ELECTROMAT MANUFACTURING AND RECORDING CORPORATION VS.

HON
LAGUNZAD, PUBLIC RESPONDENT AND NAGKAKAISANG SAMAHAN NG
MANGAGAWA NG ELECTROMAT – WASTO

Private respondent in this case is a Labor Union seeking to register as an independent

union (not under the control of the employer). The employer – the aggrieved party wanted to
cancel its registration for certain reasons not specified in the decision penned by the Court. The
ground for cancelling its registration is the failure to comply with Article 234 of the LC. More
specifically, it is challenging DO 40-03 under the pretext of amending Article 234 which is
tantamount to grave abuse of discretion. It argued that the assailed order diminished the
requirements set by said Article. The case history although interesting is a subject for another
study – on trial procedures.

The Court decided to uphold the decision of the public respondent. DO 40-03 is a valid
exercise of rule-making powers of DOLE. A citation of the decision states:

“As in the case of D.O. 9 (which introduced the above-cited Section 3 of the old rules) in
Progressive Development, D.O. 40-03 represents an expression of the government’s
implementing policy on trade unionism. It builds upon the old rules by further simplifying the
requirements for the establishment of locals or chapters. As in D.O. 9, we see nothing contrary
to the law or the Constitution in the adoption by the Secretary of Labor and Employment of D.O.
40-03 as this department order is consistent with the intent of the government to encourage the
affiliation of a local union with a federation or national union to enhance the local’s bargaining
power. If changes were made at all, these were those made to recognize the distinctions made in
the law itself between federations and their local chapters, and independent unions; local
chapters seemingly have lesser requirements because they and their members are deemed to be
direct members of the federation to which they are affiliated, which federations are the ones
subject to the strict registration requirements of the law.”

Furthermore the Court reiterated its ruling in Pagpalain case. It stated that:

“Pagpalain cannot also allege that Department Order No. 9 is violative of public policy.
x x x [T]he sole function of our courts is to apply or interpret the laws. It does not formulate
public policy, which is the province of the legislative and executive branches of government. It
cannot, thus, be said that the principles laid down by the Court in Progressive and Protection
Technology constitute public policy on the matter. They do, however, constitute the Court’s
interpretation of public policy, as formulated by the executive department through its
promulgation of rules implementing the Labor Code. However, this public policy has itself been
changed by the executive department, through the amendments introduced in Book V of the
Omnibus Rules by Department Order No. 9. It is not for us to question this change in policy, it
being a well-established principle beyond question that it is not within the province of the courts
to pass judgments upon the policy of legislative or executive action.”
 In this case, the Court upheld the decision of CA and found no merit from the arguments
of the petitioners.

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS VS. TORRES ET. AL.

PASEI is the largest national organization of private employment and recruitment

agencies duly licensed and authorized by the POEA, to engaged in the business of obtaining
overseas employment for Filipino landbased workers, including domestic helpers.

Now, PASEI is challenging the temporary suspension of deploying of Filipino

Housemaids in Hongkong by Private Employment Agencies through DO no. 16 s. 1991 because
DOLE through POEA took over. Pursuant to the above DOLE circular, the POEA issued
Memorandum Circular No. 30, Series of 1991, dated July 10, 1991, providing GUIDELINES on
the Government processing and deployment of Filipino domestic helpers to Hong Kong and the
accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers. On
August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of
1991, on the processing of employment contracts of domestic workers for Hong Kong. Effective
16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the Philippines shall recruit
under the new scheme which requires prior accreditation which the POEA. Recruitment agencies
in Hong Kong may apply for accreditation at the Office of the Labor Attache, Philippine
Consulate General where a POEA team is posted until 31 August 1991. Thereafter, those who
failed to have themselves accredited in Hong Kong may proceed to the POEA-OWWA
Household Workers Placement Unit in Manila for accreditation before their recruitment and
processing of DHs shall be allowed. Recruitment agencies in Hong Kong who have some
accepted applicants in their pool after the cut-off period shall submit this list of workers upon
accreditation. Only those DHs in said list will be allowed processing outside of the HWPU
manpower pool.

Despite of the effort of the government to protect our interests, the petitioner filed a
petition for prohibition against the decision because of overstepping the legal boundaries through
the exercise of rule-making powers which is manifested as:

1. that the respondents acted with grave abuse of discretion and/or in excess of
their rule-making authority in issuing said circulars;

2. that the assailed DOLE and POEA circulars are contrary to the Constitution,
are unreasonable, unfair and oppressive; and

3. that the requirements of publication and filing with the Office of the National
Administrative Register were not complied with.

The Court held that the first 2 grounds have no merit because it is within the bounds of
the law that rule-making authority is exercised. However as for the last cause of action, the Court
held that publication and filing requirements may not be dispensed with. So, the Court granted
the petition of prohibition however such prohibition ends if publication and filing requirements
were met.

PEOPLE VS. GUTTIEREZ

That from the months of April to August 1994 in Pasay City, Philippines, and within the
jurisdiction of this Honorable Court, accused FLOR GUTIERREZ Y TIMOD conspiring and
confederating with CECILIA BAUTISTA, ESTHER GAMILDE, LINDA RABAINO and
MARILYN GARCIA (whose present whereabouts are unknown) and mutually helping one
another, acting in common accord, did then and there, willfully, unlawfully and feloniously,
engage in recruitment activities for overseas job placement and actually contract, enlist and
recruit EVELYN V. RAMOS, ROSEMARIE I. TUGADE, GENEROSA G. ASUNCION and
ROSALYN B. SUMAYO as domestic helpers in Dubai, United Arab Emirates, for a fee of
various amounts ranging from P10,000.00 to P15,000.00 each, without first obtaining the
required license and/or authority from the Philippine Overseas Employment Administration
(POEA).

Another complainant, Rosalyn D. Sumayo, also applied for overseas job placement as a
domestic helper in Dubai. Her experience was more agonizing. In her case, it was one Marilyn
Garcia who assisted Rosalyn.23 She submitted a copy of her birth certificate, six (6) copies of 2 x
2 pictures, two (2) copies of her whole-body picture, passport, and medical certificate.24 Marilyn
also asked Rosalyn to pay: a processing fee of P7,500.00, P2,620.00 as full tax, P500.00 as
terminal fee, and P3,000.00 as service charge.25

All the documents and money given by Rosalyn to Marilyn were subsequently remitted
to the accused at her office on June 28, 1994.26 The accused told Rosalyn that she would be
leaving anytime, but after three months, Rosalyn's departure did not push through.27

Despite the setback, the accused kept assuring Rosalyn that she would still be able to
28
leave. One time, the accused brought her to the airport and instructed her to hide in the airport
restroom.29 After fifteen minutes, the accused told her that they had to leave the airport because
"mahigpit sa immigration."30 On another occasion, the accused directed Rosalyn to hide inside
the Kayumanggi Restaurant for fifteen (15) minutes.31 Nothing happened after, though, and they
went home.

On November 14, 1994, Rosalyn was again at the airport.32 The accused warned her,
though, that if the Immigration Officer insisted on seeing her papers, it would be better for her to
leave.33 As directed, she left the airport when she was asked to produce her documents.34

Exasperated, Rosalyn went to the accused's house and demanded the return of her money
and her documents. Instead of acceding to Rosalyn's demands, the accused shouted at her and
warned her that she had to pay a cancellation fee of $300.00. Generosa Asuncion suffered the
same fate as her co-applicants.
 With the promises of jobs abroad unfulfilled, complainants decided to verify if the
accused was a licensed recruiter. Upon learning from the POEA that she was not so licensed,47
they proceeded to the Philippine Anti-Crime Commission (PACC) to execute their respective
affidavits.48

In her defense, the accused claimed that as an "employee" of a duly licensed agency who
was tasked to recruit and offer job placements abroad, she could not be held liable for illegal
recruitment.54 She admitted that she had no authority to recruit in her personal capacity,55 but that
her authority emanated from a Special Power of Attorney (SPA) and a Certification issued by a
licensed agency.5

Cristobal explained that the POEA, "Never had a letter from Sarifudin registering or
authorizing Flor Gutierrez... rather, [what] we received [was a] revocation of her appointment."
He also revealed that the name of the accused does not appear in the records of the POEA as
being employed by the agency from the assumption of its license on June 11, 1993, up to its
termination on June 11, 1995.77 The defense likewise alleged that complainants Rosemarie
Tugade and Evelyn Ramos executed Affidavits of Desistance dated May 12, 1995,78 stating that
the accused had returned to them the amounts they paid her and that the complaint was a result of
a misunderstanding.

Illegal recruitment is committed when two elements concur, namely: (1) the offender has
no valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity within the meaning of
"recruitment and placement" defined under Art. 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code.80 Art. 13(b) of the Labor Code defines "recruitment
and placement" as "any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons, shall be
deemed engaged in recruitment and placement."

The crime becomes Illegal Recruitment in Large Scale when the two elements concur,
with the addition of a third element: the recruiter committed the same against three or more
persons, individually or as a group.

ppellant cannot escape liability by claiming that she was not aware that before working
for her employer in the recruitment agency, she should first be registered with the POEA.84
Illegal recruitment in large scale is malum prohibitum, not malum in se.85 Good faith is not a
defense.

PHILTRANCO SERVICE INC. VS. PHILTRANCO WORKERS UNION – ASSOCIATION

OF GENUINE LABOR ORGANIZATIONS

On the ground that it was suffering business losses, petitioner Philtranco Service Enterprises,
Inc., a local land transportation company engaged in the business of carrying passengers and
freight, retrenched 21 of its employees. Consequently, the company union, herein private
respondent Philtranco Workers Union-Association of Genuine Labor Organizations (PWU-
AGLU), filed a Notice of Strike with the Department of Labor and Employment (DOLE),
claiming that petitioner engaged in unfair labor practices. The case was docketed as NCMB-
NCR CASE No. NS-02-028-07.

Unable to settle their differences at the scheduled February 21, 2007 preliminary conference held
before Conciliator-Mediator Amorsolo Aglibut (Aglibut) of the National Conciliation and
Mediation Board (NCMB), the case was thereafter referred to the Office of the Secretary of the
DOLE (Secretary of Labor), where the case was docketed as Case No. OS-VA-2007-008.

The CA held that, in assailing the Decision of the DOLE voluntary arbitrator, petitioner erred in
filing a petition for certiorari under Rule 65 of the 1997 Rules, when it should have filed a
petition for review under Rule 43 thereof, which properly covers decisions of voluntary labor
arbitrators.12 For this reason, the petition is dismissible pursuant to Supreme Court Circular No.
2-90.13 The CA added that since the assailed Decision was not timely appealed within the
reglementary 15-day period under Rule 43, the same became final and executory. Finally, the
appellate court ruled that even assuming for the sake of argument that certiorari was indeed the
correct remedy, still the petition should be dismissed for being filed out of time. Petitioner’s
unauthorized Motion for Reconsideration filed with the Secretary of Labor did not toll the
running of the reglementary 60-day period within which to avail of certiorari; thus, from the time
of its receipt of Acting Labor Secretary Cruz’s June 13, 2007 Decision on June 14 or the
following day, petitioner had until August 13 to file the petition – yet it filed the same only on
August 29.

Petitioner filed a Motion for Reconsideration, which was denied by the CA through the second
assailed December 14, 2007 Resolution. In denying the motion, the CA held that the fact that the
Acting Secretary of Labor rendered the decision on the voluntary arbitration case did not remove
the same from the jurisdiction of the NCMB, which thus places the case within the coverage of
Rule 43.

In its Petition and Reply,16 petitioner argues that a petition for certiorari under Rule 65 – and not
a petition for review under Rule 43 – is the proper remedy to assail the June 13, 2007 Decision of
the DOLE Acting Secretary, pointing to the Court’s pronouncement in National Federation of
Labor v. Hon. Laguesma17 that the remedy of an aggrieved party against the decisions and
discretionary acts of the NLRC as well as the Secretary of Labor is to timely file a motion for
reconsideration, and then seasonably file a special civil action for certiorari under Rule 65 of the
1997 Rules of Civil Procedure.

Petitioner adds that, contrary to the CA’s ruling, NCMB-NCR CASE No. NS-02-028-07 is not a
simple voluntary arbitration case. The character of the case, which involves an impending strike
by petitioner’s employees; the nature of petitioner’s business as a public transportation company,
which is imbued with public interest; the merits of its case; and the assumption of jurisdiction by
the Secretary of Labor – all these circumstances removed the case from the coverage of Article
262,18 and instead placed it under Article 263,19 of the Labor Code. Besides, Rule 43 does not
apply to judgments or final orders issued under the Labor Code.20
On the procedural issue, petitioner insists that it timely filed the Petition for Certiorari with the
CA, arguing that Rule 65 fixes the 60-day period within which to file the petition from notice of
the denial of a timely filed motion for reconsideration, whether such motion is required or not. It
cites the Court’s pronouncement in ABS-CBN Union Members v. ABS-CBN Corporation21 that
"before a petition for certiorari under Rule 65 of the Rules of Court may be availed of, the filing
of a motion for reconsideration is a condition sine qua non to afford an opportunity for the
correction of the error or mistake complained of" and since "a decision of the Secretary of Labor
is subject to judicial review only through a special civil action of certiorari x x x [it] cannot be
resorted to without the aggrieved party having exhausted administrative remedies through a
motion for reconsideration".

In its Comment,22 respondent argues that the Secretary of Labor decided Case No. OS-VA-
2007-008 in his capacity as voluntary arbitrator; thus, his decision, being that of a voluntary
arbitrator, is only assailable via a petition for review under Rule 43. It further echoes the CA’s
ruling that even granting that certiorari was the proper remedy, the same was filed out of time as
the filing of a motion for reconsideration, which was an unauthorized pleading, did not toll the
running of the 60-day period. Finally, it argues that on the merits, petitioner’s case could not
hold water as it failed to abide by the requirements of law in effecting a retrenchment on the
ground of business losses.

The Court grants the Petition.

In fine, we find that it is procedurally feasible as well as practicable that petitions for certiorari
under Rule 65 against the decisions of the Secretary of Labor rendered under the Labor Code and
its implementing and related rules be filed initially in the Court of Appeals. Paramount
consideration is strict observance of the doctrine on the hierarchy of the courts, emphasized in St.
Martin Funeral Homes v. NLRC, on "the judicial policy that this Court will not entertain direct
resort to it unless the redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy within and calling for
the exercise of our primary jurisdiction."27

From the foregoing we see that the Labor Code and its implementing and related rules generally
do not provide for any mode for reviewing the decision of the Secretary of Labor. It is further
generally provided that the decision of the Secretary of Labor shall be final and executory after
ten (10) days from notice. Yet, like decisions of the NLRC which under Art. 223 of the Labor
Code become final after ten (10) days, decisions of the Secretary of Labor come to this Court by
way of a petition for certiorari even beyond the ten-day period provided in the Labor Code and
the implementing rules but within the reglementary period set for Rule 65 petitions under the
1997 Rules of Civil Procedure.

On the question of whether the Petition for Certiorari was timely filed, the Court agrees with
petitioner’s submission. Rule 65 states that where a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the petition shall be filed not later than 60
days counted from the notice of the denial of the motion.28 This can only mean that even though
a motion for reconsideration is not required or even prohibited by the concerned government
office, and the petitioner files the motion just the same, the 60-day period shall nonetheless be
counted from notice of the denial of the motion. The very nature of certiorari – which is an
extraordinary remedy resorted to only in the absence of plain, available, speedy and adequate
remedies in the course of law – requires that the office issuing the decision or order be given the
opportunity to correct itself. Quite evidently, this opportunity for rectification does not arise if no
motion for reconsideration has been filed. This is precisely what the Court said in the ABS-CBN
Union Members case, whose essence continues to this day.

The aforecited provision cannot be construed to mean that the Decision of the public respondent
cannot be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the
Rules of Court. As a rule, the law requires a motion for reconsideration to enable the public
respondent to correct his mistakes, if any. In Pearl S. Buck Foundation, Inc., vs. NLRC, this
Court held:

"Hence, the only way by which a labor case may reach the Supreme Court is through a petition
for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave
abuse of discretion. Such petition may be filed within a reasonable time from receipt of the
resolution denying the motion for reconsideration of the NLRC decision." x x x

Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of,
the filing of a motion for reconsideration is a condition sine qua non to afford an opportunity for
the correction of the error or mistake complained of.

FRANCISCO VS. NLRC

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the accounting
needs of the company. She was also designated as Liaison Officer to the City of Makati to secure
business permits, construction permits and other licenses for the initial operation of the company.
5

Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared
any legal document and never represented the company as its Corporate Secretary. However, on
some occasions, she was prevailed upon to sign documentation for the company. 6

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as
accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management administration functions; represent the
company in all dealings with government agencies, especially with the Bureau of Internal
Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation. 7

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her
salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation. 8
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that
she was required to sign a prepared resolution for her replacement but she was assured that she
would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei Corporation and announced that nothing had
changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to
Seiji Kamura and in charge of all BIR matters. 9

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not
paid her mid-year bonus allegedly because the company was not earning well. On October 2001,
petitioner did not receive her salary from the company. She made repeated follow-ups with the
company cashier but she was advised that the company was not earning well. 10

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but
she was informed that she is no longer connected with the company. 11

Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.

Private respondents averred that petitioner is not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters
and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her
work at her own discretion without control and supervision of Kasei Corporation. Petitioner had
no daily time record and she came to the office any time she wanted. The company never
interfered with her work except that from time to time, the management would ask her opinion
on matters relating to her profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a Board Resolution designating
her as technical consultant. The money received by petitioner from the corporation was her
professional fee subject to the 10% expanded withholding tax on professionals, and that she was
not one of those reported to the BIR or SSS as one of the company’s employees. 12

Petitioner’s designation as technical consultant depended solely upon the will of management.
As such, her consultancy may be terminated any time considering that her services were only
temporary in nature and dependent on the needs of the corporation.

The Labor Arbiter found that petitioner was illegally dismissed, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. finding complainant an employee of respondent corporation;

2. declaring complainant’s dismissal as illegal;

3. ordering respondents to reinstate complainant to her former position without loss of seniority
rights and jointly and severally pay complainant her money claims in accordance with the
following computation:
a. Backwages 10/2001 – 07/2002 275,000.00

(27,500 x 10 mos.)

b. Salary Differentials (01/2001 – 09/2001) 22,500.00

c. Housing Allowance (01/2001 – 07/2002) 57,000.00

d. Midyear Bonus 2001 27,500.00

e. 13th Month Pay 27,500.00

f. 10% share in the profits of Kasei

Corp. from 1996-2001 361,175.00

g. Moral and exemplary damages 100,000.00

h. 10% Attorney’s fees 87,076.50

P957,742.50

If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay
with additional backwages that would accrue up to actual payment of separation pay.

On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the
dispositive portion of which reads:

PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:

1) Respondents are directed to pay complainant separation pay computed at one month per year
of service in addition to full backwages from October 2001 to July 31, 2002;

2) The awards representing moral and exemplary damages and 10% share in profit in the
respective accounts of P100,000.00 and P361,175.00 are deleted;

3) The award of 10% attorney’s fees shall be based on salary differential award only;

4) The awards representing salary differentials, housing allowance, mid year bonus and 13th
month pay are AFFIRMED.

SO ORDERED. 15

On appeal, the Court of Appeals reversed the NLRC decision, thus:

WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor
Relations Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new
one is hereby rendered dismissing the complaint filed by private respondent against Kasei
Corporation, et al. for constructive dismissal.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the extent of the worker’s
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that line
of business. 23

The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. 24 In the United States, the
touchstone of economic reality in analyzing possible employment relationships for purposes of
the Federal Labor Standards Act is dependency. 25 By analogy, the benchmark of economic
reality in analyzing possible employment relationships for purposes of the Labor Code ought to
be the economic dependence of the worker on his employer.

By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate
Secretary, with substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for the proper
operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. 26 When petitioner was designated General Manager, respondent corporation
made a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in the SSS as
manifested by a copy of the SSS specimen signature card which was signed by the President of
Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces
the existence of an employer-employee relationship between petitioner and respondent
corporation. 27

It is therefore apparent that petitioner is economically dependent on respondent corporation for

her continued employment in the latter’s line of business.
In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment,
an identification card is provided not only as a security measure but mainly to identify the holder
thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers
covering petitioner’s salaries for the months stated therein, these matters constitute substantial
evidence adequate to support a conclusion that petitioner was an employee of private respondent.

VILLUGA VS. NLRC

The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring
shop owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located
at Shaw Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary
of P840.00 and a monthly transportation allowance of P40.00. In addition to his work as cutter,
Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the
shop's manager and assistant manager would be absent. He saw to it that their work conformed
with the pattern he had prepared and if not, he had them redone, repaired or resewn.

The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount
for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the
task. Petitioners did not fill up any time record since they did not observe regular or fixed hours
of work. They were allowed to perform their work at home especially when the volume of work,
which depended on the number of job orders, could no longer be coped up with.

From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to
illness. For not properly notifying his employer, he was considered to have abandoned his work.

In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor,
Villuga claimed that he was refused admittance when he reported for work after his absence,
allegedly due to his active participation in the union organized by private respondent's tailors. He
further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on
rest days and holidays, service incentive leave pay and 13th month pay.

Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that
they were dismissed from their employment because they joined the Philippine Social Security
Labor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia
Brizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stopped
working because private respondents gave them few pieces of work to do after learning of their
membership with PSSLU. All the petitioners laid claims under the different labor standard laws
which private respondent allegedly violated.

On May 28, 1979, Labor Arbiter Ernilo V. Peñalosa rendered a decision ordering the dismissal
of the complaint for unfair labor practices, illegal dismissal and other money claims except
petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive
portion of the decision states as follows:

WHEREFORE, premises considered, the respondent Broad Street Tailoring

and/or Rodolfo Zapanta are hereby ordered to pay complainant Elias Villuga the
 sum of ONE THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND
SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th month pay for the
years 1976, 1977 and 1978. His other claims in this case are hereby denied for
lack of merit.

The complaint insofar as the other eleven (11) complainants are concerned should
be, as it is hereby dismissed for want of jurisdiction.1

On appeal, the National Labor Relations Commission affirmed the questioned decision in a
resolution dated May 12, 1986, the dispositive portion of which states as follows:

WHEREFORE, premises considered, the decision appealed from is, as it is hereby

AFFIRMED, and the appeal dismissed. 2

Presiding Commissioner Guillermo C. Medina merely concurred in the result while

Commissioner Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:

I am for upholding employer-employee relationship as argued by the

complainants before the Labor Arbiter and on appeal. The further fact that the
proposed decision recognizes complainant's status as piece-rate worker all the
more crystallizes employer-employee relationship the benefits prayed for must be
granted. 3

Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member
of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary
duty consists of the performance of work directly related to management policies; (2) that he
customarily and regularly exercises discretion and independent judgment in the performance of
his functions; (3) that he regularly and directly assists in the management of the establishment;
and (4) that he does not devote his twenty per cent of his time to work other than those described
above.

Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary
work or duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any
of the management policies, as there is a manager and an assistant manager who perform said
functions. It is true that in the absence of the manager the assistant manager, he distributes and
assigns work to employees but such duty, though involving discretion, is occasional and not
regular or customary. He had also the authority to order the repair or resewing of defective item
but such authority is part and parcel of his function as cutter to see to it that the items cut are
sewn correctly lest the defective nature of the workmanship be attributed to his "poor cutting."
Elias Villuga does not participate in policy-making. Rather, the functions of his position involve
execution of approved and established policies. In Franklin Baker Company of the Philippines v.
Trajano, 5 it was held that employees who do not participate in policy-making but are given
ready policies to execute and standard practices to observe are not managerial employees. The
test of "supervisory or managerial status" depends on whether a person possesses authority that is
not merely routinary or clerical in nature but one that requires use of independent judgment. In
other words, the functions of the position are not managerial in nature if they only execute
approved and established policies leaving little or no discretion at all whether to implement said
policies or not.

Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay
and premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95
(service incentive leave pay) of the Labor Code, on the ground that he is a managerial employee
is unwarranted. He is definitely a rank and file employee hired to perform the work of the cutter
and not hired to perform supervisory or managerial functions. The fact that he is uniformly paid
by the month does not exclude him from the benefits of holiday pay as held in the case of
Insular Bank of America Employees Union v. Inciong.7 He should therefore be paid in addition
to the 13th month pay, his overtime pay, holiday pay, premium pay for holiday and rest day, and
service incentive leave pay.

As to the dismissal of the charge for unfair labor practices of private respondent consisting of
termination of employment of petitioners and acts of discrimination against members of the labor
union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta was
aware of petitioners' alleged union membership on February 22, 1978 as the notice of union
existence in the establishment with proposal for recognition and collective bargaining
negotiation was received by management only an March 3, 1978. Indeed, self-serving allegations
without concrete proof that the private respondent knew of their membership in the union and
accordingly reacted against their membership do not suffice.

Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified
refusal of the employee to resume his employment. Mere absence is not sufficient, it must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not
want to work anymore.8 At any rate, dismissal of an employee due to his prolonged absence
without leave by reason of illness duly established by the presentation of a medical certificate is
not justified.9 In the case at bar, however, considering that petitioner Villuga absented himself
for four (4) days without leave and without submitting a medical certificate to support his claim
of illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the
fact that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should be
paid separation pay where reinstatement can no longer be effected in view of the long passage of
time or because of the realities of the situation. 10 But petitioner should not be granted
backwages in addition to reinstatement as the same is not just and equitable under the
circumstances considering that he was not entirely free from blame. 11

For an employer-employee relationship to exist, the following elements are generally considered:
"(1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control the employee's
conduct.

Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis
is no argument that herein petitioners were not employees. The term "wage" has been broadly
defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed
in terms of money whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a method of
compensation and does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not likewise imply
absence of control and supervision. The control test calls merely for the existence of a right to
control the manner of doing the work, not the actual exercise of the right. 14

n determining whether the relationship is that of employer and employee or one of an

independent contractor, "each case must be determined on its own facts and all the features of the
relationship are to be considered." 15 Considering that petitioners who are either sewers,
repairmen or ironer, have been in the employ of private respondent as early as 1972 or at the
latest in 1976, faithfully rendering services which are desirable or necessary for the business of
private respondent, and observing management's approved standards set for their respective lines
of work as well as the customers' specifications, petitioners should be considered employees, not
independent contractors

ndependent contractors are those who exercise independent employment, contracting to do a

piece of work according to their own methods and without being subjected to control of their
employer except as to the result of their work. By the nature of the different phases of work in a
tailoring shop where the customers' specifications must be followed to the letter, it is
inconceivable that the workers therein would not be subjected to control.

WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National
Labor Relations Commission is hereby MODIFIED by awarding —

(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest
day, service incentive leave pay and separation pay, in addition to his 13th month pay; and

(b) in favor of the rest of the petitioners, their respective 13th month pay.

The case is hereby REMANDED to the National Labor Relations Commission for the
computation of the claims herein-above mentioned.