. Sanchez issued an assumption order, the
dispositive portion whereof reads: 5. CHALLENGED BALLOTS = 64 votes

Wherefore, premises considered, immediately upon receipt of this ————

order, the striking union and its members are hereby enjoined to lift
the picket and remove all obstacles to the free ingress to and
egress from the company premises and to return to work, including TOTAL 581 votes
the 28 contractual workers who were dismissed; likewise, the
company is directed to resume its operations immediately
thereafter and to accept all the employees back under the same
On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a
terms and conditions of employment prevailing prior to the
"Protest and Motion to Open and Count Challenged Votes" 12 on
industrial action. Further, all issues in the notice of strike, as
the ground that the 64 workers are employees of KIMBERLY
amended, are hereby assumed in this assumption order, except for
within the meaning of Article 212(e) of the Labor Code. On July 7,
CASE DIGEST LABSTAN 1st EXAM
1986, KIMBERLY filed an opposition to the protest and motion,
asserting that there is no employer-employee relationship between
the casual workers and the company, and that the med-arbiter has
no jurisdiction to rule on the issue of the status of the challenged
workers which is one of the issues covered by the assumption
order. The med-arbiter opted not to rule on the protest until the
issue of regularization has been resolved by
MOLE. 13
On November 13, 1986, then Minister Sanchez rendered a
decision in BLR Case No. NS-5-164-86, 14 the disposition wherein
is summarized as follows:
1. The service contract for janitorial and yard maintenance
service between KIMBERLY and RANK was declared legal;
2. The other casual employees not performing janitorial and
yard maintenance services were deemed labor-only contractual
and since labor-only contracting is prohibited, such employees
were held to have attained the status of regular employees, the
regularization being effective as of the date of the decision;
3. UKCEU-PTGWO having garnered more votes than
KILUSAN-OLALIA was certified as the exclusive bargaining
representative of KIMBERLY's employees;
4. The reinstatement of 28 dismissed KILUSAN-OLALIA
members was ordered;
5. Roque Jimenez was ordered reinstated without backwages,
the period when he was out of work being considered as penalty for
his misdemeanor;
6. The decision of the voluntary arbitrator ordering the
reinstatement of Ermilo Fuentes with backwages was declared as
already final and unappealable; and
7. KIMBERLY was ordered to pay appreciation bonus for 1982
and 1983.
On November 25, 1986, KIMBERLY flied a motion for
reconsideration with respect to the regularization of contractual
workers, the appreciation bonus and the reinstatement of Roque
Jimenez. 15 In a letter dated November 24, 1986, counsel for
KILUSAN-OLALIA demanded from KIMBERLY the implementation
of the November 13, 1986 decision but only with respect to the
regularization of the casual workers. 16
On December 11, 1986, KILUSAN-OLALIA filed a motion for
reconsideration questioning the authority of the Minister of Labor to
assume jurisdiction over the representation issue. In the meantime,
KIMBERLY and UKCEU-PTGWO continued with the negotiations
on the new collective bargaining agreement (CBA), no restraining
order or junctive writ having been issued, and on December 18,
1986, a new CBA was concluded and ratified by 440 out of 517
members of the bargaining unit. 17
33
In an order dated January 9, 1987, former Labor Minister Franklin
Drilon denied both motions for reconsideration filed by
KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the
new CBA executed between KIMBERLY and UKCEU-PTGWO
was signed.
On March 16, 1987, KILUSAN-OLALIA filed a petition for
certiorari in this Court docketed as G.R. No. 77629, seeking to set
aside the aforesaid decision, dated November 13, 1986, and the
order, dated January 9, 1987, rendered by the aforesaid labor
ministers.
On March 25, 1987, this Court issued in G.R. No. 77629 a
temporary restraining order, enjoining respondents from enforcing
and/or carrying out the decision and order above stated,
particularly that portion (1) recognizing respondent
UKCEU-PTGWO as the exclusive bargaining representative of all
regular rank-and-file employees in the establishment of
respondent company, (2) enforcing and/or implementing the
alleged CBA which is detrimental to the interests of the members
of the petitioner union, and (3) stopping respondent company
from deducting monthly dues and other union assessments from
the wages of all regular rank-and-file employees of respondent
company and from remitting the said collection to respondent
UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled,
"In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the
Department of Labor and Employment, Manila, 19
In its comment, 20 respondent company pointed out certain
events which took place prior to the filing of the petition in G.R. No.
77629, to wit:
1. The company and UKCEU-PTGWO have concluded a new
collective bargaining agreement which had been ratified by 440
out of 517 members of the bargaining unit;
2. The company has already granted the new benefits under
the new CBA to all its regular employees, including members of
petitioner union who, while refusing to ratify the CBA nevertheless
readily accepted the benefits arising therefrom;
3. The company has been complying with the check-off
provision of the CBA and has been remitting the union dues to
UKCEU-PTGWO
4. The company has already implement the decision of
November 13, 1986 insofar as the regularization of contractual
employees who have rendered more than one (1) year of service
as of the filing of the Notice of Strike on May 7, 1986 and are not
engaged in janitorial and yard maintenance work, are concerned
5. Rank Manpower Company had already pulled out,
reassigned or replaced the contractual employees engaged in
janitorial and yard maintenance work, as well as those with less
than one year service; and
CASE DIGEST LABSTAN 1st EXAM
6. The company has reinstated Roque Jimenez as of January
11, 1987.
In G.R. No. 78791, the records 21 disclose that on May 4, 1987,
KILUSAN-OLALIA filed another notice of strike with the Bureau of
Labor Relations charging respondent company with unfair labor
practices. On May 8, 1987, the bureau dismissed and considered
the said notice as not filed by reason of the pendency of the
representation issue before this Court in G.R. No. 77629.
KILUSAN-OLALIA moved to reconsider said order, but before the
bureau could act on said motion, KILUSAN-OLALIA declared a
strike and established a picket on respondent company's premises
in San Pedro, Laguna on May 17, 1987.
On May 18, 1987, KIMBERLY filed a petition for injunction with the
National Labor Relations Commission (NLRC), docketed as
Injunction Case No. 1442. A supplement to said petition was filed
on May 19, 1987. On May 26, 1987, the commission en banc
issued a temporary restraining order (TRO) on the basis of the
ocular inspection report submitted by the commission's agent, the
testimonies of KIMBERLY's witnesses, and pictures of the
barricade. KILUSAN-OLALIA moved to dissolve the TRO on the
ground of lack of jurisdiction.
Immediately after the expiration of the first TRO on June 9, 1987,
the striking employees returned to their picket lines and
reestablished their barricades at the gate. On June 19, 1987, the
commission en banc issued a second TRO.
On June 25, 1987, KILUSAN-OLALIA filed another petition for
certiorari and prohibition with this Court, docketed as G.R. No.
78791, questioning the validity of the temporary restraining orders
issued by the NLRC on May 26, 1987 and June 19, 1987. On June
29, 1987, KILUSAN-OLALIA filed in said case an urgent motion for
a TRO to restrain NLRC from implementing the questioned orders.
An opposition, as well as a reply thereto, were filed by the parties.
Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an
urgent motion for the issuance of a writ of preliminary injunction
when the strikers returned to the strike area after the second TRO
expired. After due hearing, the commission issued a writ of
preliminary injunction on July 14, 1987, after requiring KIMBERLY
to post a bond in the amount of P20,000.00.
Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No.
78791 a second urgent motion for the issuance of a TRO by reason
of the issuance of said writ of preliminary injunction, which motion
was opposed by KIMBERLY.
Thereafter, in its memorandum 22 filed on December 28, 1989 and
in its motion for early resolution 23 filed on February 28, 1990, both
in G.R. No. 78791, KILUSAN-OLALIA alleged that it had terminated
its strike and picketing activities and that the striking employees
had unconditionally offered to return to work, although they were
refused admission by KIMBERLY. By reason of this supervening
development, the petition in G.R. No. 78791, questioning the
propriety of the issuance of the two temporary restraining orders
and the writ of injunction therein, has been rendered moot and
academic.
34
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that
the respondent Secretary of Labor and/or the former Minister of
Labor have acted with grave abuse of discretion and/or without
jurisdiction in (1) ruling on the issue of bargaining representation
and declaring respondent UKCEU-PTGWO as the collective
bargaining representative of all regular rank-and-file employees of
the respondent company; (2) holding that petitioners are not
entitled to vote in the certification election; (3) considering the
regularization of petitioners (who are not janitors and
maintenance employees) to be effective only on the date of the
disputed decision; (4) declaring petitioners who are assigned
janitorial and yard maintenance work to be employees of
respondent RANK and not entitled to be regularized; (5) not
awarding to petitioners differential pay arising out of such illegal
work scheme; and (6) ordering the mere reinstatement of
petitioner Jimenez.
The issue of jurisdiction actually involves a question of whether or
not former Minister Sanchez committed a grave abuse of
discretion amounting to lack of jurisdiction in declaring respondent
UKCEU-PTGWO as the certified bargaining representative of the
regular employees of KIMBERLY, after ruling that the 64 casual
workers, whose votes are being challenged, were not entitled to
vote in the certification election.
KILUSAN-OLALIA contends that after finding that the 64 workers
are regular employees of KIMBERLY, Minister Sanchez should
have remanded the representation case to the med-arbiter
instead of declaring UKCEU-PTGWO as the winner in the
certification election and setting aside the med-arbiter's order
which allowed the 64 casual workers to cast their votes.
Respondents argue that since the issues of regularization and
representation are closely interrelated and that a resolution of the
former inevitably affects the latter, it was necessary for the former
labor minister to take cognizance of the representation issue; that
no timely motion for reconsideration or appeal was made from his
decision of November 13, 1986 which has become final and
executory; and that the aforesaid decision was impliedly accepted
by KILUSAN-OLALIA when it demanded from KIMBERLY the
issuance of regular appointments to its affected members in
compliance with said decision, hence petitioner employees are
now stopped from questioning the legality thereof.
We uphold the authority of former Minister Sanchez to assume
jurisdiction over the issue of the regularization of the 64 casual
workers, which fact is not even disputed by KILUSAN-OLALIA as
may be gleaned from its request for an interim order in the notice
of strike case (BLR-NS-5-164-86), asking that the regularization
issue be immediately resolved. Furthermore, even the
med-arbiter who ordered the holding of the certification election
refused to resolve the protest on the ground that the issue raised
therein correctly pertains to the jurisdiction of the then labor
minister. No opposition was offered by KILUSAN-OLALIA. We
hold that the issue of regularization was properly addressed to the
discretion of said former minister.
However, the matter of the controverted pronouncement by
former Minister Sanchez, as reaffirmed by respondent secretary,
regarding the winner in the certification election presents a
different situation.
CASE DIGEST LABSTAN 1st EXAM
It will be recalled that in the certification election, UKCEU-PTGWO
came out as the winner, by garnering a majority of the votes cast
therein with the exception of 64 ballots which were subject to
challenge. In the protest filed for the opening and counting of the
challenged ballots, KILUSAN-OLALIA raised the main and sole
question of regularization of the 64 casual workers. The
med-arbiter refused to act on the protest on the ground that the
issue involved is within the jurisdiction of the then Minister of Labor.
KILUSAN-OLALIA then sought an interim order for an early
resolution on the employment status of the casual workers, which
was one of the issues included in the notice of strike filed by
KILUSAN-OLALIA in BLR Case No. NS-5-164-86. Consequently,
Minister Sanchez rendered the questioned decision finding that the
workers not engaged in janitorial and yard maintenance service are
regular employees but that they became regular only on the date of
his decision, that is, on November 13, 1986, and, therefore, they
were not entitled to vote in the certification election. On the basis of
the results obtained in the certification election, Minister Sanchez
declared UKCEU-PTGWO as the winner.
The pivotal issue, therefore, is when said workers, not performing
janitorial or yard maintenance service, became regular employees
of KIMBERLY.
We find and so hold that the former labor minister gravely abused
his discretion in holding that those workers not engaged in janitorial
or yard maintenance service attained the status of regular
employees only on November 13, 1986, which thus deprived them
of their constitutionally protected right to vote in the certification
election and choose their rightful bargaining representative.
The Labor Code defines who are regular employees, as follows:
Art. 280. Regular and Casual Employment. — The provisions of
written agreement to the contrary not withstanding and regardless
of the oral agreements 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 under 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 exists.
The law thus provides for two. kinds of regular employees, namely:
(1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of
service, whether continuous or broken, with respect to the activity
in which they are employed. The individual petitioners herein who
have been adjudged to be regular employees fall under the second
category. These are the mechanics, electricians, machinists
machine shop helpers, warehouse helpers, painters, carpenters,
pipefitters and masons It is not disputed that these workers have
been in the employ of KIMBERLY for more than one year at the
35
time of the filing of the Petition for certification election by
KILUSAN-OLALIA.
Owing to their length of service with the company, these workers
became regular employees, by operation of law, one year after
they were employed by KIMBERLY through RANK. While the
actual regularization of these employees entails the mechanical
act of issuing regular appointment papers and compliance with
such other operating procedures as may be adopted by the
employer, it is more in keeping with the intent and spirit of the law
to rule that the status of regular employment attaches to the
casual worker on the day immediately after the end of his first
year of service. To rule otherwise, and to instead make their
regularization dependent on the happening of some contingency
or the fulfillment of certain requirements, is to impose a burden on
the employee which is not sanctioned by law.
That the first stated position is the situation contemplated and
sanctioned by law is further enhanced by the absence of a
statutory limitation before regular status can be acquired by a
casual employee. The law is explicit. As long as the employee
has rendered at least one year of service, he becomes a regular
employee with respect to the activity in which he is employed. The
law does not provide the qualification that the employee must first
be issued a regular appointment or must first be formally declared
as such before he can acquire a regular status. Obviously, where
the law does not distinguish, no distinction should be drawn.
The submission that the decision of November 13, 1986 has
become final and executory, on the grounds that no timely appeal
has been made therefrom and that KILUSAN-OLALIA has
impliedly acceded thereto, is untenable.
Rule 65 of the Rules of Court allows original petitions for certiorari
from decisions or orders of public respondents provided they are
filed within a reasonable time. We believe that the period from
January 9, 1987, when the motions for reconsideration separately
filed by KILUSAN-OLALIA and KIMBERLY were denied, to March
16, 1987, when the petition in G.R. No. 77629 was filed,
constitutes a reasonable time for availing of such recourse.
We likewise do not subscribe to the claim of respondents that
KILUSAN-OLALIA has impliedly accepted the questioned
decision by demanding compliance therewith. In the letter of
KILUSAN-OLALIA dated November 24, 1986 24 addressed to the
legal counsel of KIMBERLY, it is there expressly and specifically
pointed out that KILUSAN-OLALIA intends to file a motion for
reconsideration of the questioned decision but that, in the
meantime, it was demanding the issuance of regular
appointments to the casual workers who had been declared to be
regular employees. The filing of said motion for reconsideration of
the questioned decision by KILUSAN-OLALIA, which was later
denied, sustains our position on this issue and denies the theory
of estoppel postulated by respondents.
On the basis of the foregoing circumstances, and as a
consequence of their status as regular employees, those workers
not perforce janitorial and yard maintenance service were
performance entitled to the payment of salary differential, cost of
living allowance, 13th month pay, and such other benefits
extended to regular employees under the CBA, from the day
immediately following their first year of service in the company.
These regular employees are likewise entitled to vote in the
CASE DIGEST LABSTAN 1st EXAM 36
certification election held in July 1, 1986. Consequently, the votes
cast by those employees not performing janitorial and yard
maintenance service, which form part of the 64 challenged votes,
should be opened, counted and considered for the purpose of
determining the certified bargaining representative.

We do not find it necessary to disturb the finding of then Minister

Sanchez holding as legal the service contract executed between
KIMBERLY and RANK, with respect to the workers performing
janitorial and yard maintenance service, which is supported by
substantial and convincing evidence. Besides, we take judicial
notice of the general practice adopted in several government and
private institutions and industries of hiring a janitorial service on an
independent contractor basis. Furthermore, the occasional
directives and suggestions of KIMBERLY are insufficient to erode
primary and continuous control over the employees of the
independent contractor. 25 Lastly, the duties performed by these
workers are not independent and integral steps in or aspects of the
essential operations of KIMBERLY which is engaged in the
manufacture of consumer paper products and cigarette paper,
hence said workers cannot be considered regular employees.

The reinstatement of Roque Jimenez without backwages involves

a question of fact best addressed to the discretion of respondent
secretary whose finding thereon is binding and conclusive upon
this Court, absent a showing that he committed a grave abuse in
the exercise thereof.