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PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC v. HON. RUBEN D.

TORRES

As a result of published stories of abused Filipino housemaids in HongKong, DOLE Secretary issued a
department order temporarily suspending the recruitment of private employment agencies of Filipino
Domestic helpers going to Hong Kong. The DOLE itself, through the POEA took over the business of
deploying such Hong Kong-bound workers. PASEI, the largest national organization for private
employment and recruitment agencies, filed a petition to annul the DOLE and POEA circulars and to
prohibit implementation Due to the following reasons:

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

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

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

ISSUE:

Whether DOLE has the authority to issue the said circulars?

RULING:

Yes, Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate
recruitment and placement activities.

The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not


unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing complexity
of the modern society" (

Said Administrative Order merely restricted the scope or area of petitioner's business operations by
excluding therefrom recruitment and deployment of domestic helpers for Hong Kong till after the
establishment of the "mechanisms" that will enhance the protection of Filipino domestic helpers
going to Hong Kong.

They are reasonable, valid and justified under the general welfare clause of the Constitution, since
the recruitment and deployment business, as it is conducted today, is affected with public interest.

The questioned circulars are therefore a valid exercise of the police power as delegated to the
executive branch of Government.
SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW et. al., petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, et. al., respondents

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios
Hospital Employees Association sent a four (4)-page letter with attached support signatures
requesting and pleading for the expeditious implementation and payment by respondent Juan De
Dios Hospital of the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days off
provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor’s Policy
Instructions No. 54 dated April 12, 1988.”

Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding
their claims for statutory benefits under the above-cited law and policy issuance. On February 26,
1992, the Labor Arbiter dismissed the complaint. Petitioners appealed before public respondent
National Labor Relations Commission which affirmed the Labor Arbiter’s decision.

Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M.
Drilon is valid or not.

Ruling: The policy instruction is not valid. This issuance clarifies the enforcement policy of this
Department on the working hours and compensation of personnel employed by hospital/clinics with
a bed capacity of 100 or more and those located in cities and municipalities with a population of one
million or more.

Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by
respondent NLRC, and has long been repealed with the passage of the Labor Code on May 1, 1974.
Article 302 of which explicitly provide: “All labor laws not adopted as part of this Code either directly
or by reference are hereby repealed. All provisions of existing laws, orders, decrees, rules and
regulations inconsistent herewith are likewise repealed.” Accordingly, only Article 83 of the Labor
Code which appears to have substantially incorporated or reproduced the basic provisions of
Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter’s validity may be
gauged. Article 83 of the Labor Code states: Normal Hours of Work. -- The normal hours of work of
any employee shall not exceed eight (8) hours a day.

“Health personnel in cities and municipalities with a population of at least one million (1,000,000) or
in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office
hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where
the exigencies of the service require that such personnel work for six (6) days or forty-eight (48)
hours, in which case they shall be entitled to an additional compensation of at least thirty per cent
(30%) of their regular wage for work on the sixth day. For purposes of this Article, “health personnel”
shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers,
laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel.”
A cursory reading of Article 83 of the Labor Code betrays petitioners’ position that “hospital
employees” are entitled to “a full weekly salary with paid two (2) days’ off if they have completed the
40-hour/5-day workweek”. What Article 83 merely provides are: (1) the regular office hour of eight
hours a day, five days per week for health personnel, and (2) where the exigencies of service require
that health personnel work for six days or forty-eight hours then such health personnel shall be
entitled to an additional compensation of at least thirty percent of their regular wage for work on the
sixth day. There is nothing in the law that supports then Secretary of Labor’s assertion that
“personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they
have completed the 40-hour/5-day workweek in any given workweek”. Needless to say, the
Secretary of Labor exceeded his authority by including a two days off with pay in contravention of
the clear mandate of the statute. Administrative interpretation of the law is at best merely advisory,
and the Court will not hesitate to strike down an administrative interpretation that deviates from the
provision of the statute.
Ester Asuncion v. Nlrc

Facts

Asuncion was employed as an accountant/bookkeeper by Mabini Medical Clinic. Official of DOLE


conducted a routine inspection and discovered upon Asuncion’s disclosure , violations of labor standars
laws, such as non-coverage from sss of the employees. Mabini was made to correct these violations.

Medical diector dr. Juco, charged asuncion with offenses such as chronic absenteeism, habitual tardiness,
loitering, disobedience and insubordination. Asuncion was required to explain within 2 days why he
should not be terminated. Asuncion responded after 3 days.

On tht same day, dr. Juco dismissed asuncion on the ground of disobedience of lawful orders and for her
failure to submit her rreply within the 2 day period.

LA declared tnatasuncion was illegaly dismissed. Nlrc set aside labor arbiters ruling.

ISSUE:

Whether asuncion was dismissed for just or authorized causes.

RULING:

Yes! There is lack of evidence to establish the charges of absenteeism andd tardiness.

A worker’s employment is property in the constitutional sense. He cannot be deprived of his work
without due process. In order for dismissal to be valid, not only must it be based on just cause supported
by clear and convincing evidence, the employee must also be given an opportunity to be heard.

Court, likewise, takes note of the fact that the two-day period given to petitioner
to explain and answer the charges against her was most unreasonable, considering that
she was charged with several offenses and infractions (35 absences, 23 half-days and
108 tardiness), some of which were allegedly committed almost a year before, not to
mention the fact that the charges leveled against her lacked particularity.
Apart from chronic absenteeism and habitual tardiness, petitioner was also made
to answer for loitering and wasting of company time, getting salary of an absent
employee without acknowledging or signing for it and disobedience and
insubordination.[18] Thus, the Labor Arbiter found that actually petitioner tried to
submit her explanation on August 11, 1994 or within the two-day period given her, but
private respondents prevented her from doing so by instructing their staff not to accept
complainants explanation, which was the reason why her explanation was submitted a
day later.
what would qualify as sufficient or ample opportunity, as required by law, would be every kind of
assistance that management must accord to the employee to enable him to prepare adequately for his
defense. In the case at bar, private respondents cannot be gainsaid to have given petitioner the ample
opportunity to answer the charges leveled against her.
LETRAN CALAMBA F%ACULTY and EMPLOYEES ASSOCIATION,
Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and
COLEGIO DE SAN JUAN DE LETRAN CALAMBA, INC.
FACTS: On October 8, 1992, the Letran Calamba Faculty and
Employees Association (petitioner) filed with Regional Arbitration
Branch No. IV of the National Labor Relations Commission (NLRC) a
Complaint against Colegio de San Juan de Letran, Calamba, Inc.
(respondent) for collection of various monetary claims due its
members. Subsequently, these three cases were consolidated.

The Labor Arbiter (LA) dismissed both the money claims of the
petitioners and the petition to declare strike illegal filed by
respondent. Both parties appealed to the NLRC and CA who both
affirmed the decision of LA.

Petitioner’s Contention: Since the pay for excess loads or overloads


does not fall under any of the enumerated exclusions in the
computation of basic pay of an employee (such as cash equivalents
of unused vacation and sick leave credits, overtime, premium, night
differential, holiday pay and cost-of-living allowances); and
considering that the said overloads are being performed within the
normal working period of eight hours a day, it only follows that the
overloads should be included in the computation of the faculty
members’ 13th-month pay.

Respondent’s Contention: Contrary to the asseveration of


petitioner, prior to the issuance of the DOLE Order, the prevailing
rule is to exclude excess teaching load, which is akin to overtime, in
the computation of a teacher’s basic salary and, ultimately, in the
computation of his 13th-month pay.

ISSUE: Whether or not an overload must be included for the


purposes of computing the 13th month pay of a teacher.
RULING: NO. An overload pay, owing to its very nature and
definition, may not be considered as part of a teacher’s regular or
basic salary, because it is being paid for additional work performed
in excess of the regular teaching load.
Overload work” is sometimes misunderstood as synonymous to
“overtime work” as this term is used and understood in the Labor
Code. These two terms are not the same because overtime work is
work rendered in excess of normal working hours of eight in a day
(Art. 87, Labor Code). Considering that overload work may be
performed either within or outside eight hours in a day, overload
work may or may not be overtime work.

Any teaching load in excess of the normal or regular teaching load


shall be considered as overload and does not form part of the
regular or basic pay.
In accordance with Article 83 of the Labor Code of the Philippines, as
amended, the normal hours of work of school academic personnel
shall not exceed eight (8) hours a day. Any work done in addition to
the eight (8) hours daily work shall constitute overtime work.

Under the Labor Code of the Philippines. To cite a few provisions:

“Art. 87 – Overtime work. Work may be performed beyond eight


(8) hours a day provided that the employee is paid for the overtime
work, additional compensation equivalent to his regular wage plus
at least twenty-five (25%) percent thereof.”

It is clear that overtime pay is an additional compensation other


than and added to the regular wage or basic salary, for reason of
which such is categorically excluded from the definition of basic
salary under the Supplementary Rules and Regulations
Implementing Presidential Decree 851.

Similarly, even if an overload is performed within the normal eight-


hour working day, an overload is still an additional or extra teaching
work which is performed after the regular teaching load has been
completed. Hence, any pay given as compensation for such
additional work should be considered as extra and not deemed as
part of the regular or basic salary.
SINGER SEWING MACHINE COMPANY, petitioner
vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE
COLLECTORS UNION-BAGUIO (SIMACUB)

FACTS:
SIMACUB filed a petition for direct certification as the sole and exclusive bargaining agent of all
collectors of the Singer Sewing Machine Company, Baguio City

SS machine opposed because union members are not employees


but are independent contractors evidenced by the collection agency
agreement they signed.
Med-arbiter ruled that there exists an er-ee relationship and granted
the certification election which was affirmed hy Drilon. The company
files the present petition on determination of relationship. The union
insists that the provisions of the Collection Agreement belie the
company’s position that the union members are independent
contractors.
ISSUE:
Whether there is er-ee relationship.
RULING:
NONE. If the union members are not employees, no right to organize
for the purpose of bargaining or as a bargain agent cannot br
recognized.
The ff. Elements are generally considered in determination of the
relationship: selection and engagement of ees, payment of wages,
power of dismissal and power to control ees conduct.
The nature of relationship between a comppany and its collecting agents
depends on the circumstances of each particular relationship. Not all
collecting agents are employees and neither aree all collecting agents
independent contractors. The agreement confirms the status of the collecting
agents as inndepemdent contractor. The requirement that collection agents
utilize only receipt forms and reports forms issued bynthe company and that
reports shall be submitted at least once a week is not necessarily an indication
of control over the means by which the job collection is to be performed. Even
if report requirements are to be called cont4ol measures, any control is only
with respect to the end result of the collection since the requirements regulate
he things to be done after the performance of the collection job or the
rendition of service.
The plain language of the agreement reveals that the designation as collection
agent does not create an employment relationship and that the applicant to be
considered at all times as an independent contractor.
Since the private respondents are not employees of the company, they are not
entitled to the constitutional right to form or join a lanor organization for the
purposes of collective bargaining. There is no constitutional and legal basis for
their union to be granted their petition for direct certification.
Manila golf and country club inc. V. IAC
FACTS:
The caddies of manila golf country club petitioned with Social Security
Commission (SSC) for coverage and availment of benefits under the Social
Security Act as amended.
MGC had not registered them as employed with the sss based on the absence
of two elements: (1) payment of wages (paid by golf players themselves and
not by the respondent club); and (2) control and supervission over them,
(manner in which they performed work).
SSC dismissed their petition, thus they appealed to IAC. IAC declaed that er1-
ee relationship and Fermin Llamar passed the so-called “control test” 24-hour
rules and regulations, group rotation system, club’s “suggesting” the rate of
fees payable to the caddies.
ISSUES:
Whether caddies are employees of manila golf and cohntry club.

RULING:
NO. 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 work in. 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.

These considerations clash frontally with the concept of employment. 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, the caddy may leave the premises and to go to such other place of work
that he wishes. These are things beyond the control of the petitioner.

The caddy (LLamar) is not an employee of petitioner Manila Golf and Country Club and the
petitioner is under no obligation to report him for compulsory coverage of SSS.
ENCYCLOPEDIA BRITANNICA INC vs NLRC Case Digest
ENCYCLOPEDIA BRITANNICA (Philippines), INC. vs. NLRC

264 SCRA 4

Facts: Limjoco was a Sales Divison of Encyclopaedia Britannica and was in charge of selling the
products through some sales representatives. As compensation, he would receive commissions from
the products sold by his agents. He was also allowed to use the petitioner’s name, goodwill and
logo. It was agreed that office expenses would be deducted from Limjoco’s commissions.

In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner for
alleged non-payment of separation pay and other benefits and also illegal deduction from sales
commissions. Petitioner alleged that Limjoco was not an employee of the company but an
independent dealer authorized to promote and sell its products and in return, received commissions
therein. Petitioner also claims that it had no control and supervision over the complainant as to the
manners and means he conducted his business operations. Limjoco maintained otherwise. He
alleged he was hired by the petitioner and was assigned in the sales department.

The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the
decision and opined that there was no evidence supporting allegation that Limjoco was an
independent contractor or dealer.

Issue: Whether or not there was an employee-employer relationship between the parties.

Ruling: There was no employee-employer relationship. In determining the relationship, the following
elements must be present: selection and engagement of the employee, payment of wages, power of
dismissal and power to control the employee’s conduct. The power of control is commonly regarded
as the most crucial and determinative indicator of the presence or absence of an employee-
employer relationship. Under the control test, an employee-employer relationship exists where the
person for whom the services are performed reserves a right to control not only the end to be
achieved, but also the manner and means to be employed in reaching that end.

The issuance of guidelines by the petitioner was merely guidelines on company policies which sales
managers follow and impose on their respective agents. Limjoco was not an employee of the
company since he had the free rein in the means and methods for conducting the marketing
operations. He was merely an agent or an independent dealer of the petitioner. He was free to
conduct his work and he was free to engage in other means of livelihood.

In ascertaining the employee-employer relationship, the factual circumstances must be considered.


The element of control is absent where a person who works for another does so more or less at his
own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated in
according to the result of his efforts and not the amount thereof. Hence, there was no employee-
employer relationship
380 SCRA 467

Facts: Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in
the gall bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The
operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was
admitted to the medical center the day before the operation. On the following day, she was ready for
operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio
wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than
3 hours of the scheduled operation.

Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left
hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there for a month.
Since the ill-fated operation, Erlinda remained in comatose condition until she died.

The family of Ramos sued them for damages.

Issue: Whether or not there was an employee-employer relationship that existed between the
medical center and Drs. Hosaka and Guiterrez.

Ruling: Private Hospitals hire, fire and exercise real control over their attending and visiting
consultant staff. While consultants are not technically employees, the control exercised, the hiring
and the right to terminate consultants fulfill the hallmarks of an employer-employee relationship with
the exception of payment of wages. The control test is determining.

In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors.
It has been consistently held that in determining whether an employer-employee relationship exists
between the parties, the following elements must be present: (1) selection and engagement of
services; (2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only
the end to be achieved, but the means to be used in reaching such an end.

The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a
clinic and/or admitting patients. It is the patient who pays the consultants. The hospital cannot
dismiss the consultant but he may lose his privileges granted by the hospital. The hospital’s
obligation is limited to providing the patient with the preferred room accommodation and other things
that will ensure that the doctor’s orders are carried out.

The court finds that there is no employer-employee relationship between the doctors and the
hospital.
JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 138051

June 10, 2004

Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonza’s services
exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly
talent fee of P310, 000 for the first year and P317, 000 for the second and third year.

On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent
events concerning his program and career. After the said letter, Sonza filed with the Department of
Labor and Employment a complaint alleging that ABS-CBN did not pay his salaries, separation pay,
service incentive pay,13th month pay, signing bonus, travel allowance and amounts under the
Employees Stock Option Plan (ESOP). ABS-CBN contended that no employee-employer
relationship existed between the parties. However, ABS-CBN continued to remit Sonza’s monthly
talent fees but opened another account for the same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-employer
relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of
NLRC.

Issue: Whether or not there was employer-employee relationship between the parties.

Ruling: Case law has consistently held that the elements of an employee-employer relationship are
selection and engagement of the employee, the payment of wages, the power of dismissal and the
employer’s 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.

Sonza’s services to co-host its television and radio programs are because of his peculiar talents,
skills and celebrity status. 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. All the talent fees and benefits paid to SONZA were the result of negotiations that led to
the Agreement. For violation of any provision of the Agreement, either party may terminate their
relationship. Applying the control test to the present case, we find that SONZA is not an employee
but an independent contractor.
The control test is the most important test our courts apply in distinguishing an employee from 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. 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-CBN’s control. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN
merely reserved the right to modify the program format and airtime schedule "for more effective
programming." ABS-CBN’s sole concern was the quality of the shows and their standing in the
ratings.

Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonza’s
work. A radio broadcast specialist who works under minimal supervision is an independent
contractor. Sonza’s work as television and radio program host required special skills and talent,
which SONZA admittedly possesses.

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries
to treat talents like Sonza as independent contractors. The right of labor to security of tenure as
guaranteed in the Constitution arises only if there is an employer-employee relationship under labor
laws. 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.
ANGELITO LAZARO vs. SOCIAL SECURITY COMMISSION

435 SCRA 472 (2004)

Facts: Respondent Rosalina M. 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, proprietor of Royal Star Marketing
(“Royal Star”), which is engaged in the business of selling home appliances.

Lazaro denied that Laudato was an employee but instead claimed that she was an agent of the
company. Lazaro also maintained that she was not mandated to work of definite work hours and
thus not deemed to be a regular employee of Royal Star Marketing, the company of Lazaro.

SSC promulgated a decision rendering that Laudato is a regular employee of Royal Star Marketing
and entitled to social security contributions. Lazaro filed a petition for review before the CA where CA
ruled that Laudato was an employee of Royal Star Marketing. This petition before the Court assails
same arguments raised by Lazaro in SSC. She raised that Laudato was not an employee of Royal
Star Marketing since Royal Star had no control over the activities of Laudato.

Issue: Whether or not Laudato was a regular employee of Royal Star Marketing and thus, entitled to
social security contributions.

Ruling: It is an accepted doctrine that for the purposes of coverage under the Social Security Act,
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.

The SSC, applying the control test found that Laudato was an employee of Royal Star. The Court
agrees with the findings of the SSC and the CA. The fact that Laudato was paid by way of
commission does not preclude the establishment of an employer-employee relationship.

In the case of Grepalife v. Judico, the Court upheld the existence of an employer-employee
relationship between the insurance company and its agents, despite the fact that the compensation
that the agents on commission received was not paid by the company but by the investor or the
person insured. 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.
Neither does it follow that a person who does not observe normal hours of work cannot be deemed
an employee.

In the case of Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the
existence of an employer-employee relationship, as the claimant according to it, was a “supervisor
on commission basis” who did not observe normal hours of work. This Court declared that there was
an employer-employee relationship, noting that “[the] supervisor, although compensated on
commission basis, [is] exempt from the observance of normal hours of work for his compensation is
measured by the number of sales he makes.”
ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO et al.

G.R. No. 164156

September 26, 2006

Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting


business and owns a network of television and radio stations, whose operations revolve around the
broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television operations. It has a franchise as a
broadcasting company, and was likewise issued a license and authority to operate by the National
Telecommunications Commission.

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production


assistants (PAs) on different dates. They were assigned at the news and public affairs, for various
radio programs in the Cebu Broadcasting Station. On December 19, 1996, petitioner and the ABS-
CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective
during the period from December 11, 1996 to December 11, 1999. However, since petitioner refused
to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay,
and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter
rendered judgment in favor of the respondents, and declared that they were regular employees of
petitioner as such, they were awarded monetary benefits. NLRC affirmed the decision of the Labor
Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.

Issue: Whether or not the respondents were considered regular employees of ABS-CBN.

Ruling: The respondents are regular employees of ABS-CBN. It was held that where a person has
rendered at least one year of service, regardless of the nature of the activity performed, or where the
work is continuous or intermittent, the employment is considered regular as long as the activity
exists, the reason being that a customary appointment is not indispensable before one may be
formally declared as having attained regular status.

In Universal Robina Corporation v. Catapang, the Court states that the primary standard, therefore,
of determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer.
The connection can be determined by considering the nature of work performed and its relation to
the scheme of the particular business or trade in its entirety. Also, if the employee has been
performing the job for at least a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity exists.

Additionally, respondents cannot be considered as project or program employees because no


evidence was presented to show that the duration and scope of the project were determined or
specified at the time of their engagement. In the case at bar, however, the employer-employee
relationship between petitioner and respondents has been proven. In the selection and engagement
of respondents, no peculiar or unique skill, talent or celebrity status was required from them because
they were merely hired through petitioner’s personnel department just like any ordinary employee.
Respondents did not have the power to bargain for huge talent fees, a circumstance negating
independent contractual relationship. Respondents are highly dependent on the petitioner for
continued work. The degree of control and supervision exercised by petitioner over respondents
through its supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the
employer and when the worker, relative to the employer, does not furnish an independent business
or professional service, such work is a regular employment of such employee and not an
independent contractor. As regular employees, respondents are entitled to the benefits granted to all
other regular employees of petitioner under the CBA . Besides, only talent-artists were excluded
from the CBA and not production assistants who are regular employees of the respondents.
Moreover, under Article 1702 of the New Civil Code: “In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and decent living of the laborer.”
ANGELINA FRANCISCO vs. NLRC

500 SCRA 690 (2006)

Facts: Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated
as accountant and corporate secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liason Officer to the City of Manila to secure permits for the
operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of
all employees and perform management administration functions. In 2001, she was replaced by Liza
Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was until
September. She asked for her salary but was informed that she was no longer connected to the
company. She did not anymore report to work since she was not paid for her salary. She filed an
action for constructive dismissal with the Labor Arbiter.

The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while
CA reversed it.

Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally, courts 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 to the
standard of right-of-control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the existence of an employer-
employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer’s power to control the employee with respect to the means and methods by which the work
is to be accomplished; and (2) the underlying economic realities of the activity or relationship.

In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an
employer-employee relationship based on an analysis of the totality of economic circumstances of
the worker.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the extent of the worker’s investment
in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the
worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight
required for the success of the claimed independent enterprise; (6) the permanency and duration of
the relationship between the worker and the employer; and (7) the degree of dependency of the
worker upon the employer for his continued employment in that line of business. The proper
standard of economic dependence is whether the worker is dependent on the alleged employer for
his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporation’s
Technical Consultant. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latter’s line of business.

There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation.
She was selected and engaged by the company for compensation, and is economically dependent
upon respondent for her continued employment in that line of business. Her main job function
involved accounting and tax services rendered to Respondent Corporation on a regular basis over
an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for
compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation
had the power to control petitioner with the means and methods by which the work is to be
accomplished.
ROGELIO NOGALES V. CAPITOL MEDICAL center

FACTS:
Pregnant with her fourth child, Corazon Nogales (“Corazon”), who was then 37 years old, was under the
exclusive prenatal care of Dr. Oscar Estrada (“Dr. Estrada”) beginning on her fourth month of pregnancy
or as early as December 1975. While Corazon was on her last trimester of pregnancy, Dr. Estrada noted
an increase in her blood pressure and development of leg edema indicating preeclampsia, which is a
dangerous complication of pregnancy. Around midnight of 25 May 1976, Corazon started to experience
mild labor pains prompting Corazon and Rogelio Nogales (“Spouses Nogales”) to see Dr. Estrada at his
home. After examining Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical
Center (“CMC”). The following day, Corazon was admitted at 2:30 a.m. at the CMC after the staff nurse
noted the written admission request of Dr. Estrada. Upon Corazon’s admission at the CMC, Rogelio
Nogales (“Rogelio”) executed and signed the “Consent on Admission and Agreement” and “Admission
Agreement.” Corazon was then brought to the labor room of the CMC. Corazon died at 9:15 a.m. The
cause of death was “hemorrhage, post partum.”

Petitioners filed a complaint for damages with the Regional Trial Court of Manila against CMC, Dr.
Estrada, and the rest of CMC medical staff for the death of Corazon. In their defense, CMC pointed out
that Dr. Estrada was a consultant to be considered as an independent-contractor, and that no employer-
employee relationship existed between the former and the latter.

After more than 11 years of trial, the trial court rendered judgment on 22 November 1993 finding Dr.
Estrada solely liable for damages. Petitioners appealed the trial court’s decision. Petitioners claimed that
aside from Dr. Estrada, the remaining respondents should be held equally liable for negligence.
Petitioners pointed out the extent of each respondent’s alleged liability.

On appeal, the Court of Appeals affirmed the trial court’s ruling and applied the “borrowed servant
doctrine” to release the liability of other medical staff. This doctrine provides that once the surgeon enters
the operating room and takes charge of the proceedings, the acts or omissions of operating room
personnel, and any negligence associated with such acts or omissions, are imputable to the surgeon.
While the assisting physicians and nurses may be employed by the hospital, or engaged by the patient,
they normally become the temporary servants or agents of the surgeon in charge while the operation is in
progress, and liability may be imposed upon the surgeon for their negligent acts under the doctrine
of respondeat superior.
ISSUE: Whether CMC is vicariously liable for the negligence of Dr. Estrada as its attending independent-
contractor physician considering that facts of the instant case.

HELD: YES.
In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however, an exception to this principle. The hospital may be liable if the physician is the “ostensible”
agent of the hospital. This exception is also known as the “doctrine of apparent authority.”xxx The doctrine
of apparent authority essentially involves two factors to determine the liability of an independent-
contractor physician. The first factor focuses on the hospital’s manifestations and is sometimes described
as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude
that the individual who was alleged to be negligent was an employee or agent of the hospital. In this
regard, the hospital need not make express representations to the patient that the treating physician is an
employee of the hospital; rather a representation may be general and implied. xxx The second factor
focuses on the patient’s reliance. It is sometimes characterized as an inquiry on whether the plaintiff acted
in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence.
xxx

In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through CMC’s
acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe
that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority. The
records show that the Spouses Nogales relied upon a perceived employment relationship with CMC in
accepting Dr. Estrada’s services. Rogelio testified that he and his wife specifically chose Dr. Estrada to
handle Corazon’s delivery not only because of their friend’s recommendation, but more importantly
because of Dr. Estrada’s “connection with a reputable hospital, the [CMC].” In other words, Dr. Estrada’s
relationship with CMC played a significant role in the Spouses Nogales’ decision in accepting Dr.
Estrada’s services as the obstetrician-gynecologist for Corazon’s delivery. Moreover, as earlier stated,
there is no showing that before and during Corazon’s confinement at CMC, the Spouses Nogales knew or
should have known that Dr. Estrada was not an employee of CMC. xxx CMC’s defense that all it did was
“to extend to [Corazon] its facilities” is untenable. The Court cannot close its eyes to the reality that
hospitals, such as CMC, are in the business of treatment.

xxx

The Court finds respondent Capitol Medical Center vicariously liable for the negligence of Dr. Oscar
Estrada. The amounts of P105,000 as actual damages and P700,000 as moral damages should each
earn legal interest at the rate of six percent (6%) per annum computed from the date of the judgment of
the trial court. The Court affirms the rest of the Decision dated 6 February 1998 and Resolution dated 21
March 2000 of the Court of Appeals in CA-G.R. CV No. 45641.
COCA-COLA BOTTLERS PHILS., INC., vs. DR. DEAN CLIMACO

G.R. No. 146881. February 15, 2007

Facts: Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer
agreement. The agreement states that there is no employer-employee relationship between the
parties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993.
Despite of the non-renewal of the agreement, respondent continued to perform his functions as
company doctor until he received a letter in March 1995 concluding their retainer agreement.

Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the
petitioner company and prayed for the payment of all benefits of a regular employee. In the decision
of the Labor Arbiter, the company lacked control over the respondent’s performance of his duties.
Respondent appealed where it rendered that no employer-employee relationship existed between
the parties.

The CA ruled that an employer-employee relationship existed.

Issue: Whether or not there exists an employer-employee relationship between the parties.

Ruling : The Court, in determining the existence of an employer-employee relationship, has


invariably adhered to the four-fold test: (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 so-called “control test,” considered to be the most important element.

The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this
case show that no employer-employee relationship exists between the parties. The Comprehensive
Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not
control the means and methods by which respondent performed his assigned tasks. In addition, the
Court finds that the schedule of work and the requirement to be on call for emergency cases do not
amount to such control, but are necessary incidents to the Retainership Agreement.

Considering that there is no employer-employee relationship between the parties, the termination of
the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent.
Calamba medical center, inc. V. Nlrc
Ronaldo Lanzanas and Merceditha Lanzanas are doctors employed by Calamba Medical
Center, Inc. They are given a retainer’s fee by the hospital as well as shares from fees
obtained from patients.
One time, Ronaldo was overheard by Dr. Trinidad talking to another doctor about how low
the admission rate to the hospital is. That conversation was reported to Dr. Desipeda who
was then the Medical Director of the hospital.
Eventually Ronaldo was suspended. Ronaldo filed a case for Illegal Suspension in March
1998. In the same month, the rank and file employees organized a strike against the
hospital for unfair labor practices. Desipeda eventually fired Ronaldo for his alleged
participation in the strike, which is not allowed under the Labor Code for he is a managerial
employee. Desipeda also fired Merceditha on the ground that she is the wife of Ronaldo
who naturally sympathizes with him.
The Labor Arbiter ruled that there was no Illegal Suspension for there was no employer-
employee relationship because the hospital has no control over Ronaldo as he is a doctor
who even gets shares from the hospitals earnings.
The National Labor Relations Commission as well as the Court of Appeals reversed the LA.
ISSUE: Whether or not there is an employer-employee relationship?
HELD: Yes. Under the control test, an employment relationship exists between a physician
and a hospital if the hospital controls both the means and the details of the process by
which the physician is to accomplish his task. There is control in this case because of the
fact that Desipeda schedules the hours of work for Ronaldo and his wife.
The doctors are also registered by the hospital under the SSS which is premised on an
employer-employee relationship.
There is Illegal Dismissal committed against Rolando for there was no notice and hearing
held. It was never shown that Rolando joined the strike. But even if he did, he has the right
to do so for he is not a part of the managerial or supervisory employees. As a doctor, their
decisions are still subject to revocation or revision by Desipeda
There is illegal dismissal for the ground therefore was not mentioned in Art. 282 of labor code.
When is control absent?
Where aa person who works for another does so more or less at his own pleasure and is not
subject to definite hours or conditions of work, and is compensated according to the result of his
efforts and not the amount thereof, the element of control is absent.
William Ollendorf vs. Ira Abrahamson

38 Phil. 585

Facts: The record discloses that Ollendorf is and for a long time past has been engaged in the city
of Manila and elsewhere in the Philippines in the business of manufacturing ladies' embroidered
underwear for export. Ollendorf imports the material from which this underwear is made and adopts
decorative designs which are embroidered upon it by Filipino needle workers from patterns selected
and supplied by him. Most of the embroidery work is done in the homes of the workers. The
embroiderers employed by plaintiff are under contract to work for plaintiff exclusively.

On September 1915, plaintiff and defendant entered into a contract. Under the terms of this,
agreement defendant entered the employ of plaintiff and worked for him until April 1916, when
defendant, on account of ill health, left plaintiff's employ and went to the United States. While in
plaintiff's employ defendant had access to all parts of plaintiff's establishment, and had full
opportunity to acquaint himself with plaintiff's business methods and business connections. The
duties performed by him were such as to make it necessary that he should have this knowledge of
plaintiff s business. Defendant had a general knowledge of the Philippine embroidery business
before his employment by plaintiff, having been engaged in similar work for several years.

Some months after his departure, defendant returned to Manila as the manager of the Philippine
Underwear Company, a corporation. This corporation does not maintain a factory in the Philippine
Islands, but sends material and embroidery designs from New York to its local representative here
who employs Filipino needle workers to embroider the designs and make up the garments in their
homes. The only difference between plaintiff's business and that of the firm by which the defendant
is employed, is the method of doing the finishing work — the manufacture of the embroidered
material into finished garments.

Shortly after defendant's return to Manila and the commencement by him of the discharge of the
duties of his position as local manager of the Philippine Embroidery Company, plaintiff commenced
this action, the principal purpose of which is to prevent, by injunction, any further breach of that part
of defendant's contract of employment by plaintiff, by which he agreed that he would not "enter into
or engage himself directly or indirectly . . . in a similar or competitive business to that of (plaintiff)
anywhere within the Philippine Islands for a period of five years . . ." from the date of the agreement.

Issue: Whether or not the said contract is valid.

Ruling: The contract is a valid one. The only limitation upon the freedom of contractual agreement is
that the pacts established shall not be contrary to "law, morals or public order." (Civil Code, art.
1255.)
Public welfare is first considered, and if it be not involved, and the restraint upon one party is not
greater than protection to the other party requires, the contract may be sustained. The question is
whether, under the particular circumstances of the case and the nature of the particular contract
involved in it the contract is, or is not, unreasonable.

The Courts adopt the modern rule that the validity of restraints upon trade or employment is to be
determined by the intrinsic reasonableness of the restriction in each case, rather than by any fixed
rule, and that such restrictions may be upheld when not contrary to the public welfare and not
greater than is necessary to afford a fair and reasonable protection to the party in whose favor it is
imposed.

A business enterprise may and often does depend for its success upon the owner's relations with
other dealers, his skill in establishing favorable connections, his methods of buying and selling — a
multitude of details, none vital if considered alone, but which in the aggregate constitute the sum
total of the advantages which are the result of the experience or individual aptitude and ability of the
man or men by whom the business has been built up. Failure or success may depend upon the
possession of these intangible but all-important assets, and it is natural that their possessor should
seek to keep them from falling into the hands of his competitors.

It is with this object in view that such restrictions as that now under consideration are written into
contracts of employment. Their purpose is the protection of the employer, and if they do not go
beyond what is reasonably necessary to effectuate this purpose they should be upheld. We are of
the opinion, and so hold, that in the light of the established facts the restraint imposed upon
defendant by his contract is not unreasonable.
ALFONSO DEL CASTILLO V. SHANNON RICHMOND
FACTS.
The case was instituted to declare

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