VILLUGA, ET. AL. V.

NLRC
GR NO. 75038
AUGUST 23, 1993

FACTS: Elias Villuga was employed in Broad Street Tailoring as a cutter. He receives monthly salary and
transportation allowance. In addition to his work as a cutter, during the absence of the shop’s manager
and assistant manager, he would be the one distributing the work to the shop’s tailors. He is to make
sure that their work conformed with the pattern he prepared. On the other hand, other petitioners
were ironers, repairmen and sewers. Their salaries are based on every item ironed, repaired or sewn
regardless of the time consumed. There are also allowed to perform their work at home especially when
they could no longer cope with the volume of work.

Petitioner Villuga, for four days, failed to report to work allegedly due to illness. He was not able to
notify his employer and the latter considered he abandoned his work. He filed with Regional Office of
the Department of Labor for illegal dismissal and the refusal of his admittance for work is due to his
active participation in the union organized by private respondent’s tailors. He also claimed that he was
not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service
incentive leave pay and 13th month. Other petitioners also claimed that they were dismissed from their
work because they joined the Philippine Social Security Labor Union (PSSLU). They stopped working
because private respondents gave them few pieces of work to do after learning their membership with
PSSLU.

Labor Arbiter dismissed the complaint except petitioner Villuga’s claim for 13th month pay for the years
1976, 1977 and 1980. The complaints regarding the other eleven petitioners were likewise dismissed for
want of jurisdiction. On appeal, NLRC affirmed the assailed decision. Thus, this is the present petition.

Issue: Whether there is an employee-employer relationship between other eleven petitioners and Broad
Street Tailoring that warrants them a claim for benefits under Labor Code; and when it comes to Villuga,
whether his employment is managerial in character?

Held: The court held that Villuga’s employment is not managerial in character though he distributes and
assigns work to employees during the absence of the manager and assistant manager but such is
occasional and not regular. In Franklin Baker Company of the Philippines v. Trajano, the court held that
employees who do not participate in policy-making but are given ready policies to execute the standard
practices to observe are not managerial employees. Another test was of managerial status depends on
whether a person possess authority that requires the use of independent judgment. In this light, it is
obvious that Villuga was hired to be a cutter and not hired to perform managerial functions. He is
therefore not entitled with benefits claimed under Articles 87 (overtime pay and premium pay for
holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the
Labor Code. But since he is uniformly paid, he is entitled from the benefits of holiday pay as held in the
case of Insular Bank of America Employees Union v. Inciong. It was also held that there was no illegal
dismissal on the ground of membership on union. But there was no abandonment that warrants the
dismissal. The court held that a sanction was justified and not dismissal. Instead of reinstatement,
Villuga was entitled with separation pay since reinstatement was no longer possible.

In regards with the other eleven petitioners, the court held that they are not independent contractors.
There was an employee-employer relationship since the four elements were satisfied namely: (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. The mere fact that petitioners were paid based on
piece- rate basis does not mean that they were not employees. Such was just a method of compensation
and does not define the essence of the relation. And though they were allowed to perform their work in
their home does not imply absence of control and supervision. The control test calls merely for the
existence of a right to control the manner of doing the work, not the actual exercise of the right. And in
the case of Rosario Brothers, Inc. v. Ople, the court already pronounced that tailors and similar workers
hired in the tailoring department, although paid weekly wages on piece of work basis, are employees
not indepent contractors. As regular employees paid on a piece-rate basis, petitioners are not entitled to
overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. They were
also not entitled for separation pay since they were dismissed by the private respondent.
HIJOS DE F. ESCANO, INC., V NLRC
G.R. NO. 59229
22 AUGUST 1991

FACTS:
prior to the incorporation, Pier 8 Arrastre and Stevedoring Services, Inc. (Pier 8 A&S), two stevedoring
companies had been serving vessels docketing in pier 8. One of which was the Manila Integrated
Services, Inc. (MISI) which was serving Escaño vessels that then was docking in pier 8. The other was the
San Nicolas Stevedoring and Arrastre Services, Inc. (SNSASI) which was serving Compania Maritama
vessels. Pursuant to Philippine Port Authority’s policy of “one pier, one Arrastre and/or stevedoring
company, MISI and SNSASI merged to form Pier 8 Arrastre and Stevedoring Services, Inc.

But sometime in June 1978, Escaño transferred to pier 16. Pier 8 A&S encountered problems; business
was severely reduced with only Compania Maritama to service. The continuance of service to Escaño
was not possible since there was another company exclusive authorized to handle and render
stevedoring in pier 16. Because of the surplus of employees, Pier 8 A&S altered the work schedule by
rotating them. The scheme was resisted by the stevedores especially those formerly assigned to service
of Escaño vessels. The affected stevedores boycotted Pier 8 leading to their severance from
employment. They continued to refuse to go back to work even after they were served with a return-to-
work order.

On September 8, 1978, National Organization of Workingmen ("NOWM") PSSLU-TUCP, the labor

organization wherein majority of the laborers of petitioner Pier 8 A&S, filed a complaint for unfair labor
practice and illegal dismissal against Pier 8 A&S. On their amendment, they implead to include Escaño as
respondent before the Ministry of Labor and Employment. The complaint for illegal dismissal was
addressed in compulsory arbitration wherein the labor arbiter found through position papers submitted
by parties that Pier 8 A&S and Escaño guilty of committing acts guilty of unfair labor practice and were
ordered to reinstate petitioners and pay them jointly and severally of full backwages counted from the
time they were illegal dismissed. The decision was appealed by petitioners with NLRC but the same was
affirmed. They filed petition with the Court contending that NLRC committed grave abuse of discretion
on upholding that the stevedores were not only employees of Pier 8 A&S but also of Escaño. The
stevedores claimed that since they had long serving Escaño vessels, they should also be considered as
employees of Escaño.

Issue: Whether a shipping company engaged with inter-island business has an employee-employer
relationship with stevedores who had been long servicing them with the loading and unloading of cargo
on or from the vessel on port that would make the former liable for illegal dismissal?

Held: There was no employer-employee relationship between Escaño and the stevedores. It was not
alleged that Escaño or any other shipping company was also engaged in Arrastre and stevedoring
services. Considering that a shipping company is not customarily enagaged in stevedoring and arrastre
activities, Escaño and other shipping companies contracts with other companies offering those services.
In this light, stevedores should not be deemed employees of the shipping company. Therefore, Escaño
cannot be held liable with Pier 8 A&S.
SEVILLA V. CA
G.r. No. 44182-3
15 APRIL 1988

FACTS:
A contract by and between Noguera and Tourist World Service (TWS), represented by Canilao,
wherein TWS leased the premises belonging to Noguera as branch office of TWS. 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 Mrs. Sevilla, 4% was to go to Sevilla and 3% was to be withheld by the TWS. Later, TWS
was informed that Sevilla was connected with rival firm, and since the branch office was losing, TWS
considered closing down its office.

On January 3, 1962, the contract with appellee for the use of the branch office premises was
terminated and while the effectivity thereof was January 31, 1962, the appellees no longer used it.
Because of this, Canilao, the secretary of TWS, went over to the branch office, and finding the premises
locked, he padlocked the premises. When neither appellant Sevilla nor any of his employees could enter,
a complaint was filed by the appellants against the appellees. TWS insisted that Sevilla was a mere
employee, being the “branch manager” of its branch office and that she had no say on the lease
executed with the private respondent, Noguera.

ISSUE: W/N ER-EE relationship exists between Sevilla and TWS

RULING: The records show that petitioner, Sevilla, was not subject to control by the private respondent
TWS. In the first place, under the contract of lease, she had bound herself in solidum as and for rental
payments, an arrangement that would belie claims of a master-servant relationship. That does not make
her an employee of TWS, since a true employee cannot be made to part with his own money in
pursuance of his employer’s business, or otherwise, assume any liability thereof.

In the second place, when the branch office was opened, the same was run by the appellant
Sevilla payable to TWS by any airline for any fare brought in on the effort of Sevilla. Thus, it cannot be
said that Sevilla was under the control of TWS. Sevilla in pursuing the business, relied on her own
capabilities.

It is further admitted that Sevilla was not in the company’s payroll. For her efforts, she retained
4% in commissions from airline bookings, the remaining 3% going to TWS. Unlike an employee, who
earns a fixed salary, she earned compensation in fluctuating amount depending on her booking
successes. The fact that Sevilla had been designated “branch manager” does not make her a TWS
employee. It appears that Sevilla is a bona fide travel agent herself, and she acquired an interest in the
business entrusted to her. She also had assumed personal obligation for the operation thereof, holding
herself solidary liable for the payment of rentals.

Wherefore, TWS and Canilao are jointly and severally liable to indemnify the petitioner, Sevilla.
ILOILO CHINESE COMMERCIAL SCHOOL V. FABRIGAR
L-16600, 27
DECEMBER 1961

FACTS: Santiago Fabrigar had been employed from 1947 to Mar. 12, 1956, as a janitor-messenger of
Iloilo Commercial School. On Mar. 13 he spat blood and stopped working. He undergo treatment for
pulmonary tuberculosis and for heart disease. It was concluded by the commission that between his last
day of work and his death, it was indicated that he had been suffering from such disease even during the
time he was employed and considering the strenuous work he preformed , his employment as janitor
aggravated his pre-existing illness. As a result of the death his heirs filed for a claim for compensation
under the workmen’s compensation commission. The WCC denied the claim for failure to prove that the
disease was contracted in line of duty.

ISSUE: WON the heirs of Fabrigar entitled compensation under WCC

Held: The court ruled in favor of the heirs of fabrigar

While Petitioner contends that the preponderance of evidence on the matters involved in this case,
militates in its favor.

Considering the doctrine that the Commission, like the Court of Industrial Relations, is bound not by the
rule of preponderance of evidence as in ordinary civil cases, but by the rule of substantial evidence.

Considering the strenuous work that he performed while in the service of the respondents and the
unusually long hours of work he rendered beyond the normal and legal working hours, we find that his
employment aggravated his pre-existing illness and brought about his death. Moreover, our conclusion
finds support in the fact that immediately preceding his last day of work with the respondent, he had an
unusually hard day lifting desks and other furnitures and assisting in the preparations for the graduation
exercises of the school. Considering also his complaints during that day (March 11), among which was
"shortness of breath", we may also say that his work affected an already existing heart ailment.

Note: It is claimed that actually the deceased was not an employee of the petitioner, but by the Iloilo
Chinese Chamber of Commerce which was the one that furnished the janitor service in the premises of
its buildings; that the Chamber of Commerce paid the salaries of janitors, including the deceased. It is
pretended that the deceased was not an employee of the school but of the Chinese Chamber of
Commerce which should be the one responsible for the compensation of the deceased.

according to the Commission, there is substantial proof to the effect that Fabrigar was employed by and
rendered service for the petitioner and was an employee within the purview of the Workmen's
Compensation Law. On the other hand, the most important test of employer-employee relation is the
power to control the employee's conduct. The records disclose that the person in charge of the
respondent school supervised the deceased in his work and had control over the manner he performed
the same.

Considering that this factual question has not been properly put in issue before the Commission, it may
not now be entertained in this appeal for the first time
MAM REALTY DEV. CORP. V. NLRC
G.R. NO. 114787
2 JUNE 1995

FACTS: Balbastro filed a complaint against petitioners, MAM realty and its Vice Pres Centeno, for wage
differentials, overtime pay and others. Balbastro alleged that he was employed by MAM as a pump
operator and performed such work at its Rancho Estate. He earned a monthly salary who worked seven
days a week. Petitioner alleged that Balbastro had previously been employed by Francisco Cancho Inc.,
the developer of Rancho Estates. His services were contracted by petitioner for the operation of the
Rancho Estates’ water pump. Under the agreement, Balbastro was made to open and close daily the
water supply system. He worked for only a maximum of 3 hours a day and used his free times by
offering plumbing services to the residents of the subdivision.

ISSUE: W/N there exists an ER-EE relationship between petitioner and Balbastro

HELD: Yes. Repeatedly, the issue of the existence of ER-EE relationship is determined by the following
factors:

1. selection and engagement of the employees

2. payment of wages
3. power of dismissal
4. employer’s power to control the employee with respect to the result to be done and to the
means and methods by which the work is to be accomplished.
The power of control refers merely to the existence of the power and not to the actual 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.

With regards to the liability of Centeno, Vice Pres of MAM, he is not jointly and severally liable
with MAM. A corporation, being a juridical entity, may act only through its directors, officers,
employees. Obligations incurred by them, are not theirs but the direct accountabilities of the
corporation they represent. Solidary liability may at times be incurred but only when exceptional
circumstances warrant, such as:

1. When directors and trustees or the officers of a corporation:

a. vote for or assent to patently unlawful acts of the corporation
b. act in bad faith or with gross negligence
c. guilty of conflict of interest
2. When a director or officer has consented to the issuance of watered stocks or who, having
knowledge thereof, did not file his written objection thereto
3. When a director, trustee or officer has agreed to hold himself personally and solidarily liabl
e with corporation
4. When a director, trustee or officer is made personally liable for his corporate action.
In the case at bench, there is nothing substantial that can justify Centeno’s solidary liability with
corporation.
JIMENEZ, ET. AL., V. NLRC
G.R. NO. 116969
2 APRIL 1996

FACTS: Pedro and Fredelito Juanatas, father and son, filed a claim for unpaid wages/commission,
separation pay and damages against JJ’s Trucking and/or Bernardordo Jimenez. The private respondents
alleged in their compliant that in December 1987, they were hired by the petitioner as driver/mechanic
and helper respectively. They were assigned to a ten (wheeler truck and paid on commission basis
initially fixed at 17% but was later increased to 20% in1988 but in March 1990, their services were
illegally terminated and they only received partial commission for the total gross income of the years
1998 and 1999. it is the refusal of the petitioners to pay the said commission was a ploy to unjustly
terminate them. Petitioners contended that Fredelito Juanatas was not an employee of the firm #ut was
merely a helper of his father Pedro0 the commissions due to Pedro were duly paid0 and there was no
illegal dismissal since the truck that the private respondents were using was sold to one Winston Flores.

The Labor Arbiter rendered decision ordering respondents to pay jointly and severally Pedro Juantas for
the separation pay and dismissed the complaint of Fredelito Juanatas for lack of merit. but on appeal,
the decision was modified and Fredelito Juanatas was declared to #e respondent’s employee who was
entitled also of commission and separation fee. Petitioner’s motion for reconsideration was also denied.
Thus, the present petition.

Issue: Whether there is an employer employee relationship when the person was hired as mere helper
by another employee and not my the company itself.

Held: None. There was no employee (employer relationship) between Fredelito Juanatas and
petitioners. The four elements in determining the existence of employer (employee relationship are: (1.)
the selection and engagement of the employee (2) the Payment of wages. (3) the power of dismissal and
the power to control the employees conduct, were lacking in the present case. And in the present case,
Fredelito was hired by his father and the compensation he received was out of his father’s commission.
t was also established that Fredelito was not subject to the control and supervision of and dismissal
of the petitioners #ut pf his father. Therefore, there was no employer (employee relationship
established and Fredelito Juanatas was not entitled to separation pay and award of commission