UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), vs. HON. BIENVENIDO E. LAGUESMA, PEPSI-COLA PRODUCTS, PHILS.

FACTS: Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification election on behalf of the route managers at PepsiCola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides: Ineligibility of managerial employees to join any labor organization; right of supervisory employees; Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Petitioner filed a motion for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. ISSUES: 1) Whether or not the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees 2) Whether or not Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, 8 of the Constitution RULING: 1) YES. The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them. They are not mere functionaries with simple oversight functions but business administrators in their own right. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions. The exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. Thus, their only power is to recommend. Certainly, the route managers in this case more than merely recommend effective management action. They perform operational, human resource, financial and marketing functions for the company, all of which involve the laying down of operating policies for themselves and their teams. The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." Managers constitute three levels of a pyramid: FIRST-LINE MANAGERS: The lowest level in an organization at

which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. MIDDLE MANAGERS: Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers' principal responsibilities are to direct the activities that implement their organizations' policies and to balance the demands of their superiors with the capacities of their subordinates. TOP MANAGERS: Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organization's interactions with its environment. In the Case, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found: we find that only those employees occupying the position of route manager and accounting manager are managerial employees, hence ineligible to join, form or assist a union. 2) NO. The real intent of Art. III, 8 is evident in Lerums proposal. The Commission intended the absolute right to organization of government workers, supervisory employees, and security guards to be constitutionally guaranteed. By implication, no similar absolute constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle managers. Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations. In Bulletin Publishing Co. Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus: The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership.

JOSE Y. SONZA V. ABS-CBN BROADCASTING CORPORATION Facts: In May 1994, respondent ABS-CBN signed an Agreement with the Mel and Jay Management and Development Corporation (MJMDC) represented by Jose Y. Sonza and Carmela Tiangco. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television. On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, saying that he irrevocably resigns in view of recent events concerning his programs and career. The acts of the station are violative of the Agreement and said letter will serve as notice of rescission of said contract. The letter also contained the waiver and renunciation for recovery of the remaining amount stipulated but reserves the right to seek

recovery of the other benefits under said Agreement. On 30 April 1996, SONZA filed a complaint against ABS-CBN before the DOLE-NCR Q.C.. SONZA complained for none payment of his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan )ESOP). ABS-CBN filed a Motion to Dismiss on the ground that no employee-employer relationship existed between the parties. The Labor Arbirter denied the motion to dismiss by respondents but later dismissed the complaint for lack of jurisdiction. SONZA appealed to the NLRC but it affirmed the Labor Arbiters decision. SONZA filed a motion for reconsideration, which the NLRC also denied. The Court of Appeals affirmed the Decision. Thus, this petition. Issue: Whether or not there exist an employer-employee relationship between Sonza and ABS-CBN. Held: There is no employer-employee relationship between Sonza and ABS-CBN. This court affirmed the decision of CA, NLRC and Labor Arbiter. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. In any event, the method of selecting and engaging SONZA does not conclusively determine his status. The Court must consider all the circumstances of the relationship, with the control test being the most important element. Case law has consistently held that the elements of an employer-employee relationship are:(a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important element. Applying the control test to the present case, SONZA is not an employee but an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent contractor. SONZAs contention that ABS-CBN exercised control over the means and methods of his work is misplaced. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. If radio and television program hosts can render their services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press.

SONZAs claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.

ASIATIC DEVELOPMENT CORPORATION Respondents Wellington and Flordeliza Brogada are the parents of Fermin B. Brogada who was allegedly employed by petitioner Asiatic Development Corporation from July 1994 up to his death in November 14, 1996. Respondents filed with the SSC a petition for social security coverage and payment of contributions in order to avail of the benefits accruing from the death of Fermin. They alleged that Fermin worked as survey aide under Engr. Bienvenido Orense, petitioners geodetic engineer. Fermin was working on a project with Engr. Orense for one of petitioners clients when he was shot and killed. Petitioner denied its liability on the ground that there was no employeremployee relationship between it and Fermin. It claimed that Fermin was the employee of Engr. Orense. SSS held that Fermin was an employee and was subject to the compulsory coverage. On appeal, the SSC resolution was affirmed by the CA. Issue: WON an employer-employee relationship exists Held: The question of WON an employer-employee relationship exists is a question of fact. In petitions for review on certiorari under Rule 45, only questions of law may be raised by the parties and passed upon by this Court. Factual findings of quasi-judicial bodies, when adopted and confirmed by the CA and if supported by substantial evidence, are accorded respect and even finality by this Court. While this Court has recognized several exceptions to this rule, none of these exceptions finds application here. Both the SSC and CA found that Fermin was petitioners employee. Thus, petitioner is liable for unpaid social security contributions. Petitioners claims are a mere reiteration of arguments unsuccessfully raised before the SSC and the CA. No compelling reason whatsoever is shown by petitioner for this Court to reverse the SSCs findings and conclusions, as affirmed by the CA. Petition is DENIED. VILLAVILLA V CA (SSS, MERCADO, COSUCO) 212 SCRA 488 Facts of the Case Arturo Villavilla, son of petitioners, was employed as "tripulante" (crew member) of the fishing boat "F/B Saint Theresa" from 1974 until September 11, 1977, when the boat sank off Isla Binatikan, Taytay, Palawan. Arturo was not among the known survivors of that sinking and had been missing since then. On November 20, 1979, petitioners Andres Villavilla and Ester Gadiente Villavilla, parents of Arturo, filed a petition with the Social Security Commission against Reynaldo Mercado and Marcelino Cosuco, owners of the ill-fated fishing boat, for death compensation benefits of Arturo whom respondents failed to register as their employee. On May 29, 1981, the Social Security System (SSS) filed a petition in intervention alleging that records from the SSS Production Department showed that "F/B Saint Theresa", owned by Marcelino Cosuco and operated by Reynaldo Mercado, was a registered member-employer, and that in the event petitioners succeeded in proving the employment of Arturo with private respondents, the latter should

be held liable in damages equivalent to the benefits due the petitioners for failure to report Arturo for coverage pursuant to Sec. 24 (a) of the Social Security Act, as amended. Respondent Cosuco filed his answer denying all allegations in the petition and claiming that he already sold the fishing boat to respondent Mercado on December 10, 1975, and from then on he did not participate anymore in the operation and management of the boat nor in the hiring of its crewmembers. Meanwhile respondent Mercado was declared in default for failure to file his answer. After petitioners had presented their evidence and rested their case, respondent Cosuco filed a motion to dismiss (demurrer to evidence) on the ground of res judicata and lack of cause of action. Respondent Social Security Commission issued an Order dismissing the petition for lack of cause of action. The Court of Appeals affirmed the questioned Order of respondent Commission there being no reversible error. Issue: WON there was an employer-employee relationship between petitioners' deceased son, Arturo Villavilla, and herein private respondents Held: NO The records disclose that the relationship between Mercado and the crew members of the ship headed by its skipper, Capt. Pedro Matibag, is one positively showing the existence of a joint venture. This is clearly revealed in the testimonies of Capt. Pedro Matibag and Gil Chua, a crew member, both witnesses for petitioners. 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. It is clear that there was no employer-employee relationship between petitioner'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, respondent 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 MIGUEL V. JCT GROUP G.R. No. 157752 March 16, 2005 PANGANIBAN, J: FACTS: "For several years, Glorious Sun Garment Manufacturing Company (Glorious Sun) was a garment exporter until it folded up in October 1994. Thereafter, De Soliel Apparel Manufacturing Corporation (De Soleil) and American Inter-Fashion Corporation (AIFC) took over Glorious Suns manufacturing plant, facilities and equipment and absorbed its employees, including the petitioners. After EDSA Revolution, PCGG sequestered De Soleil and AIFC and took over their assets and operations. JCT Group, Inc. (JCT) and De Soleil, executed a Management and Operating Agreement (MOA) for the purpose of servicing De Soleils export quota to ensure its rehabilitation and preserve its viability and profitability. The MOA was for a period of one year and renewable yearly at the option of JCT. When it expired, it was not renewed. De Soleil ceased business operations, effectively terminating petitioners employment. Petitioners filed complaints for illegal dismissal and payment of backwages and other monetary claims before the NLRC Arbitration Branch against De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Vicente Cuevas III. The cases were eventually consolidated. JCT and Cuevas filed a motion to dismiss founded on lack of jurisdiction over the subject matter of the action because of the absence of an employer-employee relationship between them and petitioners. Labor Arbiter Vladimir P.L. Sampang rendered a decision in favor of petitioners. NLRC modified the decision of labor arbiter by absolving Glorious Sun from liability and dismissed respondent's appeal. CA reversed the decision of NLRC and remanded the case to the labor arbiter for further proceedings. ISSUE: Whether or not CA committed grave abuse of discretion HELD: NO. The labor arbiter and the NLRC gravely abused their discretion when they ruled in favor of herein petitioners without determining the existence of an employer-employee relationship between them and respondents. Save for his conclusion that petitioners were regular employees, the labor arbiter made no determination whether there was employer-employee relationship between respondents and petitioners and, if so, whether respondents assumed the obligations of petitioners previous employers. It is necessary to remand the present case for further proceedings, because the labor arbiter and the NLRC failed to make the factual findings needed to resolve the controversy. To uphold the Decisions of the labor arbiter and the NLRC at this stage would amount to depriving respondents of property without due process. The test for determining an employer-employee relationship hinges on resolving who has the power to select employees, who pays for their wages, who has the power to dismiss them, and who exercises control in the methods and the results by which the work is accomplished. The last factor, the "control test," is the most important. In resolving the status of an MOA, the test for determining an employer-employee relationship has to be applied. WACK WACK GOLF & COUNTRY CLUB vs. NLRC

FACTS: On November 29, 1996, a fire destroyed a large portion of the main clubhouse of Wack Wack. In view of the reconstruction, it filed a notice with DOLE that it was going to suspend its operations of the Food and Beverage Department. Notices to 54 employees out of 85 were also sent informing them that they need not report for work anymore after April 14, 1997 but that they would still be paid their salaries up to May 14, 1997. They were further told that they would be informed once full operations in Wack Wack resume. Wack Wack Golf Employees Union branded the suspension of operations arbitrary, discriminatory and constitutive of unionbusting, so they filed a notice of strike. Several meetings between the officers of Wack Wack and the Union were held until the parties entered into an amicable settlement. Dominguez, who was then working in the Administrative Department of Wack Wack, was the first to avail of the special separation package then Cagasan and the last one to avail was Crisanto Baluyot, Sr. Wack Wack entered into a Management Contract with (BSMI), a corporation engaged in the business as Management Service Consultant. When Wack Wack engaged several contractors other than BSMI, the latter saw the positions of Cagasan and Dominguez as redundant. Thus, in separate Letters, the services of Dominguez and Cagasan were terminated. With respect to Baluyot, he applied for the position of Chief Porter which was among those recommended to be abolished by the BSMI, so he was offered the position of Caddie Master Aide which he declined, thus, BSMI continued with its plan to abolish the said position and he was dismissed from the service. The three (3) employees filed their respective complaints with NLRC for illegal dismissal and damages against Wack Wack and BSMI. Labor Arbiter decided against Cagasan and Dominguez but in favor of Baluyot. Appeal to NLRC were made which ordered Wack Wack to reinstate Dominguez and Cagasan with full backwages and other benefits. ISSUE/S: 1. WON the respondents were illegally dismissed and deserving of back wages and other benefits 2. WON BSMI is an independent contractor HELD: 1. NO. It must be recalled that said respondents availed of the special separation package offered by the petitioner voluntarily. This special separation package was thought of and agreed whereby the respondents signed their respective release and quitclaims after receiving their money benefits. It cannot be said that the respondents did not fully comprehend and realize the consequences of their acts. They are not unlettered persons who need special protection. They held responsible positions in the petitioneremployer, so they presumably understood the contents of the documents they signed. There is no showing that the execution thereof was tainted with deceit or coercion. Further, the respondents were paid hefty amounts of separation pay indicating that their separation from the company was for a valuable consideration. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking. As in contracts, these quitclaims amount to a valid and binding

compromise agreement between the parties which deserve to be respected. 2. YES. An independent contractor is one who undertakes job contracting. In determining the existence of an independent contractor relationship, several factors may 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 employers power with respect to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its sufficient capitalization. Thus, no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez exists, the latter have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be validly ordered to reinstate the respondents and pay them their claims for backwages. PHILIPPINE GLOBAL COMMUNICATIONS, INC. vs. RICARDO DE VERA FACTS Petitioner Philippine Global Communications, Inc. is engaged in the business of communication services and allied activities. Respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. On 5/15/1981 De Vera offered his services to the petitioner through a letter, he proposed his plan of works required of a practitioner in industrial medicine. The parties agreed and executed a RETAINERSHIP CONTRACT for a period of one year subject to renewal. The retainership arrangement went on from 1981 to 1994 with changes in the retainer's fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. In December 1996, through a letter Philcom informed De Vera that they decided to discontinue the 'retainer's contract effective at the close of business hours of 12/31/1996. They decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises. On 1/22/1997, De Vera filed a complaint for illegal dismissal, claiming that since 1981, he has been employed by Philcom as its company physician and was dismissed without due process. On 12/21/1998, Labor Arbiter Ramon Valentin C. Reyes dismissed De Vera's complaint for lack of merit. De Vera was an independent contractor and that he was not dismissed but rather his contract with ended when said contract was not renewed after 12/31/1996. Upon De Veras appeal to NLRC, the Labor Arbiters decision was reversed and declared De Vera a regular employee and accordingly directed the company to reinstate him to his former

position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. Philcom filed a motion for reconsideration but it was denied by the NLRC, prompting it file a petition to CA for certiorari imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC. Subsequently, CA modified NLRCs decision. CA deleted the award of traveling allowance and ordered payment of separation pay to De Vera in lieu of reinstatement. The companys latest motion for reconsideration was denied. Hence, this petition. ISSUE WON an employer-employee relationship exists between petitioner and respondent HELD NO. The Court held that in determining the existence of an employer-employee relationship, has invariably adhered to 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 power to control the employee's conduct, or the socalled 'control test', considered to be the most important element. Application of the four-fold test: Selection and engagement of the employee Proposal Letter (5/15/1981) It was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner. My plan of works and targets shall cover the duties and responsibilities required of a practitioner in industrial medicine which includes the following: 1. Application of preventive medicine including periodic checkup of employees; 2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to employees; 3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents; 4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee; 5. Conduct home visits whenever necessary; 6. Attend to certain medical administrative functions such as accomplishing medical forms, evaluating conditions of employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred which are medical in nature. Payment of wages and power of dismissal Letter dated 4/211982 De Veras proposal for the extension of his two-hour service indicated that PHILCOM did not control complainants schedule and as to how he is to be paid for his services. This serves as proof that the complainant understood his relationship with PHILCOM as a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work. Term of the Contract The contract (9/6/1982) signed by De Vera clearly states that is it a retainership contract. The retainer fee and duration of the contract for one year are clearly indicated in paragraph 5 of said Retainership Contract. The complainant cannot claim that he was unaware of the term, as he signed and accepted its renewal every year until 1994 without any objections. As a Doctor of Medicine, a literate and educated person, the

complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis. Tax and SSS Contribution The labor arbiter noted that from the time he started to work for Philcom, he never was included in its payroll; was never deducted any contribution for remittance to the SSS; and was in fact subjected by Philcom to the 10% withholding tax for his professional fee, matters which are simply inconsistent with an employer-employee relationship. Power to terminate The power to terminate the parties' relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause. Control Test Remarkably absent from the parties' arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. De Vera could even embark in the private practice of his profession, not to mention the fact that respondent's work hours and the additional compensation were negotiated upon by the parties. The parties themselves practically agreed on every terms and conditions of respondent's engagement, which thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work. JARDIN, ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.) G.R. No. 119268; February 23, 2000 Facts: Petitioners were drivers of Philjama International Inc., a domestic corporation engaged in the operation of Goodman Taxi. The usual work schedule of petitioners was to drive respondents taxicabs every other day for 24-hours under a boundary system. Petitioners earned an average of P400.00 daily. Private respondent admitted that it regularly deducted P30.00 from private respondents earnings for the washing of the taxi units. Petitioners decided to form a labor union thinking that such practice was unjust. Private respondent came to know petitioners plan, and consequently, refused to let petitioners drive their taxicabs. Petitioners became aggrieved and thus filed with the labor arbiter a complaint against private labor practice, illegal dismissal and illegal deduction of fees. The labor arbiter dismissed the complaint for lack of merit. On appeal, the NLRC reversed and set aside the judgment of the labor arbiter. Private respondent filed a motion for reconsideration, the first was denied but it was granted in the second. The NLRC granted the second motion for reconsideration on the ground that it has no jurisdiction over the case, there being no employer-employee relationship between Philjama International and petitioners, rather what existed between them was leasehold. Hence, this petition. Issues: 1. Whether or not employer-employee relationship existed

2. 3.

between Philjama International and petitioners. Whether or not petitioners were unjustly dismissed from work. Whether or not the deduction of P30 from the petitioners earnings for the purpose of car washing illegal.

Held: 1. Yes. The Supreme Court ruled that the NLRC decision run against prevailing jurisprudence. The Court cited that in a number of cases it has decided, they ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lesssor-lessee. The Court explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be liable for damages. In application to the case at bar, the respondentowner/operator exercises supervision and control over the petitioner-drivers. As the holder of the certificate of public convenience, the owner must see to it that the driver follows the route prescribed by the franchising authority and rules promulgated as regards its operation. The fact that the drivers do not receive fixed wages but get only that in excess of the boundary they pay to the owner/operator is not sufficient to withdraw the relationship between them from the employer and employee. Petitioners are employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer. 2. Yes. The Court held that the termination of employment must be effected in accordance with law. Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the case at bar, there was no valid cause to terminate the employment nor were there written notices sent, thus the petitioners were illegally dismissed. Under RA 6715, the Court held that petitioners as they were illegally dismissed are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time of their actual compensation was withheld from them up to the time of their actual reinstatement. Considering that petititoners were terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily earnings. No. The Court held that the P30.00 deducted from the daily earnings of petitioners for the washing of the taxi units was not illegal in the context of law. It is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Moreover, car washing after a tour of duty is a practice in the taxi industry and is dictated by fair play. The Court ruled that the petitioners are not entitled to reimbursement for the washing charges.

In the case before the SSC, petitioner club alleged that Llamar and the others, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, they were not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees. ISSUE - Whether or not persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS) HELD - No. They are not employees. There is no employeremployee relationship between the caddies and the golf club. Thus, petitioner club is under no obligation to report Llamar and his fellow caddies for compulsory coverage to the Social Security System. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment. The respondent IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess. Court agree that the group rotation system so-called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last number for the day. Moreover, petitioner has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or otherwise with any entity or individual without restriction by petitioner It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work elsewhere. Under such circumstances, he may then leave the premises of petitioner and go to such other place of work that he wishes. Or a caddy who is on call for a particular day may deliberately absent himself if he has more profitable caddying, or another, engagement in some other place. These are things beyond petitioner's control and for which it imposes no direct sanctions on the caddies Note: Control Test - whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished

3.

MANILA GOLF & COUNTRY CLUB, INC. vs. INTERMEDIATE APPELLATE COURT G.R. No. 64948 September 27, 1994 FACTS - Respondent Fermin Llamar and several others who were caddies and employees of petitioner Manila Golf & Country Club originally filed a petition with the Social Security Commission (SSC) for coverage and availment of benefits under the Social Security Act. They alleged that although they were employees of the said club, a domestic corporation, the latter had not registered them as such with the SSS.

ALFREDO B. FELIX vs. DR. BRIGIDA BUENASEDA, G.R. No. 109704 January 17, 1995 FACTS: Dr. Alfredo B. Felix joined the National Center for Mental Health (then the National Mental Hospital) on May 26, 1980 as a Resident Physician. In August of 1983, he was promoted to the position of Senior Resident Physician 6 a position he held until the Ministry of Health reorganized the National Center for Mental Health (NCMH) in January of 1988, pursuant to Executive Order No. 119. Under the reorganization, petitioner was appointed to the position of Senior Resident Physician in a temporary capacity immediately after he and other employees of the NCMH allegedly tendered their courtesy resignations to the Secretary of Health. 7 In August of 1988, petitioner was promoted to the position of Medical Specialist I (Temporary Status), which position was renewed the following year. In 1988, the Department of Health issued Department Order No. 347 which required board certification as a prerequisite for renewal of specialist positions in various medical centers, hospitals and agencies of the said department. Secretary of Health Alfredo Bengzon issued Department Order No. 347 providing for an extension of appointments of Medical Specialist positions in cases where the termination of medical specialist who failed to meet the requirement for board certification might result in the disruption of hospital services. Petitioner was one of the hundreds of government medical specialist who would have been adversely affected by Department Order No. 347 since he was no yet accredited by the Psychiatry Specialty Board. On August 20, 1991, after reviewing petitioner's service record and performance, the Medical Credentials Committee of the National Center for Mental Health recommended non-renewal of his appointment as Medical Specialist I, informing him of its decision on August 22, 1991. He was, however, allowed to continue in the service, and receive his salary, allowances and other benefits even after being informed of the termination of his appointment. On November 25, 1991, a meeting was held wherein Dr. Vismindo de Grecia, petitioner's immediate supervisor, pointed out petitioner's poor performance, frequent tardiness and inflexibility as among the factors responsible for the recommendation not to renew his appointment. The other department heads concurred to the said non-renewal. The matter was thereafter referred to the Civil Service Commission, which ruled that "the temporary appointment (of petitioner) as Medical Specialist I can be terminated at any time . . ." and that "[a]ny renewal of such appointment is within the discretion of the appointing authority." Consequently, in a memorandum dated March 25, 1992 petitioner was advised by hospital authorities to vacate his cottage since he was no longer with said memorandum. ISSUE: Whether or not petitioner's removal from a permanent position in the National Center for Mental Health as a result of the reorganization of the Department of Health is illegal and violative of the constitutional provision on security of tenure. HELD: We rule in the negative. Petitioner's insistence on being reverted back to the status quo prior to the reorganizations made pursuant to Executive Order No. 119 would therefore be akin to a college student asking to be sent back to high school and staying there. From the position of senior resident physician, which he held at the time of the government reorganization, the next logical step in the stepladder process was obviously his promotion to the rank of Medical Specialist I, a position which he apparently accepted not only because of the increase in salary and rank but because of the prestige and status which the promotion conferred upon him in the medical community. Such status, however, clearly carried with it certain professional responsibilities including the responsibility of keeping up with the minimum requirements of specialty rank, the responsibility of keeping abreast with current knowledge in his

specialty rank, the responsibility of completing board certification requirements within a reasonable period of time. The evaluation made by the petitioner's peers and superiors clearly showed that he was deficient in a lot of areas, in addition to the fact that at the time of his non-renewal, he was not even board-certified. The validity of the government reorganization of the Ministry of Health pursuant to E.O. 119 not being the real issue in the case at bench, we decline to make any further pronouncements relating to petitioner's contentions relating to the effect on him of the reorganization except to say that in the specific case of the change in designation from permanent resident physician to temporary resident physician, a change was necessary, overall, to rectify a ludicrous situation whereby some government resident physicians were erroneously being classified as permanent resident physicians in spite of the inherently temporary nature of the designation. The attempts by the Department of Health not only to streamline these positions but to make them conform to current standards of specialty practice is a step in a positive direction. Finally, it is crystal clear, from the facts of the case at bench, that the petitioner accepted a temporary appointment (Medical Specialist I). As respondent Civil Service Commission has correctly pointed out, the appointment was for a definite and renewable period which, when it was not renewed, did not involve a dismissal but an expiration of the petitioner's term R TRANSPORT CORP V EJANDRA FACTS Private Respondent Rogelio Ejandra worked for petitioner, bus company, as a driver for almost 6 years and was paid 10% of his daily earnings. On Jan. 31, 1996, an officer of LTO, Guadalupe Branch, apprehended respondent for obstruction of traffic. His license was confiscated. He immediately reported the incident to his manager, Mr. Oscar Pasquin, who gave him P500 to redeem his license. The following day, he went to LTO, Guadalupe Branch, to claim it but he was told that it had not yet been turned over by the officer who apprehended him. He was able to retrieve his license only after a week. On feb 8, 1996, he reported for work, however, company said they were reviewing if they were going to allow him drive again. Also, he was being blamed for damage to the bus. Ejandra said the bus was damaged during the week he wasnt able to drive. Petitioner, on the other hand, claims that Ejandra is a habitual absentee and has abandoned his job. To belie private respondents allegation that his license had been confiscated, petitioner asserted that, had it been true, he should have presented an apprehension report and informed petitioner of his problems with the LTO. But he did not. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis The labor arbiter ruled in favor of Ejandra. It was held that he didnt abandon his work, since there was valid reason for his 1 week absence. He also was not afforded due process. NLRC and CA affirmed. ISSUES 1. WON there was an employee employer relationship 2. WON Ejandra was dismissed for a just cause HELD 1. YES - Petitioner is barred to negate the existence of an employeremployee relationship. He has invoked rulings on the right of an employer to dismiss an employee for just cause. The power to dismiss an employee is one of the indications that there was

such relationship. Also, A97 of the Labor Code says that employees can be paid in form of commissions. The fact that the transportation company paid a driver on a commission basis does not rule out the presence of an EER. 2. NO - To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Petitioner did not fulfill the requisites. First, Ejandras absence was justified since his license wasnt release until after a week. Second, Ejandra did not want to sever their relationship when he got his license back. Third, labor arbiter Yulo correctly observed that, if private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997(Rules Implementing Book V of the Labor Code). Petitioner made no such report. - In addition, he wasnt also given due process by not giving him notice and hearing.

NO. The Court ruled in the negative. It was decided that for an employer-employee relationship to exist, there is a four-fold test: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. The last one, the control test, was given emphasis by the Court, averring that 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 achieved, but also the manner and means to be used in reaching that end. Reading into the scope of services the petitioner was to perform, there was an absence of any prescription by Infinite Loop on how petitioner was to perform her work, but there was merely an enumeration of the expected tasks she was to complete. Hence, there was no established employer-employee relationship between Almirez and Infinite Loop. SEVILLA v. CA FACTS On the strength of a contract, Tourist World Service Inc. (TWS) leased the premises belonging to Mrs. Segundina Noguera for the formers use as a branch office. Lina Sevilla bound herself solidarily liable with TWS for the prompt payment of the monthly rentals thereon. When the branch office was opened, it was run by appellant Sevilla payable to TWS by any airline for any fare brought in on the efforts of Sevilla, 4% was to go to Sevilla and 3% was to be withheld by TWS. TWS appears to have been informed that Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the TWS considered closing down its office. Two resolutions of the TWS board of directors were passed to abolish the office of the manager and vice president of the branch office and authorizing the corporate secretary to receive the properties in the said branch office. Subsequently, the corporate secretary went to the branch office, and finding the premises locked and being unable to contact Sevilla, padlocked the premises to protect the interests of TWS. When neither Sevilla nor her employees could enter the locked premises, she filed a complaint against TWS with a prayer for the issuance of a mandatory preliminary injunction. The trial court dismissed the case holding that TWS, being the true lessee, was within its prerogative to terminate the lease and padlock the premises. It likewise found that Sevilla was a mere employee of TWS and as such, was bound by the acts of her employer. The CA affirmed. Hence this petition. ISSUES 1. Whether or not there was an employer-employee relationship between TWS and Sevilla? 2. Whether or not the padlocking of the premises by TWS without the knowledge and consent of Sevilla entitled the latter to the relief of damages prayed for? HELD 1. NO. It was a principal-agent relationship. In this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. In general, We have 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. In addition, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, are also considered in determining the existence of an employer-

Insular Life

ALMIREZ V INFINITE LOOP (G.R. NO. 162401, JANUARY 31, 2006) Doctrine 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 achieved, but also the manner and means to be used in reaching that end. Facts of the Case

In September 1999, respondent Infinite Loop hired petitioner Almirez as a Refinery Senior Process Design Engineer for a specific project through its General Manager, herein respondent, Rabino. Her acceptance was embodied in a letter sent and signed by Rabino, and also contained the stipulations regarding her salary (with no mention of deductions for taxes) and a guarantee of work for 12 continuous months up to the completion of the project. Such letter also contained the scope of the professional services she was expected to perform as part of the job given to her. However, she found that she could not receive the full amount of the salary agreed upon in the letter as taxes were deducted from it, apart from the taxes she had been paying voluntarily. Her work was also terminated barely after more than four months due to the unavailability of the financial side of the project, contrary to the work guaranteed to her by respondent for 12 months. Petitioner then sent a demand letter to respondent for the compensation she was entitled to, but the same was not granted by the latter. Petitioner then filed a complaint against Infinite Loop for breach of contract of employment, to which the Labor Arbiter ruled in her favor and ordered respondent to pay her. But the CA reversed the ruling, averring that there was no employer-employee relationship between the petitioner and the respondent hence the Labor Arbiter and the NLRC had no jurisdiction over the case Issuee Whether or not there is an employer-employee relationship between petitioner Almirez and respondent Infinite Loop Ruling

employee relationship. Sevilla was not subject to control by TWS either as to the result of the enterprise or as to the means used in connection therewith.

the respondent for illegal dismissal, unfair labor practice, nonpayment of overtime pay, among others. The respondents denied these allegations by denying the existence of employer-employee relationship. According to the respondent, the petitioner was an independent contractor since the petitioner had the sole control over the means and methods by which his work was accomplished. Thus Chavez, was not entitled to any of the benefits he was praying for. Issue: Whether there was employer-employee relationship that existed between the parties? Ruling: Yes, there was employer-employee relationship that existed between the parties. As employer, the respondent had the power to control the means and methods by which the employee's work is to be performed. Chavez was a considered as a regular employee of the respondent for he performed a service that was indispensable to the company's business. Petitioner could not be considered an independent contractor since he had no substantial capital in the form of tools and machinery. In fact, the truck that he drove belong to the respondent company. The fact that petitioner was with respondent for more than 10 years is a fact that his status was determined not by the length of service but by the contract of service. Clearly, the Court found that petitioner's right to due process was violated, for he was not afforded the opportunity to be heard prior to his dismissal. SAN MIGUEL CORPORATION V. ABALLA G.R. NO. 149011 FACTS: Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative (Sunflower) entered into a one-year Contract of Services. Some of the pertinent provisions of the Contracts is as follows: cooperative agrees and undertakes to perform and/or provide for the company, on a non-exclusive basis for a period of one year; cooperative shall employ the necessary personnel and provide adequate equipment, materials, tools and apparatus; cooperative shall have the entire charge, control and supervision of the work and services; no employer-employee relationship; cooperative undertakes to pay the wages or salaries of its member-workers. Pursuant to the contract, Sunflower engaged private respondents to render services at SMCs Bacolod Shrimp Processing Plant. Private respondents filed a complaint before the NLRC praying to be declared as regular employees of SMC with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees and added illegal dismissal as additional cause of action. Meanwhile, SMC filed before the RTC a Notice of Closure of its aquaculture operations. ISSUE: Whether or not private respondents may be regarded as a regular employee despite the express prohibition in the Contract of employer-employee relationship. HELD: Affirmative; private respondents are held to be regular employees despite express prohibition in the Contract. We must differentiate LEGITIMATE LABOR CONTRACTING from LABOR ONLY CONTRACTING, which the Omnibus Rules Implementing the Labor Code, as amended prohibits. The Contract between SMC and Sunflower shows that the parties clearly disavowed the existence of an employeremployee relationship between SMC and private respondents. The language of a contract is not, however, determinative of the parties relationship; rather, it is the totality of the facts and

Under the contract of lease, Sevilla bound herself in solidum for the rental payments; an arrangement that would belie the claims of a master-servant relationship for a true employee cannot be made to part with his own money in pursuance of his employers business, or otherwise assume liability thereof. Sevilla was not in the companys payroll. She retained 4% in commissions from airline bookings, the remaining 3% going to TWS. Unlike an employee who usually earns a fixed salary, she earned compensation in fluctuating amounts depending on her booking successes. The fact that Sevilla has been designated branch manager does not make her, ergo, TWS employee. Employment is determined by the right of control test and certain economic parameters. Titles are weak indicators. When Sevilla agreed to man TWS Ermita branch office, she did so pursuant to a contract of agency. It is the essence of this contract that the agent renders services in representation or on behalf of another. In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, TWS. 2. YES. For its unwarranted revocation of the contact of agency, TWS should be sentenced to pay damages. Sevilla had acquired a personal stake in the business itself, and necessarily, in the equipment pertaining thereto. Sevilla was not a stranger to that contract of lease having been explicitly named therein as third party in charge of rental payments. She could not be ousted from possession summarily as one would eject an interloper. The Court is satisfied with the chronicle of events, there was indeed some malevolent design to put the petitioner Sevilla in a bad light following the disclosures that she had worked for a rival firm. ___________________________________________________ Insular life assurance

PEDRO CHAVEZ VS NLRC AND SUPREME PACKING, INC. Facts: Pedro Chavez is a truck driver of respondent Supreme Packing Inc. Respondent is in the business packaging of manufacturing cartons and other packaging materials. The petitioner was tasked to deliver the respondent's products to Bataan to its various customers. Most of his trips were at night. He would return to Manila two to three days after the delivery. Sometime in 1992, the petitioner expressed to respondent the respondent company his desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, night shift differential pay, 13th Month pay, among others. Respondent company promised to give petitioner his request but actually failed to do so. Thus, on February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration of the NLRC in San Fernando, Pampanga. But before the case could be heard, respondent company terminated the services of the petitioner. Consequently, the petitioner filed an amended complaint against

surrounding circumstances of the case. What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. On the other hand, it is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC. Sunflower did not cater to clients other than the SMC, and with the closure of SMCs Bacolod Shrimp Processing Plant, Sunflower likewise ceased to exist. All the foregoing considerations affirm by more that substantial evidence the existence of an employeremployee relationship between SMC and private respondents. As regards the issue of retrenchment or the closure of business due to serious business reverses, SMC has proven substantial business reverse justifying retrenchment of its employees. However, for it to be valid, the law requires written notice of the intended retrenchment be served by employer on the worker and DOLE 1 month before actual date for retrenchment. Failing such notice- since private respondents were only verbally informed a day before its effectivity- such retrenchment is invalid.

ALEXANDER R. LOPEZ, ET AL. VS. MWSS FACTS: By virtue of an Agreement, petitioners were engaged by the Metropolitan Waterworks and Sewerage System (MWSS) as collectors-contractors, wherein the former agreed to collect from the concessionaires of MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services which the MWSS bills from time to time. In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS. Regular employees of the MWSS, except those who had retired or opted to remain with the latter, were absorbed by the concessionaires. Regular employees of the MWSS were paid their retirement benefits, but not petitioners, relying on a resolution of the Civil Service Commission (CSC) that contract-collectors of the MWSS are not its employees and therefore not entitled to the benefits due regular government employees. ISSUE: Whether or not petitioners were employees of the MWSS and, consequently, entitled to the benefits they claim. HELD: The Supreme Court ruled on the affirmative. The four-fold test used by the Court for purposes of determining whether an employer-employee relationship exists is as follows: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. Despite the obvious attempt of MWSS to categorize petitioners as mere service providers, not employees, by entering into contracts for services, its actuations show that they are its employees, pure and simple. MWSS wielded its power of selection when it contracted with the individual petitioners, undertaking separate contracts or agreements. The same goes true for the power to dismiss. Although termed as causes for termination of the Agreement, a review of the same shows that the grounds indicated therein can similarly be grounds for termination of employment under the Labor Code. As to the compensation received by herein petitioners

the court ruled that the petitioners rendered services to MWSS for which they were paid and given similar benefits due the other employees of MWSS. It is hard to imagine that MWSS was simply moved by the spirit of benevolence and generosity when it granted liberal benefits to petitioners. Obviously, the additional benefits were granted with the same motivation as good managers anywhere else haveto foster a good working relationship with the bill-collectors and incentivize them to raise the high level of their performance even higher. It is axiomatic that the existence of an employeremployee relationship cannot be negated by expressly repudiating it in an agreement when the terms of the agreement and the surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be. In addition, the control test merely calls for the existence of the right to control, and not the exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the former has a right to wield the power. While petitioners were contract-collectors of MWSS, they were under the latters direction as to where and how to perform their collection and were even subject to disciplinary measures. Trainings were in fact conducted to ensure that petitioners are conversant of the procedures of the MWSS. MWSS contends that petitioners were free to engage in other occupations and were not limited by the Agreement. Suffice it to say, however, that the control measures installed by MWSS were restrictive enough to limit or even render illusory the other employment options of petitioners as their tasks took up most of their time, they being required to report and remit to MWSS almost twice daily. Under the Agreement petitioners were allowed to render overtime work, and were given additional incentive commission for work so rendered as long as the same was authorized. Verily, the need to secure MWSS authorization before petitioners can render overtime work debunks its claim that they were allowed to work as and when they please. All these indicate that MWSS controlled the working hours of petitioners. Furthermore, petitioners did not have their own offices nor their own supplies and equipment. MWSS provides them with company stationeries, office space and equipment. Likewise, MWSS comported itself as the employer of petitioners, providing them with I.D.s. and certifications which declared them as employees of MWSS. It also deducted and remitted petitioners withholding taxes and Medicare contributions. Petitioners are indeed regular employees of the MWSS. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Likewise, the repeated and continuing need for the performance of the job has been deemed sufficient evidence of the necessity, if not indispensability of the activity to the business. Some of the petitioners had rendered more than two decades of service to the MWSS. The continuous and repeated rehiring of these bill collectors indicate the necessity and desirability of their services, as well as the importance of the role of bill collectors in the MWSS.

LAZARO vs. SOCIAL SECURITY COMMISSION July 30, 2004 G.R. No. 138254 Facts: Private respondent Rosalina M. Laudato (Laudato) filed a petition before the SSC for social security coverage and

remittance of unpaid monthly social security contributions against her three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star Marketing (Royal Star), which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star, Lazaro had failed to report her to the SSC for compulsory coverage or remit Laudatos social security contributions. Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work & argued that Royal Star had no control over Laudatos activities. As such, Laudato could not be deemed an employee of Royal Star. After the parties submitted their respective position papers, the SSC promulgated a Resolution ruling in favor of Laudato. Applying the control test, it held that Laudato was an employee of Royal Star, and ordered Royal Star to pay the unremitted social security contributions of Laudato together with the penalties and damages. Lazaros motion and petition was denied by the SCC and Court of Appeals. Hence, this petition. Issue: Whether or not Laudato is an employee of Royal Star Marketing in accordance with the control test. Held: SC affirmed SSC and CAs decision. It is an accepted doctrine that the determination of employer-employee relationship warrants the application of 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 done, but also as to the means and methods by which the same is accomplished. Lazaros arguments are nothing more but a mere reiteration of arguments unsuccessfully posed before two bodies: the SSC and the Court of Appeals. In Grepalife v. Judico, the fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee as stated in Cosmopolitan Funeral Homes, Inc. v. Maalat. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. SSC & CA found that Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. SC examined the cash vouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a Sales Supervisor of the company, and Certificates of Appreciation issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts in promoting the company. On the other hand, Lazaro has failed to present any convincing contrary evidence, relying instead on his bare assertions. The petitioner has not sufficiently shown that the SSCs ruling was not supported by substantial evidence. WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals dated 20 November 1998 is AFFIRMED. Costs against petitioner.

Eddie Domasig filed a complaint for illegal dismissal, unpaid commission and other monetary claims against respondent Corporation and spouses Ong. Domasig contend that he was a salesman of Cata Garment Corporation (formely named Cato Garment Corporation) since June 6, 1986 but was dismissed on August 29, 1992 for being pirated by a rival corporation, which offer he refused. To support his claim, Domasig showed as evidence his identification card in the company and cash vouchers reflecting his monthly salaries amounting to P1,500.00 a month. Spouses Ong denied that Domasig was a regular employee of the company but contends that he was a mere sales agent who receives commissions and fixed allowance of P1,500.00 every month with no regular time schedule. The Labor Arbiter held in favor of petitioner and ordered the reinstatement and payment of backwages of Domasig. On appeal, NLRC was not convinced that the evidence procured by Domasig constituted an employeremployee relationship and remanded the case for further proceeding. Hence, this appeal. ISSUE: Whether or not there was an employer-employee relationship between the parties. HELD: Yes. Having been employed for more than one year, petitioner is considered as a regular employee, under the law. Substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion is sufficient as a basis for judgment on the existence of an employer-employee relationship. An ID card together with cash vouchers of salaries constitutes substantial evidence to support a conclusion that there exist an employer-employee relationship between Cata Garment Corp. and Domasig. An ID card is mainly used to identify the holder thereof as a bona fide employee of the firm that issues it. Moreover, the act of dismissing an employee on mere suspicion that he was being enticed by another firm to work constitutes illegal dismissal that would entitle the petitioner to the monetary claims. Thus, the Labor Arbiters decision is reinstated.

ABANTE V. LA MADRID Doctrine: the existence of an ER-EE relationship is ultimately a question of fact and that the findings thereon by the labor Arbiter and the NLRC shall be accorded not only respect but even finality when supported by substantial evidence. An ER-EE relationship is notably absent in the case of a commission salesman who received 3% commission of his gross sales, where no quota was imposed on him by the alleged employer, he was not required to report to the office at any time or submit any periodic written report on his sales performance and activities, and he was not designated by respondent to conduct his sales activities at any particular or specific place. Facts: Abante was employed by the Lamadrid company in 1985 as a salesman for Mindanao w/ a commission of 3% of the total paidup sales. Petitioner had 5 bad accounts worth P687K in 1998 & Jose warned him that if he doesnt issue his own checks to cover the bad accounts, his commissions wont be released & he will lose his job. He issued checks on condition that these will not be deposited for clearing & that the deficiencies shall be charged against his commissions. The company tricked him into signing a Promissory Note and a Deed of Real Estate Mortgage. Some checks were returned to Abante. Abante was to apply for a salary loan w/ SSS but learned that he wasnt covered. When he inquired w/ Jose, the latter berated & hurled invectives at him. Jose deposited the remaining checks,

EDDIE DOMASIG VS. NLRC, CATA GARMENTS CORP. AND/OR OTTO ONG AND CATALINA ONG FACTS:

contrary to their agreement. These were dishonored due to Account Closed. Company demanded that he make good his checks. Abante replied committing his commissions as payment for the balance of the sales. Abantes customer handed to him a letter from the company informing clients that Abante is no longer recognized as a salesman. Abante received a subpoena for violation of BP 22. ABante filed a complaint for illegal dismissal w/ money claims before the NLRC. The respondents aver that Abante is a freelance salesman, not an employee because he was on commission basis, he doesnt have a monthly salary, he doesnt report to work daily, he didnt have a pay-slip, he is not enrolled w/ the SSS, he is also a salesman for 5 other companies, and he shouldnt have executed a Promissory Note & Deed of Real Estate Mortgage.. The Labor Arbiter ruled in favor of Abante. The NLRC reversed the NLRCs decision for lack of cause of action. The CA denied Abantes petition for review. Issue/Held: WON Abante is an employee of Lamadrid. NO Ratio: Abante allege that he was doing work that is necessary or desirable in Lamadrids usual business or trade (pursuant to Art 280, Labor Code). He also said that the company had the power of control over him. He collected payments from sales. The company directs him to report in Mindanao for sales & collection activities and sends him to conferences. He says that even though he doesnt report daily to work, it doesnt mean that hes not an employee. The court applied the four-fold test and found out that there was no ER-EE relationship between Lamadrid & Abante. 1. Selection & engagement he was free to offer his services to other companies 2. Payment of wages he was paid on commission 3. Power of dismissal he had no sales quote w/c, if not reached, would be a ground for his dismissal 4. Power of control he was not required to submit a period report on his sales & activities he was not assigned to particular areas only, he was assigned to the whole of Mindanao he was left alone to adopt any style/strategy to sell his products the things he learned from the marketing conferences in Manila served only as guidelines Art 280 is not a crucial factor in determining the existence of an ER-EE relationship. It merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining their rights to certain benefits, such as 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.

individual notices of termination. They were paid the equivalent of one month salary for every year of service as separation pay, the money value of their unused sick, vacation, emergency and seniority leave credits, thirteenth (13th) month pay for the year 1992, medicine allowance, tax refunds, and goodwill cash bonuses for those with at least ten (10) years of service. All of them executed sworn releases, waivers and quitclaims. And some signed sworn statements of conformity to the company retrenchment program. And except for Martinez, they all tendered letters of resignation. Subsequently, the private respondents filed with the NLRC complaints for illegal dismissal with a prayer for reinstatement with backwages, moral damages and attorneys fees alleging that the company used the retrenchment program as a subterfuge for the union busting. ISSUES and HELD: (1) WON the termination of private respondents were illegally dismissed. NO. Out of its concern for those with less privilege in life, this Court has inclined towards the worker and upheld his cause in his conflicts with the employer. This favored treatment is directed by the social justice policy of the Constitution. But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the employer to reasonable returns from his investments. Corollarily, the law allows an employer to downsize his business to meet clear and continuing economic threats. Thus, this Court has upheld reductions in the work force to forestall business losses or stop the hemorrhaging of capital. The right of management to dismiss workers during periods of business recession and to install labor saving devices to prevent losses is governed by Art. 283 of the Labor Code The requirements for valid retrenchment which must be proved by clear and convincing evidence are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer (2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher; (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees right to security of tenure; and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status (i.e., whether they are temporary, casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for certain workers. Redundancy exist when the service capability of the work is in excess of what is reasonably needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of a service activity priorly undertaken by the business. Under these conditions, the employer has no legal obligation to keep in its payroll more employees than are

ASIAN ALCOHOL CORP VS. NLRC (GR 1311108. March 25 1999) FACTS: The Parons family, who originally owned the controlling stock in Asian Alcohol sold their majority rights to Holdings Inc. To prevent losses, Prior Holdings implemented a reorganizational plan and other cost-saving measures. Some one hundred seventeen (117) employees out of a total workforce of three hundred sixty (360) were separated. They received

necessary for the operation of its business. For the implementation of a redundancy program to be valid, the employer must comply with the following requisites: (1) written notice served on both the employees and the Department of Labor and Employment at least one moth prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

months or more. The petitioner then contends that the increase in wages to P2000 is too hight that the burden to cover such increase would shift to the consumers throughtnan increase in the rate of electricity. Issue: Was the modification by the Court contained in the CBA of no longer requiring the consent of the union for contracting out for six months or more correct? Held: Yes.The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or more has been rejected by the Court. Suffice it to say that the employer is allowed to contract out services for six months or more. However, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of employees, and in treating the latter, the employer should see to it that its employees are at least properly informed of its decision or modes of action in order to attain a harmonious labor-management relationship and enlighten the workers concerning their rights. Hiring of workers is within the employer's inherent freedom to regulate and is a valid exercise of its management prerogative subject only to special laws and agreements on the matter and the fair standards of justice.The management cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. It has the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what management decides. Contracting out of services is an exercise of business judgment or management prerogative. Absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. As mentioned in the January 27, 1999 Decision, the law already sufficiently regulates this matter. Jurisprudence also provides adequate limitations, such that the employer must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious or arbitrary actions. These are matters that may be categorically determined only when an actual suit on the matter arises.

(2) WON the private respondents only signed their quitclaims,

waivers and voluntary resignations only to get their separation packages, thus were forced to do so. NO It is true that this court has generally held that quitclaims and releases are contrary to public policy and therefore, void. Nonetheless, voluntary agreements that represents a reasonable settlement are binding on the parties and should not later be disowned. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable, that the law will step in to bail out the employees. While it is our duty to prevent the exploitation of employees, it is also behooves us to protect the sanctity of contracts that do not contravene our laws. In the case at bar, there is no showing that the quitclaims, waivers and voluntary resignation letters were executed by the private respondents under force or duress. MERALCO VS QUISIMBING Gr. 127598, feb 22, 2000 Facts: A decision by the Secretary of labor was reversed by the this Court in january 27, 1999 containing modified terms and conditions of their collective bargaining agreement. The changes are as follows: January 27, 1999 decision Secretary's resolution Wages P1,900.00 for 1995-96. P2,200.00 X'mas bonus modified to one month 2 months Retirees remanded to the Secretary granted Loan to coops - denied granted GHSIP, HMP and Housing loans - granted up to P60,000.00 granted Signing bonus - denied granted Union leave - 40 days (typo error) 30 days High voltage/polnot apply to those who are not exposed to the risk. members of a team Collectors no need for cash bond, no need to reduce quota and MAPL CBU exclude confidential employees. include Union security maintenance of membership closed shop Contracting out - no need to consult union consult first All benefits - existing terms and conditions all terms Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995 One of the modifications of the cba which was contested by some members of the union was the rectroactivity of the arbitral awards and that in the decision there is no longer a need to consult the union when meralco decides to contract out for six

PHILIPPINE AIRLINES VS. LIGAN FACTS Synergy Services Corporation (Synergy) having been found to be a labor-only contractor, respondents were consequently declared as petitioners regular employees who are entitled to the salaries, allowances, and other employment benefits under the pertinent Collective Bargaining Agreement. Petitioner prays for a reconsideration of the Decision, maintaining its position that respondents were employed by Synergy, and to "reinstate" respondents as regular employees is iniquitous since it would be compelled to employ personnel more than what its operations require. For their part, respondents, deducing from the Decision that their termination was found to be illegal, posit that the portion of the Decision ordering petitioner to "accept" them should also mean to "reinstate" them with backwages. Respondents disclose that except for those who have either died, accepted settlement earlier, or declared as employee of Synergy, the remaining respondents have all been terminated in the guise of retrenchment. Finally, it must be stressed that respondents, having been declared to be regular employees of petitioner, Synergy being a mere agent of the latter, had acquired security of tenure. As

such, they could only be dismissed by petitioner, the real employer, on the basis of just or authorized cause, and with observance of procedural due process. ISSUE: Is retrenchment a just or authorized cause for termination of employees? If so, was Philippine Airlines able to establish sufficient evidence of their financial woes that led to the laying off of employees? RULING: Notably, subject of the Decision was respondents complaints for REGULARIZATION AND UNDER-/NONPAYMENT OF BENEFITS. The Court did not and could not take cognizance of the validity of the eventual dismissal of respondents because the matter of just or authorized cause is beyond the issues of the case. That is why the Court did not order reinstatement for such relief presupposes a finding of illegal dismissal in the proper case. Respecting petitioners allegation of financial woes that led to the June 30, 1998 lay-off of respondents, as the Court held in its Decision, petitioner failed to establish such economic losses which rendered impossible the compliance with the order to accept respondent as regular employees. Thus the Decision reads: Other than its bare allegations, petitioner presented nothing to substantiate its impossibility of compliance. In fact, petitioner waived this defense by failing to raise it in its Memorandum filed on June 14, 1999 before the Court of Appeals. x x x Petitioner, for the first time, revealed the matter of termination and the allegation of financial woes in its Motion for Reconsideration of October 10, 2000 before the appellate court, not by way of defense to a charge of illegal dismissal but to manifest that supervening events have rendered it impossible for petitioner to comply with the order to accept respondents as regular employees. Moreover, the issue of economic losses as a ground for dismissing respondents is factual in nature, hence, it may be determined in the proper case. The Courts finding that respondents are regular employees of petitioner neither frustrates nor preempts the appellate courts proceedings in resolving the issue of retrenchment as an authorized cause for termination. If an authorized cause for dismissal is later found to exist, petitioner would still have to pay respondents their corresponding benefits and salary differential up to June 30, 1998. Otherwise, if there is a finding of illegal dismissal, an order for reinstatement with full backwages does not conflict with the Courts declaration of the regular employee status of respondents. WHEREFORE, the Court of Appeals Decision of September 29, 2000 is AFFIRMED with MODIFICATION. Petitioner PHILIPPINE AIRLINES, INC., is ordered to recognize respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARISUSA, JEFFREY LLENES, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERIE ALEGRES, EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular employees in their same or substantially equivalent positions, and pay the wages and benefits due them as regular employees plus salary differential corresponding to the difference between the wages and benefits given them and those granted to petitioners other regular employees of the same or substantially equivalent rank, up to June 30, 1998, without prejudice to the resolution of the illegal dismissal case. There being no data from which this Court may determine the

monetary liabilities of petitioner, the case is REMANDED to the Labor Arbiter solely for that purpose. ESCANIAS VS. SHANGRI-LA MACTAN Pakicheck nalang guys sa pinaka-last. Thanks.

Coca Cola bottlers DEVELOPMENT BANK OF THE PHILIPPINES vs. NLRC Facts: Private respondent Leonor A. Ang is an employee of Tropical Philippines Wood Industries, Inc. (TPWII), a corporation engaged in the manufacture and sale of veneer, plywood and sawdust panel boards. In September 1983 petitioner DBP, as mortgagee of TPWII, foreclosed TPWII continued its business operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities and equipment. In January 1986 petitioner took possession of the foreclosed properties. As a consequence, private respondent was on 15 April 1986, verbally terminated from the service. Private respondent filed with the Labor Arbiter a complaint for separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances against TPWII, its General Manager, and petitioner. The Labor Arbiter found TPWII primarily liable to private respondent but only for her separation pay and vacation and sick leave pay because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed. The General Manager was absolved of any liability. But with respect to petitioner, it was held subsidiarily liable in the event the company failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an employee to be paid benefits due him from the properties of his employer is superior to the right of the latter's mortgagee. The NLRC affirmed the ruling. Issue: Is declaration of bankruptcy or judicial liquidation required before the worker's preference may be invoked under Art. 110 of the Labor Code? Held: A declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order. The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be putting the worker in a better position than the State which could only assert its own prior preference in case of a judicial proceeding. Art. 110, as amended by R.A. 6715 effective 21 March 1989, now reads: Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. Obviously, the amendment expanded the concept of "worker preference" to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. The Rules and Regulations

Implementing R.A. 6715, approved 24 May 1989, also amended the corresponding implementing rule, and now reads: Sec. 10. Payment of wages and other monetary claims in case of bankruptcy. In case of bankruptcy or liquidation of the employer's business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid. The right to preference given to workers under Art. 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvent's creditors may be given and where the claims of preferred creditors may be binding adjudicated. Indubitably, the preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established In the present case, there is as yet no declaration of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to enforce the worker's preference. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. UNITED SPECIAL WATCHMAN AGENCY vs. COURT OF APPEALS 405 SCRA 432 JULY 8, 2003 Doctrine: Floating status of an employee is lawful. However such floating status should last for only a reasonable time. When floating status or reserve status lasts for more than six (6) months, it is considered that the employee had been constructively dismissed from his employment. Facts: The complaint arises from a contract of security services between the respondents against United Special Watchman Agency (USWA) and Banco Filipino Savings and Mortgage Bank (BF) regarding the separation payment of the employees. USWA and BF entered into a contract of security services, two (2) days after the execution of the contract, BF terminated such. Thus USWA notified all the affected employees stationed at the BF branches about such termination, and advised them to report to the office for re-assignment. Out of 67 guards, only 30 reported back and were given new assignments. More than 6 months passed, thus the 37 remaining alleged that they have been put on a floating status, were not notified of the standing offer of the agency to reassign them to other clients after the termination of the contract with BF, and due to their dismissal, they are bound for separation pay. USWA contends otherwise, stating that it is the employees fault for not returning to the office for reassignment, and were not illegally dismissed, thus not bound for separation pay. NLRC ordered that USWA liable for separation pay. Issue: WON the employees of USWA were illegally dismissed thus eligible for separation pay?

Held: Yes. The employees were illegally dismissed. The facts from the NLRC state that the letter request made by USWA, requesting the addresses of the respondents upon termination to notify them of the offer for re-assginment, was made beyond the six (6) months allowable period to place complainants in a floating status. Such facts are conclusive. Findings of administrative agencies are given great weight by the courts. Floating status of an employee is lawful. However such floating status should last for only a reasonable time. When floating status or reserve status lasts for more than six (6) months, it is considered that the employee had been constructively dismissed from his employment. Such is illegal dismissal. USWA is liable for separation pay.

NEW GOLDEN BUILDERS PCI AUTOMATION CENTER, INC. V. NLRC Facts: Philippine Commercial International Bank (PCIB) commenced its 4th GL Environment Conversion Project which seeks to link all existing computer systems within PCIB and its branches around the country. It entered into a Computer Services Agreement with petitioner (PCI-AC) under which, PCIAC is obligated to direct, supervise and run the development of the software and computer systems of PCIB. PCIB then engaged the services of Prime Manpower Resources Development, Inc. (Prime) to procure manpower for the petitioner. They entered into an External Job Contract. On September 1985, private respondent Hector Santelices was hired by Prime and was assigned as a data encoder for PCIBs project. However, on March 1991, Prime decided to terminate private respondents services after it was informed by PCI-AC that his services were no longer needed. Private respondent then filed a complaint against PCI-AC and Prime for Illegal Dismissal. A decision was rendered by the Labor Arbiter that provate respondents dismissal was indeed illegal. Prime and PCI-AC appealed to the NLRC. The NLRC affirmed the decision of the labor arbiter. Hence this petition. Issue/s: 1. Whether or not PCI-AC is solidarily liable with Prime for all the monetary claims of private respondent. Held: Yes. The external job contract between Prime and PCIB must be read in conjunction with the agreement between PCIB and petitioner. Hence, although the parties in the external job contract are only prime and PCIB, the legal consequences of such contracts must also be made to apply to the petitioner. Under the circumstances, PCIB merely acted as a conduit between petitioner and Prime. Under the law, any person who enters into an agreement with a job contractor, either for the performance of a specified work or for the supply of manpower, assumes the responsibility over the employees of the latter. In legitimate job contracting, no employer-employee relationship exists between the employees of the job contractor and the principal employer. Even then, the principal employer becomes jointly and severally liable with the job contractor for the payment of the employees wages whenever the contractor fails to pay the same. In such a case, the law creates an employer-employee relationship between the principal employer and the and the job contractors employees for a limited purpose, that is to ensure that the employees are paid their wages. Other than the payment of wages, the principal employer is not responsible for any claim made by the employees. Futher, considering the terms of the External Job Contract executed by Prime and PCIB, it cannot be doubted that Prime is

a labor-only contractor. Prime merely acted as a placement agency providing manpower to the petitioner through PCIB. The service rendered by Prime was not the performance of a specific job but the supply of qualified personnel to work as data encoders. WILLIAM TIU V. NLRC AND HERMES DELA CRUZ G.R. No. 95845 February 21, 1996 Facts: Private Respondent filed a complaint for illegal dismissal, violation of Minimum Wage Law and non-payment of the cost of living allowances, etc. against petitioner. Petitioner Tiu denied that private respondent was his employee. Petitioner, as operator of DRough Riders Transportation is engaged in transportation of passengers in Cebu. Private respondent worked in petitioners bus terminals as a dispatcher. Petitioner denies that private respondent was his employee. He alleges that he did not have power of control over private respondent. The Labor Arbiter ruled in favor of private respondent which was affirmed by the NLRC. Petitioner further argues that it is his Chief Dispatcher Regino Dela Cruz who exercises the power of an employer over the dispatchers for it is the latter who supervises their work and pays their wages. Issue: Whether or not there is an employee-employer relationship between petitioner and private respondent. (2) whether Dela Cruz is an independent contractor or a labor-only contractor. Held: Yes. While Dela Cruz took charge of the hiring of men and paid their wages, he did so as he was told by petitioner. The payment of wages came from petitioner. It cannot be said that Dela Cruz was the employer of the dispatchers or that he was an independent contractor. He was himself only an employee of petitioner. The control test only requires the existence of the right to control the manner of doing work in a person not necessarily the actual exercise of the power by him, which he can delegate. Dela Cruz is a mere supervisor. Petitioner does not claim that Regino Dela Cruz was an independent contractor, even if this be his contention, however, the argument would still be without merit. In the absence of the requisites, what exists is a labor only contract under which person acting as contractor is considered merely an agent or intermediary of the employer who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. Dela Cruz, can at most, be considered a labor-only contractor and therefore, a mere agent of petitioner. RAMY GALLEGO VS. BAYER PHILIPPINES, INC., G.R. No. 179807 July 31, 2009 FACTS: Herein petitioner, Ramy Gallego was contracted by Bayer Philippines, Inc. (BAYER) as crop protection technician to promote and market BAYER products, under the supervision of Aristeo Filipino, a BAYER sales representative. In 1996, petitioners employment with BAYER came to a halt. BAYER eventually reemployed petitioner, however, in 1997 through PRODUCT IMAGE of which respondent Bergonia was the President and General Manager, performing the same task. Petitioner alleged that sometime in October, 2001 he was being coerced to resign from his job by respondent Guillermo, BAYER District Sales Manager for Panay and Pascual, a sales representative against his fervent refusal. Eventually on April 7, 2002 he received a memorandum that his area of responsibility would be transferred to Luzon, of which memorandum he sought reconsideration but to no avail and was muscled out of his employment. This prompted him to file illegal dismissal with the NLRC. Respondent however alleges that

respondent simply stopped reporting for work. ISSUES:(1) Whether PRODUCT IMAGE is a labor-only contactor and BAYER should be deemed petitioners principal employer; and (2) whether petitioner was illegally dismissed from his employment. HELD: (1) PRODUCT IMAGE is a legitimate job contractor and petitioners employer. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out with a contractor or subcontractor the performance of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work or, service is to be performed or completed within or outside the premises of the principal. Under this arrangement, the following conditions must be met: (a) the contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. The issuance from DOLE of a Certificate of Registration in favor of PRODUCT IMAGE is prima facie that said corporation complied with the necessary legal requirements of a legitimate job contractor. Likewise the same is supported by PRODUCT IMAGEs relationship with BAYER and the way it conducts its business. Applying the four-fold test for determining whether an employer-employee relationship exists the Court held that PRODUCT IMAGE was indeed the employer of herein petitioner. First because it was PRODUCT IMAGE who offered to hire petitioner it was PRODUCT IMAGE that paid the wages and other benefits of petitione, the power of dismissal, and the power of control, both powers were vested in PRODUCT IMAGE. No control whatsoever shall was exercised by BAYER over the personnel assigned by PRODUCT IMAGE on the manner and method by which they perform their duties, and that all directives, complaints, or observations of BAYER relating to the performance of the employees of PRODUCT IMAGE shall be addressed to the latter. If at all, the only control measure retained by BAYER over petitioner was to act as his de facto supervisor in certifying to the veracity of the accomplishment reports he submitted to PRODUCT IMAGE. This is by no means the kind of control that establishes an employer-employee relationship. (2) Petitioner simply stopped reporting for work before filing a complaint for illegal dismissal based on his unsubstantiated belief that Guillermo and Bergonia had spread rumors that his transactions on behalf of BAYER would no longer be honored as of April 30, 2002.