71- 77 DINGLASAN LABOR 1

71.
CITIZENS' LEAGUE OF FREEWORKERS AND/OR BALBINO EPIS,
NICOLAS ROJO, ET AL. vs. HON. MACAPANTON ABBAS, Judge of the
Court of First Instance of Davao and TEOFILO GERONIMO and EMERITA
MENDEZ
G.R. No. L-21212 September 23, 1966
Industrial Peace Act; Unfair labor practice; Court of Industrial Relations; Driver
under the boundary system is an employee; Jurisdiction of Industrial Court.A driver
who operates under the boundary system is an "employee" of the owner of the vehicle
within the meaning of the law and, as a consequence, any labor dispute between them
falls under the jurisdiction of the Court of Industrial Relations. Thus, in the case at bar,
upon filing by petitioners of a complaint for unfair labor practice against the
respondent-spouses, owners and operators of auto calesas in Davao, with the Court of
Industrial Relations, said Court acquired complete and exclusive jurisdiction over the
labor dispute and the least that should have been done in Civil Case No. 3966 was either
to dismiss it or suspend proceedings therein until final resolution of the former.
Facts:
On March 11, 1963 the respondents filed a complaint to restrain the Citizens' League of
Freeworkers, a legitimate labor organization (referred to as union) from interfering in
with the respondents auto-calesas business in Davao and to recover damages from
committing certain acts complained of in connection therewith. The union members
who were drivers of the said business, alleges that the defendants named therein used to
lease the auto-calesas of the spouses on a daily rental basis and that the same does not
recognize the union as their employees rather the petitioners were treated as lessees and
refuses to bargain with them. The union declared a strike on February 20, 1963, to
which paralyzed plaintiffs' business operations through threats, intimidation and
violence. The writ was granted.
On March 18, 1963, petitioners filed a motion to declare the writ of preliminary
injunction void on the ground that the same had expired by virtue of Section 9 (d) of
Republic Act 875. In his order of March 21, 1963, however, the respondent judge denied
said motion on the ground that there was no employer-employee relationship between
respondents-spouses and the individual petitioners herein and that, consequently, the
Rules of Court and not Republic Act No. 875 applied to the matter of injunction.
Thereupon the petition under consideration was filed.
Issue:

Page 1 of 21
Whether or not there is an employer-employee relationship existing from a daily rental
basis company?
Held:
In the case of Isabelo Doce vs. Workmen's Compensation Commission, et al. (G.R. No.
L-9417, December 22, 1958), upon a similar if not an altogether identical set of facts, We
held:
"The only features that would make the relationship of lessor and lessee between the
respondent, owner of the jeeps, and the drivers, members of the petitioner union, are
the fact that he does not pay them any fixed wage but their compensation is the excess of
the total amount of fares earned or collected by them over and above the amount of
P7.50 which they agreed to pay to the respondent, and the fact that the gasoline burned
by the jeeps is for the account of the drivers. These two features are not, however,
sufficient to withdraw the relationship, between them from that of employer-employee,
because the estimated earnings for fares must be over and above the amount they
agreed to pay to the respondent for a ten-hour shift or ten-hour a day operation of the
jeeps. Not having any interest in the business because they did not invest anything in the
acquisition of the jeeps and did not participate in the management thereof, their service
as drivers of the jeeps being their only contribution to the business, the relationship of
lessor and lessee cannot be sustained."
Wherefore, judgment is hereby rendered setting aside the writ of preliminary
injunction issued by the respondent judge in Civil Case No. 3966 of the Court of First
Instance of Davao, with costs.

72,
MAKATI HABERDASHERY VS NLRC
G.R. NO. 83380-81
NOVEMBER 15, 1989

Labor Relations; Employer-Employee Relationship; Four-Fold Test of Employer-

Employee Relationship; Control Test, Defined.We have repeatedly held in countless
decisions that the test of employer-employee relationship is four-fold: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employees conduct. It is the so-called control test
that is the most important element. This simply means the determination of whether the
employer controls or has reserved the right to control the employee not only as to the
result of the work but also as to the means and method by which the same is to be
accomplished.

Labor Standards; Private respondents are not entitled to service incentive leave pay and
holiday pay because as piece-rate workers they fall under the exceptions set forth in the
implementing rules.On the other hand, while private respondents are entitled to

Page 2 of 21
Minimum Wage, COLA and 13th Month Pay, they are not entitled to service incentive
leave pay because as piece-rate workers being paid at a fixed amount for performing
work irrespective of time consumed in the performance thereof, they fall under one of
the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor
Code. For the same reason private respondents cannot also claim holiday pay (Section
1(e), Rule IV, Implementing Regulations, Book III, Labor Code).
Labor Law; Dismissal of Employees; An employer has the right to dismiss an employee
whose continuance in the service is inimical to the employers interest.Assuming that
such acts do not constitute abandonment of their jobs as insisted by private
respondents, their blatant disregard of their employers memorandum is undoubtedly
an open defiance to the lawful orders of the latter, a justifiable ground for termination of
employment by the employer expressly provided for in Article 283(a) of the Labor Code
as well as a clear indication of guilt for the commission of acts inimical to the interests of
the employer, another justifiable ground for dismissal under the same Article of the
Labor Code, paragraph (c). Well established in our jurisprudence is the right of an
employer to dismiss an employee whose continuance in the service is inimical to the
employers interest.

Same; Same; Right to dismiss for just and valid cause pertains in the first place to the
employer.Finally, it has been established that the right to dismiss or otherwise impose
disciplinary sanctions upon an employee for just and valid cause, pertains in the first
place to the employer, as well as the authority to determine the existence of said cause in
accordance with the norms of due process. There is no evidence that the employer
violated said norms. On the contrary, private respondents who vigorously insist on the
existence of employer-employee relationship, because of the supervision and control of
their employer over them, were the very ones who exhibited their lack of respect and
regard for their employers rules.

FACTS: Petition for certiorari to review the decision of the NLRC which affirmed the
decision of the Labor Arbiter who jointly heard and decided two cases filed by the Union
in behalf of the private respondents. Individual complainants are working for Makati
Haberdashery Inc as tailors, seamstress, sewers, basters, and plantsadoras and are
paid on a piece-rate basis (except two petitioners who are paid on a monthly basis) In
addition, they are given a daily allowance of P 3.00 provided they report before 9:30
a.m.everyday. Work schedule: 9:30-6 or 7 p.m., Mondays to Saturdays and even on
Sundays and holidays during peak periods. The Sandigan ng Manggagawang Pilipino
filed a complaint for underpayment of the basic wages, underpayment of living
allowance, nonpayment of overtime work, nonpayment of holiday pay, and other money
claims. The Labor Arbiter rendered judgment in favor of complainants which the NLRC
affirmed but limited back wages to one year. Petitioner urged that the NLRC erred in
concluding that an employer-employee relationship existed between the petitioner and
the workers.

Issue: 1. WON employees paid on piece-rate basis are entitled to service incentive pay?
WON there is an Employer-Employee Relationship?

Held:

Page 3 of 21
No, fall under exceptions set forth in the implementing rules (this will be reexamined
under Article 101).
Yes, evident in a Memorandum issued by the Assistant Manager.

Ratio:
As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount
for performing work irrespective of time consumed in the performance thereof, they fall
under the exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor Code. Service
Incentive Leave SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof;
Employer-Employee Relationship. There is such relationship because in the application
of the four-fold test, it was found that petitioners had control over the respondents not
only as to the result but also as to the means and method by which the same is to be
accomplished.

73,

CAURDANETAAN PIECE WORKERS UNION VS. UNDERSECRETARY

BIENVENIDO LAGUESMA
G.R. NO. 113542
February 24, 1998

Labor law; employer-employee relationship; four-fold test to determine the existence

of an employer-employee relation.to determine the existence of an employer-
employee relation, this court has consistently applied the four-fold test which has the
following elements: (1) the power to hire, (2) the payment of wages, (3) the power to
dismiss, and (4) the power to controlthe last being the most important element.
Same; same; cpwu members were regular employees of private respondent.it is
undeniable that petitioners members worked as cargadores for private respondent.
They loaded, unloaded and piled sacks of palay from the warehouses to the cargo
trucks and from the cargo trucks to the buyers. This work is directly related, necessary
and vital to the operations of corfarm. Moreover, corfarm did not even allege, much
less prove, that petitioners members have substantial capital or investment in the
form of tools, equipment, machineries, [and] work premises, among others.
Furthermore, said respondent did not contradict petitioners allegation that it paid
wages directly to these workers without the intervention of any third-party
independent contractor. It also wielded the power of dismissal over petitioners; in
fact, its exercise of this power was the progenitor of the second case. Clearly, the
workers are not independent contractors. Applying article 280 of the labor code, we
holdthat the cpwu members were regular employees of private respondent. Their tasks
were essential in the usual business of private respondent.

Same; due process; due process is not violated where a person is given the opportunity
to be heard, but chooses not to give his side of the case.private respondent had been

Page 4 of 21
duly informed of the pendency of the illegal dismissal case, but it chose not to
participate therein without any known justifiable cause. The labor arbiter sent notices
of hearing or arbitration to the parties, requiring them to submit position papers at
1:30 p.m. On november 14, 1992. Respondent corfarm did not attend the hearing.
According to respondent nlrc, there was no proof that respondent corfarm received
such notice. In any case, petitioner filed a motion to admit amended complaint on
december 23, 1992. Again, another notice for hearing or arbitration on january 7,
1993 was sent to the parties. This was received by petitioners counsel as evidenced by
the registry return receipt duly signed by private respondents counsel, atty. Alfonso
bince, jr. It was only on january 28, 1993, however, that atty. Bince entered his
appearance as counsel for respondent corfarm. On may 10, 1993, corfarm was again
given a new period of ten (10) days within which to submit its position paper and
documentary evidence; otherwise, [the labor arbiter] will be constrained to resolve
this case based on available evidence on record. As evidenced by a registry return
receipt, a copy of said directive was received by respondents counsel on may 25, 1993.
Still and all, corfarm failed to file its position paper. Clearly, private respondent was
given an opportunity to present its evidence, but it failed or refused to avail itself of
this opportunity without any legal reason. Due process is not violated where a person
is given the opportunity to be heard, but chooses not to give his side of the case.

Same; dismissal; evidence; the findings of the labor arbiter on the question of illegal
dismissal were based on credible, competent and substantial evidence.contrary to
the conclusions of the nlrc and the arguments of private respondent, the findings of the
labor arbiter on the question of illegal dismissal were based on credible, competent
and substantial evidence.

Same; same; same; proceedings before labor agencies merely require the parties to
submit their respective affidavits and position papers.it is to be borne in mind that
proceedings before labor agencies merely require the parties to submit their respective
affidavits and position papers. Adversarial trial is addressed to the sound discretion of
the labor arbiter. To establish a cause of action, only substantial evidence is necessary;
i.e., such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion, even if other minds equally reasonable might conceivably opine
otherwise.
Same; same; same; the national labor relations commission, like the labor arbiter, is
authorized to decide cases based on the position papers and other documents
submitted, without resorting to the technical rules of evidence.it must be stressed
that labor laws mandate the speedy administration of justice, with least attention to
technicalities but without sacrificing the fundamental requisites of due process. In this
light, the nlrc, like the labor arbiter, is authorized to decide cases based on the position
papers and other documents submitted, without resorting to the technical rules of
evidence. Verily, respondent nlrc noted several documentary evidence sufficient to
arrive at a just decision. Indeed, the evidence on record clearly supports the conclusion
of the labor arbiter that the petitioners were employees of respondent, and that they
were illegally dismissed.

Page 5 of 21
Same; same; same; in illegal dismissal cases, the employer always has the burden of
proof, and his failure to discharge this duty results in a finding that the dismissal was
unjustified.it is axiomatic that in illegal dismissal cases, the employer always has the
burden of proof, and his failure to discharge this duty results in a finding that the
dismissal was unjustified. Having defaulted from filing its position paper, respondent
corfarm is deemed to have waived its right to present evidence and counter the
allegations of petitioners members.

PANGANIBAN, J.

FACTS:
Complainants worked as cargador at the warehouse and rice mills of Private
Respondent Corfarm. As cargadores, they loaded, unloaded and piled sacks of palay
from the warehouse to the cargo trucks and those brought by cargo trucks for delivery to
different places. They were paid by Corfarm on a piece-rate basis. When Corfarm denied
them some benefits, they formed their union. Corfarm replaced them with non-
members of the union.

Respondent Corfarm denies that it had the power of control over the complainants
rationalizing that they were street-hired workers engaged from time to time to do
loading and unloading work; there was no superintendent-in-charge to give orders; and
there were no gate passes issued, nor tools, equipment and paraphernalia issued by
Cofarm for loading and unloading. It attributes error to the Solicitor General's reliance
on Art. 280 of the Labor Code. Citing Brent School, Inc. vs. Zamora, private respondent
asserts that a literal application of such article will result in absurdity, where
petitioners members will be regular employees not only of respondents but also of
several other rice mills, where they were allegedly also under service. Finally, Corfarm
submits that the OSGs position is negated by the fact that petitioners members
contracted for loading and unloading services with respondent company when such
work was available and when they felt like it.

ISSUE:
Whether or not the street-hired cargadores are considered as regular emplyoyees.

HELD:
The court considers the cargadores as regular employee. It is undeniable that
petitioner's members worked as cargadores for private respondent. They loaded,
unloaded and piled sacks of palay from the warehouses to the cargo trucks and from the
cargo trucks to the buyers. This work is directly related, necessary and vital to the
operations of Cofarm. Moreover, Cofarm did not even allege, much less prove, that
petitioner's members have substantial capital or investment in the form of tools,
equipment, machineries, and work premises among others. Furthermore, said
respondent did not contradict petitioner's allegation that it paid wages directly to these
workers without the intervention of any third party independent contractor. It also
wielded the power of dismissal over the petitioners. Clearly, the workers are not
independent contractors.

Page 6 of 21
74.

RUGA ET. AL VS NLRC

G.R. NO. L-72654-61
JANUARY 22, 1990

Labor law; remedial law; appeal; doctrine that in labor cases before this tribunal, no
undue sympathy is to be accorded to any claim of a procedural misstep well-settled.
fundamental considerations of substantial justice persuade us to decide the instant
case on the merits rather than to dismiss it on a mere technicality. In so doing, we
exercise the prerogative accorded to this court enunciated in firestone filipinas
employees association, et al. Vs. Firestone tire and rubber co. Of the philippines, inc.,
61 scra 340 (1974), thus the well-settled doctrine is that in labor cases before this
tribunal, no undue sympathy is to be accorded to any claim of a procedural misstep,
the idea being that its power be exercised according to justice and equity and
substantial merits of the controversy.

Same; same; same; same; court adopts a more liberal attitude in applying to
petitioners the 10-calendar day rule in the filing of appeals with the nlrc from the
decision of the labor arbiter.circumstances peculiar to some extent to fishermen-
crew members of a fishing vessel regularly engaged in trawl fishing, as in the case of
petitioners herein, who spend one (1) whole week or more in the open sea performing
their job to earn a living to support their families, convince us to adopt a more liberal
attitude in applying to petitioners the 10-calendar day rule in the filing of appeals with
the nlrc from the decision of the labor arbiter.

Same; same; same; same; same; peculiar circumstance and the fact that the
representative of petitioners is a non-lawyer provided equitable justification to
conclude that there is substantial compliance with the ten-calendar-day rule of filing
of appeals with the nlrc.records reveal that petitioners were informed of the labor
arbiters decision of march 31, 1984 only on july 3, 1984 by their non-lawyer
representative during the arbitration proceedings, jose dia-logo, who received the
decision eight (8) days earlier, or on june 25, 1984. As adverted to earlier, the
circumstances peculiar to petitioners occupation as fishermen-crew members, who
during the pendency of the case understandably have to earn a living by seeking
employment elsewhere, impress upon us that in the ordinary course of events, the
information as to the adverse decision against them would not reach them within such
time frame as would allow them to faithfully abide by the 10-calendar day appeal
period. This peculiar circumstance and the fact that their representative is a non-
lawyer provide equitable justification to conclude that there is substantial compliance
with the ten-calendar day rule of filing of appeals with the nlrc when petitioners filed

Page 7 of 21
on july 10, 1984, or seven (7) days after receipt of the decision, their appeal with the
nlrc through registered mail.

Same; elements in determining the existence of an employer- employee relationship.

we have consistently ruled that in determining the existence of an employer-employee
relationship, the elements that are generally considered are the following (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 with respect to the
means and methods by which the work is to be accomplished. The employment
relation arises from contract of hire, express or implied. In the absence of hiring, no
actual employer-employee relation could exist.
Same; same; court relied on the so-called right-of-control test.from the four (4)
elements mentioned, we have generally relied on the so-called right-of-control test
where the person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such end. The test
calls merely for the existence of the right to control the manner of doing the work, not
the actual exercise of the right.

Same; same; same; case of pajarillo vs. Sss invoked by the public respondent as
authority for the ruling that a joint fishing venture existed between private
respondent and petitioner is not applicable in the instant case.the case of pajarillo
vs. Sss, supra, invoked by the public respondent as authority for the ruling that a joint
fishing venture existed between private respondent and petitioners is not applicable
in the instant case. There is neither right of control nor actual exercise of such right on
the part of the boat-owners in the pajarillo case, where the court found that the pilots
therein are not under the orders of the boat-owners as regards their employment; that
they go out to sea not upon directions of the boat-owners, but upon their own volition
as to when, how long and where to go fishing; that the boat-owners do not in any way
control the crew-members with whom the former have no relationship whatsoever;
that they simply join every trip for which the pilots allow them, without any reference
to the owners of the vessel; and that they only share in their own catch produced by
their own efforts.

FERNAN, C.J.:

FACTS:
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de
Guzman, president of private respondent, to proceed to the police station at Camaligan,
Camarines Sur, for investigation on the report that they sold some of their fish-catch at
midsea to the prejudice of private respondent. Petitioners denied the charge claiming
that the same was a countermove to their having formed a labor union and becoming
members of Defender of Industrial Agricultural Labor Organizations and General
Workers Union (DIALOGWU) on September 3, 1983.

During the investigation, no witnesses were presented to prove the charge against
petitioners, and no criminal charges were formally filed against them. Notwithstanding,

Page 8 of 21
private respondent refused to allow petitioners to return to the fishing vessel to resume
their work on the same day, September 11, 1983.

On September 22, 1983, petitioners individually filed their complaints for illegal
dismissal and non-payment of 13th month pay, emergency cost of living allowance and
service incentive pay, with the then Ministry (now Department) of Labor and
Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases
Nos. 1449-83 to 1456-83. 2 They uniformly contended that they were arbitrarily
dismissed without being given ample time to look for a new job.
On October 24, 1983, private respondent, thru its operations manager, Conrado S. de
Guzman, submitted its position paper denying the employer-employee relationship
between private respondent and petitioners on the theory that private respondent and
petitioners were engaged in a joint venture. 3

After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the
case for joint hearing furnishing the parties with notice and summons. On December 27,
1983, after two (2) previously scheduled joint hearings were postponed due to the
absence of private respondent, one of the petitioners herein, Alipio Ruga, the
pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the fishing
operations were conducted, mode of payment of compensation for services rendered by
the fishermen-crew members, and the circumstances leading to their dismissal.

On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S.
Coralde rendered a joint decision 5 dismissing all the complaints of petitioners on a
finding that a "joint fishing venture" and not one of employer-employee relationship
existed between private respondent and petitioners.

From the adverse decision against them, petitioners appealed to the National Labor
Relations Commission.
On May 30, 1985, the National Labor Relations Commission promulgated its
resolution 6 affirming the decision of the labor arbiter that a "joint fishing venture"
relationship existed between private respondent and petitioners.

Issue:
whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II
are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether
or not they were illegally dismissed from their employment.

Held:
Petitioners assail the ruling of the public respondent NLRC that what exists between
private respondent and petitioners is a joint venture arrangement and not an employer-
employee relationship.

Aside from seeking the dismissal of the petition on the ground that the decision of the
labor arbiter is now final and executory for failure of petitioners to file their appeal with
the NLRC within 10 calendar days from receipt of said decision pursuant to the doctrine
laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347

Page 9 of 21
(1982), the Solicitor General claims that the ruling of public respondent that a "joint
fishing venture" exists between private respondent and petitioners rests on the
resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De Guzman
Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private
respondent herein, from compulsory coverage of the SSS on the ground that there is no
employer-employee relations between the boat-owner and the fishermen-crew members
following the doctrine laid down in Pajarillo vs. SSS, 17 SCRA 1014 (1966). In applying
to the case at bar the doctrine in Pajarillo vs. SSS, supra, that there is no employer-
employee relationship between the boat-owner and the pilot and crew members when
the boat-owner supplies the boat and equipment while the pilot and crew members
contribute the corresponding labor and the parties get specific shares in the catch for
their respective contribution to the venture, the Solicitor General pointed out that the
boat-owners in the Pajarillo case, as in the case at bar, did not control the conduct of the
fishing operations and the pilot and crew members shared in the catch.

Fundamental considerations of substantial justice persuade Us to decide the instant

case on the merits rather than to dismiss it on a mere technicality. In so doing, we
exercise the prerogative accorded to this Court enunciated in Firestone Filipinas
Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc.,
61 SCRA 340 (1974), thus "the well-settled doctrine is that in labor cases before this
Tribunal, no undue sympathy is to be accorded to any claim of a procedural misstep, the
idea being that its power be exercised according to justice and equity and substantial
merits of the controversy."

We have consistently ruled that in determining the existence of an employer-employee

relationship, the elements that are generally considered are the following (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished. The employment relation
arises from contract of hire, express or implied. In the absence of hiring, no actual
employer-employee relation could exist.

The conclusion of public respondent that there had been no change in the situation of
the parties since 1968 when De Guzman Fishing Enterprises, private respondent herein,
obtained a favorable judgment in Case No. 708 exempting it from compulsory coverage
of the SSS law is not supported by evidence on record. It was erroneous for public
respondent to apply the factual situation of the parties in the 1968 case to the instant
case in the light of the changes in the conditions of employment agreed upon by the
private respondent and petitioners as discussed earlier.

While tenure or length of employment is not considered as the test of employment,

nevertheless the hiring of petitioners to perform work which is necessary or desirable in
the usual business or trade of private respondent for a period of 8-15 years since 1968
qualify them as regular employees within the meaning of Article 281 of the Labor Code
as they were indeed engaged to perform activities usually necessary or desirable in the
usual fishing business or occupation of private respondent.

Page 10 of 21
Furthermore, the fact that on mere suspicion based on the reports that petitioners
allegedly sold their fish-catch at midsea without the knowledge and consent of private
respondent, petitioners were unjustifiably not allowed to board the fishing vessel on
September 11, 1983 to resume their activities without giving them the opportunity to air
their side on the accusation against them unmistakably reveals the disciplinary power
exercised by private respondent over them and the corresponding sanction imposed in
case of violation of any of its rules and regulations. The virtual dismissal of petitioners
from their employment was characterized by undue haste when less extreme measures
consistent with the requirements of due process should have been first exhausted. In
that sense, the dismissal of petitioners was tainted with illegality.

WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned

resolution of the National Labor Relations Commission dated May 30,1985 is hereby
REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to
their former positions or any equivalent positions with 3-year backwages and other
monetary benefits under the law. No pronouncement as to costs.
SO ORDERED.

75,

AGRO-COMMERCIAL SECURITY AGENCY VS. NLRC

G.R. Nos. 82823-24 Julyv31, 1989
Labor Law; Due Process; Allegation of denial of due process is without basis.
Forthwith, the allegation of denial of due process is without basis. Petitioner was
afforded the opportunity to file its position paper. It even entered into a stipulation of
facts with private respondent.
Same; Employer-employee relationship; Records show that private respondents are
regular employees of petitioner.As to the issue of employer-employee relationship,
an examination of the records shows that private respondents are regular employees
of petitioner. Their individual length of service ranges from four (4) to more than ten
(10) years. In accordance with the stipulation of facts, it appears that private
respondents worked with petitioner as security guards/janitors. It was petitioner who
determined how much private respondents received as their monthly salary,
overtime/night differential pay, mid-year and Christmas bonus and 13th month pay,
uniforms and meal allowances and other benefits mandated by law. Private
respondents were reported by the petitioner as its employees for purposes of social
security coverage. Petitioner remitted their withholding taxes to the Bureau of
Internal Revenue and made monthly contributions to the Pag-Ibig fund for their
benefit. It was petitioner who determined and decided on the assignments, promotions
and salary increases of private respondents, their working hours, the firearms to be
issued to them and janitorial devices and tools to be used. Likewise, it was petitioner
who imposed the appropriate disciplinary measures on private respondents by way of
reprimand, suspension and dismissal.

Page 11 of 21
Same; Same; Elements for the existence of an employer-employee relationship.In
determining the existence of an employee-employer relationship, the following
elements are generally considered: 1) the selection and engagement of the employees;
2) payment of wages; 3) the power of dismissal; and 4) the power to control the
employees conduct.
Same; Dismissal; Security guards who remained without work or assignment for a
period exceeding six (6) months are in effect constructively dismissed.From the
foregoing it is clear that when the bonafide suspension of the operation of a business
or undertaking exceeds six (6) months then the employment of the employee shall be
deemed terminated. By the same token and applying the said rule by analogy to
security guards, if they remained without work or assignment, that is in floating
status for a period exceeding six (6) months, then they are in effect constructively
dismissed.
Same; Same; Accepting employment in other security agencies without previously
resigning from employment is a just cause for termination of services.In this case, it
appears that twenty-seven (27) of the private respondents violated this rule by
accepting employment in other security agencies without previously resigning from
employment with petitioner. No doubt, this is a just cause for termination of their
services and as such they are not entitled to any separation pay.
Same; Same; Stipulation to remain in floating status for more than six (6) months,
lawful.As regards the other seventeen (17) private respondents, they admittedly
remained in floating status for more than six (6) months. Such a floating status is
not unusual for security guards employed in security agencies as their assignments
primarily depend on the contracts entered into by the agency with third parties. Such
a stipulated status is, therefore, lawful.
Same; Same; Same; Floating status of an employee should last only for a reasonable
time.The floating status of such an employee should last only for a reasonable time.
In this case, respondent labor arbiter correctly held that when the floating status of
said employees lasts for more than six (6) months, they may be considered to have
been illegally dismissed from the service. Thus, they are entitled to the corresponding
benefits for their separation. Agro Commercial Security Services Agency, Inc. vs.
NLRC, 175 SCRA 790, G.R. Nos. 82823-24 July 31, 1989

FACTS:

In July 25, 1986, respondents numbering 46 in all, who worked as security guards and
janitors for Agro Commercial Security Services Agency, Inc. , filed a complaint against
their Agro Commercial for illegal dismissal before the Arbitration Branch of DOLE, after
having placed on floating status for several months. Petitioners service contracts with

Page 12 of 21
various corporations and government agencies were terminated due to sequestration by
the PCGG.
They sought the payment of their respective separation pay, 13th month for 1986, and
service incentive pay. The Labor arbiter ruled in favour of the respondents and was
affirmed by the NLRC.
Hence, the Agro Commercial filed a petition assailing said decision, alleging that they
were denied due process of law by the NLRC and it committed a grave abuse of
discretion,

ISSUE: Whether or not there exists an employer-employee relationship between

private respondents and petitioner, Agro Commercial.

HELD:
Yes. In determining the exi=stence of of an employee-employer relationship, the
following elements are generally considered:

(1) Selection and engagement of the employees;

(2) Payment of wages;
(3) The power of dismissal; and
(4) The power to control the employees conduct
It can be easily deduced in the respondents employment contracts that the above
elements are present and therefore they are regular employees who enjoy security of
tenure and cannot be dismissed except for cause.
Under Article 286 of the Labor Code, it states that a bonafide suspension of business
operation for a period not exceeding 6 months shall not terminate employment.
Thus in analogy , if the security guards remained without work or in floating status for a
period exceeding 6 months then they are in effect constructively dismissed.
Except for the 27 respondents who accepted employment without resigning from
employment with petitioner, a just reason for their termination, 17 were in floating
status for more than 6 months and therefore unreasonable and may be considered to
have been illegally dismissed.
The court dismissed the complaint of the 27 for lack of merit and upheld the NLRCs
decision for the 17 illegally dismissed employees.

76.

Page 13 of 21
MARAGUINOT AND P. ENERO VS NLRC AND VIVA FILMS
GR NO. 120969
JANUARY 22, 1998

Alejandro maraguinot, jr. And paulino enero, petitioners, vs. National labor relations
commission (second division) composed of presiding commissioner raul t. Aquino,
commissioner rogelio i. Rayala and commissioner victoriano r. Calaycay (ponente),
vic del rosario and viva films, respondents.

Labor law; classification of employment; as labor-only contracting is prohibited, the

law considers the person or entity engaged in the same a mere agent or intermediary
of the direct employer.as labor-only contracting is prohibited, the law considers the
person or entity engaged in the same a mere agent or intermediary of the direct
employer. But even by the preceding standards, the associate producers of viva cannot
be considered labor-only contractors as they did not supply, recruit nor hire the
workers. In the instant case, it was juanita cesario, shooting unit supervisor and an
employee of viva, who recruited crew members from an available group of
Free-lance workers which includes the complainants maraguinot and enero. And in
their memorandum, private respondents declared that the associate producer hires
the services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew;
(c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . This
clearly showed that the associate producers did not supply the workers required by the
movie project.
Same; same; the employer-employee relationship between peti tioners and viva can
further be established by the control test; elements to determine the existence of an
employment relationship.the employer-employee relationship between petitioners
and viva can further be established by the control test. While four elements are
usually considered in determining the existence of an employment relationship,
namely: (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 employees
conduct, the most important element is the employers control of the employees
conduct, not only as to the result of the work to be done but also as to the means and
methods to accomplish the same. These four elements are present here.
Same; same; requisites before a project employee or a member of a work pool may
acquire the status of a regular employee.a project employee or a member of a work
pool may acquire the status of a regular employee when the following concur: 1) there
is a continuous rehiring of project employees even after cessation of a project; and 2)
the tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.

Same; same; same; the length of time during which the employee was continuously re-
hired is not controlling, but merely serves as a badge of regular employment.
however, the length of time during which the employee was continuously re-hired is
not controlling, but merely serves as a badge of regular employment.
Same; same; same; no impediment to apply policy instruction no. 20/department
order no. 19 to industries other than the construction industry.while lao admittedly
involved the construction industry, to which policy instruction no. 20/department

Page 14 of 21
order no. 19 regarding work pools specifically applies, there seems to be no
impediment to applying the underlying principles to industries other than the
construction industry. Neither may it be argued that a substantial distinction exists
between the projects undertaken in the construction industry and the motion picture
industry. On the contrary, the raison d etre of both industries concern projects with a
foreseeable suspension of work.

Same; same; same; courts ruling does not mean that simply because an employee is a
project or work pool employee even outside the construction industry, he is deemed,
ipso jure, a regular employee.the courts ruling here is meant precisely to give life to
the constitutional policy of strengthening the labor sector, but, we stress, not at the
expense of management. Lest it be misunderstood, this ruling does not mean that
simply because an employee is a project or work pool employee even outside the
construction industry, he is deemed, ipso jure, a regular employee. All that we hold
today is that once a project or work pool employee has been: (1) continuously, as
opposed to intermittently, re-hired by the same employer for the same tasks or nature
of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular
employee, pursuant to article 280 of the labor code and jurisprudence. To rule
otherwise would allow circumvention of labor laws in industries not falling within the
ambit of policy instruction no. 20/department order no. 19, hence allowing the
prevention of acquisition of tenurial security by project or work pool employees who
have already gained the status of regular employees by the employers conduct.

Same; same; same; petitioners are now entitled to back wages and reinstatement
without loss of seniority rights and other benefits that may have accrued.in closing
then, as petitioners had already gained the status of regular employees, their dismissal
was unwarranted, for the cause invoked by private respondents for petitioners
dismissal, viz., completion of project, was not, as to them, a valid cause for dismissal
under article 282 of the labor code. As such, petitioners are now entitled to back wages
and reinstatement, without loss of seniority rights and other benefits that may have
accrued. Nevertheless, following the principles of suspension of work and no pay
between the end of one project and the start of a new one, in computing petitioners
back wages, the amounts corresponding to what could have been earned during the
periods from the date petitioners were dismissed until their reinstatement when
petitioners respective shooting units were not undertaking any movie projects, should
be deducted.

FACTS:

Maraguinot and Enero were separately hired by Vic Del Rosario under Viva Films as
part of the filming crew. Sometime in May 1992, sought the assistance of their
supervisor to facilitate their request that their salary be adjusted in accordance with the
minimum wage law.

On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario would
agree to their request only if they sign a blank employment contract. Petitioners refused

Page 15 of 21
to sign such document. After which, the Mr. Enero was forced to go on leave on the
same month and refused to take him back when he reported for work. Mr. Maraguinot
on the other hand was dropped from the payroll but was returned days after. He was
again asked to sign a blank employment contract but when he refused, he was
terminated.

Consequently, the petitioners sued for illegal dismissal before the Labor Arbiter. The
private respondents claim the following: (a) that VIVA FILMS is the trade name of VIVA
PRODUCTIONS, INC. and that it was primarily engaged in the distribution & exhibition
of movies- but not then making of movies; (b) That they hire contractors called
producers who act as independent contractors as that of Vic Del Rosario; and (c) As
such, there is no employee-employer relation between petitioners and private
respondents.

The Labor Arbiter held that the complainants are employees of the private respondents.
That the producers are not independent contractor but should be considered as labor-
only contractors and as such act as mere agent of the real employer. Thus, the said
employees are illegally dismissed.

The private respondents appealed to the NLRC which reversed the decision of the Labor
Arbiter declaring that the complainants were project employees due to the ff. reasons:
(a) Complainants were hired for specific movie projects and their employment was co-
terminus with each movie project; (b)The work is dependent on the availability of
projects. As a result, the total working hours logged extremely varied; (c) The extremely
irregular working days and hours of complainants work explains the lump sum payment
for their service; and (d) The respondents alleged that the complainants are not
prohibited from working with other movie companies whenever they are not working for
the independent movie producers engaged by the respondents.

A motion for reconsideration was filed by the complainants but was denied by NLRC. In
effect, they filed an instant petition claiming that NLRC committed a grave abuse of
discretion in: (a) Finding that petitioners were project employees; (b) Ruling that
petitioners were not illegally dismissed; and (c) Reversing the decision of the Labor
Arbiter.

In the instant case, the petitioners allege that the NLRC acted in total disregard of
evidence material or decisive of the controversy.

Issues:

(a) W/N there exist an employee- employer relationship between the petitioners and the
private respondents.

(b) W/N the private respondents are engaged in the business of making movies.

(c) W/N the producer is a job contractor.

Page 16 of 21
Held:

There exist an employee- employer relationship between the petitioners and the private
respondents because of the ff. reasons that nowhere in the appointment slip does it
appear that it was the producer who hired the crew members. Moreover, it was VIVAs
corporate name appearing on heading of the slip. It can likewise be said that it was VIVA
who paid for the petitioners salaries.

Respondents also admit that the petitioners were part of a work pool wherein they
attained the status of regular employees because of the ff. requisites: (a) There is a
continuous rehiring of project employees even after cessation of a project; (b) The tasks
performed by the alleged project employees are vital, necessary and indispensable to
the usual business or trade of the employer; and (c) However, the length of time which
the employees are continually re-hired is not controlling but merely serves as a badge of
regular employment.

Since the producer and the crew members are employees of VIVA and that these
employees works deal with the making of movies. It can be said that VIVA is engaged of
making movies and not on the mere distribution of such.

The producer is not a job contractor because of the ff. reasons: (Sec. Rule VII, Book III
of the Omnibus Rules Implementing the Labor Code.)

a. A contractor carries on an independent business and undertakes the contract work on

his own account under his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal in all matters connected
with the performance of the work except as to the results thereof. The said producer has
a fix time frame and budget to make the movies.

b. The contractor should have substantial capital and materials necessary to conduct his
business. The said producer, Del Rosario, does not have his own tools, equipment,
machinery, work premises and other materials to make motion pictures. Such materials
were provided by VIVA.

It can be said that the producers are labor-only contractors. Under Article 106 of the
Labor Code (reworded) where the contractor does not have the requisites as that of the
job contractors.

77.

COCA COLA BOTTLERS INC v. DELA CRUZ

Actions; Pleadings and Practice; Procedural Rules and Technicalities; A partys belated
attention to the imputed defect indicates to us that it did not consider this defect worth
raising when things were going its way, but considered it a serious one when things
turned the other waythis opportunistic stance is not the Courts idea of how technical

Page 17 of 21
deficiencies should be viewed.After due consideration, we deem the respondents to
have substantially complied with the verification and certification requirements in their
petition for certiorari before the CA. We find from our examination of the records that
the fact situation that gave rise to the notarial issue before the CA was not a new one; the
same situation obtained before the NLRC where the verification and certification of the
respondents appeal were also notarized before the same notary publicDiosdado V.
Macapagaland where the respondents presented the same evidence of identity (their
community tax certificates). The petitioners belated attention to the imputed defect
indicates to us that the petitioner did not consider this defect worth raising when things
were going its way, but considered it a serious one when things turned the other way.
This opportunistic stance is not our idea of how technical deficiencies should be viewed.
We are aware, too, that under the circumstances of this case, the defect is a technical
and minor one; the respondents did file the required verification and certification of
non-forum shopping with all the respondents properly participating, marred only by a
glitch in the evidence of their identity. In the interest of justice, this minor defect should
not defeat their petition and is one that we can overlook in the interest of substantial
justice, taking into account the merits of the case as discussed below.

Labor Law; Labor-Only Contracting; Parties; Where the main issue is labor
contracting and a labor-only contracting situation is found to exist, the question of
whether or not the purported contractors are necessary parties is a non-issuethese
purported contractors are mere representatives of the principal/employer whose
personality, as against that of the workers, is merged with that of the
principal/employer.Where, as in this case, the main issue is labor contracting and a
labor-only contracting situation is found to exist as discussed below, the question of
whether or not the purported contractors are necessary parties is a non-issue; these
purported contractors are mere representatives of the principal/employer whose
personality, as against that of the workers, is merged with that of the
principal/employer. Thus, this issue is rendered academic by our conclusion that
labor-only contracting exists. Our labor-only contracting conclusion, too, answers the
petitioners argument that confusion results because the workers will have two
employers.

Same; Same; Contracting and sub-contracting are hot labor issues for two reasons
the first is that job contracting and labor-only contracting are technical Labor Code
concepts that are easily misunderstood, and, the second, echoing the cry from the
labor sector, is that the Labor Code provisions on contracting are blatantly and
pervasively violated, effectively defeating workers right to security of tenure; The law
allows contracting and subcontracting involving services but closely regulates these
activities for the protection of workers.Contracting and sub-contracting are hot
labor issues for two reasons. The first is that job contracting and labor-only
contracting are technical Labor Code concepts that are easily misunderstood. For one,

Page 18 of 21
there is a lot of lay misunderstanding of what kind of contracting the Labor Code
prohibits or allows. The second, echoing the cry from the labor sector, is that the Labor
Code provisions on contracting are blatantly and pervasively violated, effectively
defeating workers right to security of tenure. This Court, through its decisions, can
directly help address the problem of misunderstanding. The second problem, however,
largely relates to implementation issues that are outside the Courts legitimate scope of
activities; the Court can only passively address the problem through the cases that are
brought before us. Either way, however, the need is for clear decisions that the
workers, most especially, will easily understand and appreciate. We resolve the
present case with these thoughts in mind. The law allows contracting and
subcontracting involving services but closely regulates these activities for the
protection of workers. Thus, an employer can contract out part of its operations,
provided it complies with the limits and standards provided in the Code and in its
implementing rules.

Same; Same; Sales Route Helpers; In strictly laymans terms, a manufacturer can sell
its products on its own, or allow contractors, independently operating on their own, to
sell and distribute these products in a manner that does not violate the regulations.
In strictly laymans terms, a manufacturer can sell its products on its own, or allow
contractors, independently operating on their own, to sell and distribute these
products in a manner that does not violate the regulations. From the terms of the
above-quoted D.O. 18-02, the legitimate job contractor must have the capitalization
and equipment to undertake the sale and distribution of the manufacturers products,
and must do it on its own using its own means and selling methods.

Same; Same; Same; Where the contractors were merely suppliers of labor, the
contracted personnel, engaged in component functions in the main business of the
company under the latters supervision and control, cannot but be regular company
employees.Following the lead we gave in Magsalin, 403 SCRA 199 (2003), the CA
concluded that the contracted personnel who served as route helpers were really
engaged in functions directly related to the overall business of the petitioner. This led
to the further CA conclusion that the contracted personnel were under the companys
supervision and control since sales and distribution were in fact not the purported
contractors independent, discrete and separable activities, but were component parts
of sales and distribution operations that the company controlled in its softdrinks
business. Based on these considerations, we fully agree with the CA that Peerless and
Excellent were mere suppliers of labor who had no sufficient capitalization and
equipment to undertake sales and distribution of softdrinks as independent activities
separate from the manufacture of softdrinks, and who had no control and supervision
over the contracted personnel. They are therefore labor-only contractors.
Consequently, the contracted personnel, engaged in component functions in the main
business of the company under the latters supervision and control, cannot but be

Page 19 of 21
regular company employees. In these lights, the petition is totally without merit and
hence must be denied.

Where the contractors were merely suppliers of labor, the contracted personnel,
engaged in component functions in the main business of the company under the latters
supervision and control, cannot but be regular company employees.

FACTS:
Respondents Dela Cruz et.al. filed complaints for regularization with money claims
against Coca-Cola Bottlers. The respondents alleged they are route helpers who go from
the Coca- Cola sales offices or plants to customer outlets, and doing such, their jobs are
necessary and desirable in its main business. They further alleged that they worked
under the control and supervision of the companys supervisors who prepared their
work schedules and assignments. They argued that the petitioners contracts of services
with Peerless and Excellent are in the nature of labor-only contracts prohibited by law
since Peerless and Excellent did not have sufficient capital or investment to provide
services to the petitioner.

Coca-cola, the petitioner, contended that it entered into contracts of services with
Peerless and Excellent Partners to provide allied services and that the contractors shall
pay the salaries of all personnel assigned to the petitioner. It claimed that its main
business is softdrinks manufacturing and the respondents tasks of sale and distribution
are not part of the manufacturing process. The petitioner posited that there is no
employer-employee relationship between the company and the respondents and the
complaints should be dismissed for lack of jurisdiction.

The labor arbiter and the NLRC dismissed the case. CA reversed the decision and denied
the motion for reconsideration. Thus this petition.

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

HELD:
Article 106 which provides: Whenever, an employer enters into a contract with another
person for the performance of the formers work, the employees of the contractor and of
the latters subcontractor shall be paid in accordance with the provisions of this Code. x
x x There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and
placed by such persons are performing activities which are directly related to the
principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the alter were directly employed by him.

Page 20 of 21
The CA noted that both the contracts for Peerless and the Excellent show that their
obligation was solely to provide the company with the services of contractual
employees, and nothing more. Peerless and Excellent were mere suppliers of labor who
had no sufficient capitalization and equipment to undertake sales and distribution of
softdrinks as independent activities separate from the manufacture of softdrinks, and
who had no control and supervision over the contracted personnel. They are therefore
labor-only contractors. Consequently, the contracted personnel, engaged in component
functions in the main business of the company under the latters supervision and
control, cannot but be regular company employees.

Page 21 of 21