JO vs.
NLRC petitioners, as new owners of the barbershop, hired private respondent as
G.R. No. 121605, February 2, 2000
FACTS: Private respondent working as a barber on piece-rate basis was
designated by petitioners as caretaker of their barbershop. Private respondent’s
duties as caretaker, in addition to his being a barber, were: 1) to report to the
owners of the barbershop whenever the air condition units malfunction and/or
whenever water or electric power supply was interrupted; 2) to call the laundry
woman to wash dirty linen; 3) to recommend applicants for interview and hiring;
4) to attend to other needs of the shop. For this additional job, he was given an
honorarium equivalent to1/3 of the net income of the shop.
Private respondent left his job voluntarily because of his misunderstanding with
his co-worker and demanded separation pay and other monetary benefits.
Petitioner’s contends that respondent was not their employee but their “partner
in trade” whose compensation was based on a sharing arrangement per haircut
or shaving job done.
ISSUE: Whether or not there exist an employer-employee relationship.
HELD: Yes. The Court reiterates the doctrine that the existence of an employer-
employee relationship is ultimately a question of fact and that the findings
thereon by the labor arbiter and the NLRC shall be accorded not only respect but
even finality when supported by ample evidence.
In determining the existence of an employer-employee relationship, the
following elements are considered: (1) the selection and engagement of the
workers; (2) power of dismissal; (3) the payment of wages by whatever means;
and (4) the power to control the workers conduct, with the latter assuming
primacy in the overall consideration. The power of control refers to the
existence of the power and not necessarily 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 employer has the right to wield that power.
Absent a clear showing that petitioners and private respondent had intended to
pursue a relationship of industrial partnership, we entertain no doubt that
private respondent was employed by petitioners as caretaker-barber. Initially,
1|Labor Standards Week 1- Jazztine Artizuela
barber by absorbing the latter in their employ.
Undoubtedly, the services performed by private respondent as barber is related
to, and in the pursuit of the principal business activity of petitioners. Later on,
petitioners tapped private respondent to serve concurrently as caretaker of the
shop.
Certainly, petitioners had the power to dismiss private respondent being the
ones who engaged the services of the latter. In fact, private respondent sued
petitioners for illegal dismissal, albeit contested by the latter.
As a caretaker, private respondent was paid by petitioners wages in the form
of honorarium, originally, at the rate of one-third (1/3) of the shops net income
but subsequently pegged at a fixed amount per month. As a barber, private
respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job
done.
Furthermore, the following facts indubitably reveal that petitioners controlled
private respondents work performance, in that:
(1) private respondent had to inform petitioners of the things needed in the
shop;
(2) he could only recommend the hiring of barbers and masseuses, with
petitioners having the final decision;
(3) he had to be at the shop at 9:00 a.m. and could leave only at 9:00 p.m.
because he was the one who opened and closed it, being the one entrusted
with the key.
These duties were complied with by private respondent upon instructions of
petitioners. Moreover, such task was far from being negligible as claimed by
petitioners. On the contrary, it was crucial to the business operation of
petitioners as shown in the preceding discussion. Hence, there was enough
basis to declare private respondent an employee of petitioners. Accordingly,
there is no cogent reason to disturb the findings of the labor arbiter and NLRC
on the existence of employer-employee relationship between herein private
parties.
REPUBLIC V. ASIAPRO COOPERATIVE
(G.R. NO. 172101)
FACTS: Respondent Asiapro Cooperative is composed of owners-members with
primary objectives of providing them savings and credit facilities and livelihood
services. In discharge of said objectives, Asiapro entered into several service
contracts with Stanfilco. Sometime later, the cooperative owners-members
requested Stanfilco’s help in registering them with SSS and remitting their
contributions. Petitioner SSS informed Asiapro that being actually a manpower
contractor supplying employees to Stanfilco, it must be the one to register itself
with SSS as an employer and remit the contributions. Respondent continuously
ignoring the demand of SSS the latter filed before the SSC. Asiapro alleges that
there exists no employer-employee relationship between it and its owners-
members, because the owners-members cannot be their own employees.
Hence, petitioner SSC has no jurisdiction over the petition-complaint filed before
it by SSS. SSC ruled in favor of SSS. On appeal, CA reversed the decision. It
ruled that SSC has no jurisdiction to take cognizance of the petition filed before
it because respondent is not an employer within the contemplation of the Labor
Law but is a multi-purpose cooperative created pursuant to Republic Act No.
6938 and composed of owners-members, not employees. It held that SSC
arbitrarily proceeded with the case as if it has jurisdiction over the petition a quo,
considering that it failed to first resolve the issue of the existence of an employer-
employee relationship between [respondent] cooperative and its owners-
members. Hence this petition.
ISSUE: Whether or not there is employer-employee relationship between
Asiapro and its owners-members.
RULING: YES. In determining the existence of an employer-employee
relationship, the following elements are considered: (1) the selection and
engagement of the workers; (2) the payment of wages by whatever means; (3)
the power of dismissal; and (4) the power to control the workers conduct, with
the latter assuming primacy in the overall consideration. 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 power of control refers to the existence of the power and not
necessarily to the actual exercise thereof. It is not essential for the employer to
2|Labor Standards Week 1- Jazztine Artizuela
actually supervise the performance of duties of the employee; it is enough that
the employer has the right to wield that power. All the aforesaid elements are
present in this case.
First. It is expressly provided in the Service Contracts that it is the respondent
cooperative which has the exclusive discretion in the selection and engagement
of the owners-members as well as its team leaders who will be assigned at
Stanfilco. Second. Wages are defined as remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained, on a time, task, piece or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
service rendered or to be rendered. In this case, the weekly stipends or the so-
called shares in the service surplus given by the respondent cooperative to its
owners-members were in reality wages, as the same were equivalent to an
amount not lower than that prescribed by existing labor laws, rules and
regulations, including the wage order applicable to the area and industry; or the
same shall not be lower than the prevailing rates of wages. It cannot be doubted
then that those stipends or shares in the service surplus are indeed wages,
because these are given to the owners-members as compensation in rendering
services to respondent cooperatives client, Stanfilco. Third. It is also stated in
the above-mentioned Service Contracts that it is the respondent cooperative
which has the power to investigate, discipline and remove the owners-members
and its team leaders who were rendering services at Stanfilco. Fourth. As earlier
opined, of the four elements of the employer-employee relationship, the control
test is the most important. In the case at bar, it is the respondent cooperative
which has the sole control over the manner and means of performing the services
under the Service Contracts with Stanfilco as well as the means and methods of
work. Also, the respondent cooperative is solely and entirely responsible for its
owners-members, team leaders and other representatives at Stanfilco. All these
clearly prove that, indeed, there is an employer-employee relationship between
the respondent cooperative and its owners-members.
It is true that the Service Contracts executed between the respondent
cooperative and Stanfilco expressly provide that there shall be no employer-
employee relationship between the respondent cooperative and its owners-
members. This Court, however, cannot give the said provision force and effect.

As previously pointed out by this Court, an employee-employer relationship
actually exists between the respondent cooperative and its owners-members.
The four elements in the four-fold test for the existence of an employment
relationship have been complied with. The respondent cooperative must not be
allowed to deny its employment relationship with its owners-members by
invoking the questionable Service Contracts provision, when in actuality, it does
exist. The existence of an employer-employee relationship cannot be negated
by expressly repudiating it in a contract, when the terms and surrounding
circumstances show otherwise. The employment status of a person is defined
and prescribed by law and not by what the parties say it should be.
It is settled that the contracting parties may establish such stipulations, clauses,
terms and conditions as they want, and their agreement would have the force of
law between them. However, the agreed terms and conditions must not be
contrary to law, morals, customs, public policy or public order. The Service
Contract provision in question must be struck down for being contrary to law and
public policy since it is apparently being used by the respondent cooperative
merely to circumvent the compulsory coverage of its employees, who are also
its owners-members, by the Social Security Law.
As to the jurisdiction
The question on the existence of an employer-employee relationship for the
purpose of determining the coverage of the Social Security System is explicitly
excluded from the jurisdiction of the NLRC and falls within the jurisdiction of the
SSC which is primarily charged with the duty of settling disputes arising under
the Social Security Law of 1997.
On the basis thereof, considering that the petition-complaint of the petitioner SSS
involved the issue of compulsory coverage of the owners-members of the
respondent cooperative, this Court agrees with the petitioner SSC when it
declared in its order that as an incident to the issue of compulsory coverage, it
may inquire into the presence or absence of an employer-employee relationship
without need of waiting for a prior pronouncement or submitting the issue to the
NLRC for prior determination. Since both the petitioner SSC and the NLRC are
independent bodies and their jurisdiction are well-defined by the separate
3|Labor Standards Week 1- Jazztine Artizuela
statutes creating them, petitioner SSC has the authority to inquire into the
relationship existing between the worker and the person or entity to whom he
renders service to determine if the employment, indeed, is one that is excepted
by the Social Security Law of 1997 from compulsory coverage.
PERPETUAL HELP CREDIT COOPERATIVE, INC. (PHCCI) V. FABURADA
FACTS: Private respondents Faburada et. al. filed a complaint against PHCCI
for illegal dismissal, premium pay, separation pay, wage differential, moral
damages and attorney’s fees.
PHCCI filed a motion to dismiss on the ground that no employer-employee
relationship exists since private respondents are all members and co-owners of
the cooperative are working for it as volunteers. Not being regular employees,
they cannot sue petitioner.
PHCCI also filed a supplemental motion to dismiss alleging that RA 6939, the
Cooperative Development Authority Law, requires conciliation or mediation
within the cooperative before a resort to judicial proceeding. Private respondents
have not exhausted the remedies provided in the coop by laws therefore the case
filed sannot prosper.
The Labor Arbiter ruled in favor of the private respondents, holding that the case
is impressed with employer-employee relationship and that the laws on
cooperatives is subservient to the Labor Code. The NLRC affirmed.
ISSUE: Whether or not there is an employer-employee relationship between the
parties and WON private respondents were regular employees
HELD: Yes. In determining the existence of an employer-employee relationship,
the following elements are considered: (1) the selection and engagement of the
worker or the power to hire; (2) the power to dismiss; (3) the payment of wages
by whatever means; and (4) the power to control the workers conduct, with the
latter assuming primacy in the overall consideration. No particular form of proof
is required to prove the existence of an employer-employee relationship. Any
competent and relevant evidence may show the relationship.
The above elements are present here. Petitioner PHCCI, through Mr. Edilberto
Lantaca, Jr., its Manager, hired private respondents to work for it. They worked
regularly on regular working hours, were assigned specific duties, were paid
regular wages and made to accomplish daily time records just like any other
regular employee. They worked under the supervision of the cooperative
manager. But unfortunately, they were dismissed.
That an employer-employee exists between the parties is shown by the
averments of private respondents in their respective affidavits, carefully
considered by respondent NLRC in affirming the Labor Arbiter's decision,
Necessarily, this leads us to the issue of whether or not private respondents are
regular employees. Article 280 of the Labor Code provides for three kinds of
employees: (1) regular employees or those who have been engaged to perform
activities which are usually necessary or desirable in the usual business or trade
of the employer; (2) project employees or those whose employment has been
fixed for a specific project or undertaking, the completion or termination of which
has been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the employment is
for the duration of the season; and (3) casual employees or those who are neither
regular nor project employees. The employees who are deemed regular are: (a)
those who have been engaged to perform activities which are usually necessary
or desirable in the usual trade or business of the employer; and (b) those casual
employees who have rendered at least one (1) year of service, whether such
service is continuous or broken, with respect to the activity in which they are
employed. Undeniably, private respondents were rendering services necessary
to the day-to-day operations of petitioner PHCCI. This fact alone qualified them
as regular employees.
All of them, except Harold D. Catipay, worked with petitioner for more than one
(1) year: Benedicto Faburada, for one and a half (1 1/2) years; Sisinita Vilar, for
two (2) years; and Imelda C. Tamayo, for two (2) years and two (2) months. That
Benedicto Faburada worked only on a part-time basis, does not mean that he is
not a regular employee. Ones regularity of employment is not determined by the
number of hours one works but by the nature and by the length of time one has
been in that particular job. Petitioner's contention that private respondents are
mere volunteer workers, not regular employees, must necessarily fail. Its
4|Labor Standards Week 1- Jazztine Artizuela
invocation of San Jose City Electric Cooperative vs. Ministry of Labor and
Employment (173 SCRA 697, 703 (1989 ) is misplaced. The issue in this case is
whether or not the employees-members of a cooperative can organize
themselves for purposes of collective bargaining, not whether or not the
members can be employees. Petitioner missed the point.
As regular employees or workers, private respondents are entitled to security of
tenure. Thus, their services may be terminated only for a valid cause, with
observance of due process.
The valid causes are categorized into two groups: the just causes under Articles
282 of the Labor Code and the authorized causes under Articles 283 and 284 of
the same Code. The just causes are: (1) serious misconduct or willful
disobedience of lawful orders in connection with the employees work; (2) gross
or habitual neglect of duties; (3) fraud or willful breach of trust; (4) commission of
a crime or an offense against the person of the employer or his immediate family
member or representative; and, analogous cases. The authorized causes are:
(1) the installation of labor-saving devices; (2) redundancy; (3) retrenchment to
prevent losses; and (4) closing or cessation of operations of the establishment
or undertaking, unless the closing is for the purpose of circumventing the
provisions of law. Article 284 provides that an employer would be authorized to
terminate the services of an employee found to be suffering from any disease if
the employees continued employment is prohibited by law or is prejudicial to his
health or to the health of his fellow employees.
Private respondents were dismissed not for any of the above causes. They were
dismissed because petitioner considered them to be mere voluntary workers,
being its members, and as such work at its pleasure. Petitioner thus vehemently
insists that their dismissal is not against the law.
Procedural due process requires that the employer serve the employees to be
dismissed two (2) written notices before the termination of their employment is
effected: (a) the first, to apprise them of the particular acts or omissions for which
their dismissal is sought and (b) the second, to inform them of the decision of the
employer that they are being dismissed. In this case, only one notice was served
upon private respondents by petitioner. It was in the form of a Memorandum
signed by the Manager of the Cooperative dated January 2, 1990 terminating
their services effective December 29, 1989. Clearly, petitioner failed to comply
with the twin requisites of a valid notice. The Courts held that private respondents
have been illegally dismissed.
PMI COLLEGES VS NLRC
FACTS: In 1991, PMI Colleges hired the services of Alejandro Galvan for the
latter to teach in said institution. However, for unknown reasons, PMI defaulted
from paying the remunerations due to Galvan. Galvan made demands but were
ignored by PMI. Eventually, Galvan filed a labor case against PMI. Galvan got a
favorable judgment from the Labor Arbiter; this was affirmed by the National
Labor Relations Commission. On appeal, PMI reiterated, among others, that the
employment of Galvan is void because it did not comply with its by-laws.
Apparently, the by-laws require that an employment contract must be signed by
the Chairman of the Board of PMI. PMI asserts that Galvan’s employment
contract was not signed by the Chairman of the Board.
ISSUE: Whether or not there is an employer-employee relationship between the
parties
RULING: Yes, an employer-employee relationship between the parties exist. The
instant petition was dismissed for lack of merit while the resolution of the National
Labor Relations Commission is affirmed.
Petitioner places so much emphasis on its argument that private respondent did
not produce a copy of the contract pursuant to which he rendered services. This
argument is, of course, puerile. The absence of such copy does not in any
manner negate the existence of a contract of employment since (C)ontracts shall
be obligatory, in whatever form they have been entered into, provided all the
essential requisites for their validity are present. The only exception to this rule
is when the law requires that a contract be in some form in order that it may be
valid or enforceable, or that a contract be proved in a certain way.
However, there is no requirement under the law that the contract of employment
of the kind entered into by petitioner with private respondent should be in any
particular form. While it may have been desirable for private respondent to have
5|Labor Standards Week 1- Jazztine Artizuela
produced a copy of his contract if one really exists, but the absence thereof, in
any case, does not militate against his claims inasmuch as:
No particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted. For, if only documentary evidence would be
required to show that relationship, no scheming employer would ever be brought
before the bar of justice, as no employer would wish to come out with any trace
of the illegality he has authored considering that it should take much weightier
proof to invalidate a written instrument.
At any rate, the vouchers prepared by petitioners own accounting department
and the letter request of its Acting Director asking for payment of private
respondents services suffice to support a reasonable conclusion that private
respondent was employed with petitioner. How else could one explain the fact
that private respondent was supposed to be paid the amounts mentioned in
those documents if he were not employed?
Petitioners evidence is wanting in this respect while private respondent
affirmatively stated that the same arose out of his employment with petitioner. As
between the two, the latter is weightier inasmuch as we accord affirmative
testimony greater value than a negative one. For the foregoing reasons, we find
it difficult to agree with petitioner’s assertion that the absence of a copy of the
alleged contract should nullify private respondent’s claims.
JAVIER VS. FLY ACE CORPORATION
FACTS: Javier an employee of Fly Ace performing various work for the latter filed
a complaint before the NLRC for underpayment of salaries and other labor
standard benefits.
He alleged that he reported for work from Monday to Saturday from 7:00 o’clock
in the morning to 5:00 oclock in the afternoon; that during his employment, he
was not issued an identification card and pay slips by the company; that he
reported for work but he was no longer allowed to enter the company premises
by the security guard upon the instruction of Ruben Ong (Mr. Ong), his superior;
that after several minutes of begging to the guard to allow him to enter, he saw
Ong whom he approached and asked why he was being barred from entering
the premises; that Ong replied by saying, Tanungin mo anak mo;that he
discovered that Ong had been courting his daughter Annalyn after the two met
at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and
convince him to spare her father from trouble but he refused to accede; that
thereafter, Javier was terminated from his employment without notice; and that
he was neither given the opportunity to refute the cause/s of his dismissal from
work.
For its part, Fly Ace denied the existence of employer-employee relationship
between them and Javier as the latter was only called roughly 5 to 6 times only
in a month whenever the vehicle of its contracted hauler, Milmar Hauling
Services, was not available. Labor Arbiter dismissed the complaint ruling that
respondent Fly Ace is not engaged in trucking business but in the importation
and sales of groceries. Since there is a regular hauler to deliver its products, we
give credence to Respondents claim that complainant was contracted on pakiao
basis.
On appeal, NLRC reversed the decision of the LA. It was of the view that a
pakyaw-basis arrangement did not preclude the existence of employer-employee
relationship. Payment by result x x x is a method of compensation and does not
define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an
employer-employee relationship. The NLRC further averred that it did not follow
that a worker was a job contractor and not an employee, just because the work
he was doing was not directly related to the employer’s trade or business or the
work may be considered as extra helper as in this case; and that the relationship
of an employer and an employee was determined by law and the same would
prevail whatever the parties may call it. Finding Javier to be a regular employee,
the NLRC ruled that he was entitled to a security of tenure. For failing to present
proof of a valid cause for his termination, Fly Ace was found to be liable for illegal
dismissal of Javier who was likewise entitled to back wages and separation pay
in lieu of reinstatement. However, on appeal, CA reversed the ruling of NLRC
The CA ruled that Javier’s failure to present salary vouchers, pay slips, or other
pieces of evidence to bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace. Further, it found that Javier’s
work was not necessary and desirable to the business or trade of the company,
6|Labor Standards Week 1- Jazztine Artizuela
as it was only when there were scheduled deliveries, which a regular hauling
service could not deliver, that Fly Ace would contract the services of Javier as
an extra helper. Lastly, the CA declared that the facts alleged by Javier did not
pass the control test.
He contracted work outside the company premises; he was not required to
observe definite hours of work; he was not required to report daily; and he was
free to accept other work elsewhere as there was no exclusivity of his contracted
service to the company, the same being co-terminous with the trip only. Since
no substantial evidence was presented to establish an employer-employee
relationship, the case for illegal dismissal could not prosper. Hence, this appeal.
ISSUE: Does an employer-employee relationship exist between Javier and Fly
Ace, thereby holding the latter guilty of illegal dismissal?
HELD: As the records bear out, the LA and the CA found Javier’s claim of
employment with Fly Ace as wanting and deficient. The Court is constrained to
agree. Labor officials are enjoined to use reasonable means to ascertain the
facts speedily and objectively with little regard to technicalities or formalities but
nowhere in the rules are they provided a license to completely discount evidence,
or the lack of it. The quantum of proof required, however, must still be satisfied.
Hence, when confronted with conflicting versions on factual matters, it is for them
in the exercise of discretion to determine which party deserves credence on the
basis of evidence received, subject only to the requirement that their decision
must be supported by substantial evidence. Accordingly, the petitioner needs to
show by substantial evidence that he was indeed an employee of the company
against which he claims illegal dismissal.
In sum, the rule of thumb remains: the onus probandi falls on petitioner to
establish or substantiate such claim by the requisite quantum of evidence.
Whoever claims entitlement to the benefits provided by law should establish his
or her right thereto. Sadly, Javier failed to adduce substantial evidence as basis
for the grant of relief.
By way of evidence on this point, all that Javier presented were his self-serving
statements purportedly showing his activities as an employee of Fly Ace. Clearly,
Javier failed to pass the substantiality requirement to support his claim. Hence,
the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly
Ace, he was made to work in the company premises during weekdays arranging
and cleaning grocery items for delivery to clients, no other proof was submitted
to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javier’s cause.
The Court is of the considerable view that on Javier lies the burden to pass the
well-settled tests to determine the existence of an employer-employee
relationship, viz: (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. Of these elements, the most important criterion is 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 methods by which the
result is to be accomplished.
LEGEND HOTEL VS REALUYO
(G.R. NO. 153511 JULY 18, 2012)
FACTS: Respondent averred that he had worked as a pianist at the Legend
Hotel’s Tanglaw Restaurant from September 1992 with an initial rate of
P400.00/night that was given to him after each night’s performance; that his rate
had increased to P750.00/night; and that during his employment, he could not
choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm
for three to six times/week. He added that the Legend Hotel’s restaurant
manager had required him to conform with the venue’s motif; that he had been
subjected to the rules on employees’ representation checks and chits, a privilege
granted to other employees; that on July 9, 1999, the management had notified
him that as a cost-cutting measure his services as a pianist would no longer be
required effective July 30, 1999; that he disputed the excuse, insisting that
Legend Hotel had been lucratively operating as of the filing of his complaint; and
that the loss of his employment made him bring his complaint.
ISSUE: Whether or not there is employer-employee relationship.
7|Labor Standards Week 1- Jazztine Artizuela
Held: YES. Petitioner actually wielded the power of selection at the time it
entered into the service contract with respondent. This is true, notwithstanding
petitioner’s insistence that respondent had only offered his services to provide
live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s position
that what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among others, the
express written recommendation dated January 12, 1998 by Christine Velazco,
petitioner’s restaurant manager, for the increase of his remuneration.
Respondent’s remuneration, albeit denominated as talent fees, was still
considered as included in the term wage in the sense and context of the Labor
Code, regardless of how petitioner chose to designate the remuneration. Anent
this, Article 97(f) of the Labor Code clearly states:
xxx wage paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method
of calculating the same, which is payable by an employer to an employee under
a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee.
That respondent worked for less than eight hours/day was of no consequence
and did not detract from the CA’s finding on the existence of the employer-
employee relationship. In providing that the “normal hours of work of any
employee shall not exceed eight (8) hours a day,” Article 83 of the Labor Code
only set a maximum of number of hours as “normal hours of work” but did not
prohibit work of less than eight hours.
The power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee
relationship. This is the so-called control test, and is premised on whether the
person for whom the services are performed reserves the right to control both
the end achieved and the manner and means used to achieve that end.
A review of the records shows, however, that respondent performed his work as
a pianist under petitioner’s supervision and control. Specifically, petitioner’s
control of both the end achieved and the manner and means used to achieve
that end was demonstrated by the following, to wit: a. He could not choose the
time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm,
three to six times a week; b. He could not choose the place of his performance;
c. The restaurant’s manager required him at certain times to perform only
Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana
motif; and d. He was subjected to the rules on employees’ representation check
and chits, a privilege granted to other employees. Relevantly, it is worth
remembering that the employer need not actually supervise the performance of
duties by the employee, for it sufficed that the employer has the right to wield
that power.
TENAZAS vs. R. VILLEGAS TAXI TRANSPORT;
G.R. No. 192998; April 2, 2014
FACTS: Bernard A. Tenazas (Tenazas), Jaime M. Francisco (Francisco), and
Isidro G. Endraca (Endraca) filed a complaint for illegal dismissal against R.
Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas
(Andy) (respondents).
Respondents admitted that Tenazas and Endraca were employees of the
company, the former being a regular driver and the latter a spare driver.
Respondents claim that Isidro Endraca was only an extra driver who stopped
reporting to queue for available taxi units which he could drive. Respondents
offered Tenazas and Edraco reinstatement but both refused. The respondents,
however, denied that Francisco was an employee of the company or that he was
able to drive one of the company’s units at any point in time.
The Labor Arbiter held that there could be no illegal dismissal since there was
no overt act of dismissal committed by the respondents. There was no formal
investigations, no show cause memos, suspension memos or termination
memos were never issued. Otherwise stated, there is no proof of overt act of
dismissal committed by herein respondents.
8|Labor Standards Week 1- Jazztine Artizuela
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners
were all employees of the company.
The Court of Appeals affirmed with modification the decision of the NLRC,
holding that there was indeed an illegal dismissal on the part of Tenazas and
Endraca but not with respect to Francisco who failed to present substantial
evidence, proving that he was an employee of the respondents. It also deleted
the NLRC’s award of separation pay and instead ordered that Tenazas and
Endraca be reinstated.
ISSUE: Whether or not Francisco is an employee of respondent.
RULING: There was no employer-employee relationship. Francisco was claiming
to be an employee of the respondents, it is incumbent upon him to proffer
evidence to prove the existence of said relationship. Any competent and relevant
evidence to prove the relationship may be admitted. Identification cards, cash
vouchers, social security registration, appointment letters or employment
contracts, payrolls, organization charts, and personnel lists, serve as evidence
of employee status. In this case, however, Francisco failed to present any proof
substantial enough to establish his relationship with the respondents. Francisco
simply relied on his allegation that he was an employee of the company without
any other evidence supporting his claim. Unfortunately for him, a mere allegation
in the position paper is not tantamount to evidence. Bereft of any evidence, the
CA correctly ruled that Francisco could not be considered an employee of the
respondents.
FRANCISCO V. NLRC
(G.R. NO. 170087)
FACTS: Petitioner Angelina Francisco was hired by respondent Kasei
Corporation during its incorporation stage as Accountant and Corporate
Secretary and later as Liaison Officer. Subsequently she was also designated
Acting Manager until replaced, but was assured by the company that she was
still connected as Technical Consultant. Thereafter, Kasei Corporation reduced
petitioner’s salary until it was later withheld despite repeated follow-ups.
Petitioner once again asked for her salary but was informed that she is no longer
connected with the company. Petitioner thus filed an action for constructive
dismissal before the Labor Arbiter. Respondent Kasei Corporation averred that
petitioner is not their employee as she performed her work at her own discretion
without their control and supervision. Both the Labor Arbiter and NLRC tribunal
found for petitioner. CA reversed the decision.
ISSUE: Whether or not there was employer-employee relationship between the
parties.
RULING: YES. In certain cases, the control test is not sufficient to give a
complete picture of the relationship between the parties, owing to the complexity
of such a relationship where several positions have been held by the worker. 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.
By applying the control test, there is no doubt that petitioner is an employee of
Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporation’s Technical Consultant. She reported for work
regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for
the proper operation of the corporation such as securing business permits and
other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be
an employee of respondent corporation because she had served the company
for six years before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as
deductions and Social Security contributions. Petitioner’s membership in the
SSS as manifested by a copy of the SSS specimen signature card which was
signed by the President of Kasei Corporation and the inclusion of her name in
the on-line inquiry system of the SSS evinces the existence of an employer-
employee relationship between petitioner and respondent corporation. It is
therefore apparent that petitioner is economically dependent on respondent
corporation for her continued employment in the latter’s line of business.
9|Labor Standards Week 1- Jazztine Artizuela
(Longers version of the digest)
Petitioner Angelina Francisco was hired by Kasei Corporation during its
incorporation stage in 1995. She was designated as Accountant and Corporate
Secretary assigned to handle the accounting needs of the
company. Petitioner was also assigned as Liaison Officer to the City of Makati
in-charge of securing business permits, construction permits and other licenses
for the operation of the company.
As Corporate Secretary, Francisco was not entrusted with corporate documents
except on some occasions, she signed documents for the company. In 1996, she
was appointed as Acting Manager and served its functions for five years. As of
December 2000, her salary was 27,000 php plus 3,000 php house allowance
and a 10% share in the profit of the corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager.
Petitioner Francisco was made to sign a prepared resolution for her replacement,
but she was assured of her continuous connection with Kasei Corporation.
However, the corporation later reduced her salary for a total reduction of P22,000
as of September 2001. She was advised that such reduction was because the
company was not earning well. Subsequently, petitioner was informed she was
no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the Labor Arbiter. Private
respondent meanwhile said petitioner is not an employee of Kasei Corporation
submitting proof that the former was not included in its list of
employees and payees reported to BIR. SSS records were also submitted
showing that petitioner’s latest employer was Seiji Corporation.
The Labor Arbiter ruled that petitioner was illegally dismissed. Such decision was
affirmed by the NLRC with some modifications. On appeal, the Court of Appeals
reversed the NLRC decision dismissing the complaint filed by petitioner against
Kasei Corporation. Thus, the present petition to the Supreme Court.
ISSUE: Whether an employer-employee relationship exists between petitioner
and Kasei Corporation.
HELD: Yes. Petitioner is economically dependent on respondent corporation for
her continued employment in the latter’s line of business. WHEREFORE, the
petition is GRANTED. The Decision and Resolution of the Court of Appeals are
ANNULLED and SET ASIDE. The Decision of the National Labor Relations
Commission is REINSTATED. The case is REMANDED to the Labor Arbiter for
the recomputation of petitioner Angelina Francisco’s full backwages from the
time she was illegally terminated until the date of finality of this decision, and
separation pay representing one-half month pay for every year of service, where
a fraction of at least six months shall be considered as one whole year.
RATIONALE: In a number of decided case, the Court have relied on the decisive
factor called 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 on 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 can also help in
determining the existence of an employer-employee relationship.
However, there are situations when aside from the power to control, realities of
the employment relations help provide a more accurate classification of the
individual. The Supreme Court noted that 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 Petitioner Francisco, reporting for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager
and Corporate satisfies the control test. Thus, it can be said that she is an
employee of Kasei Corporation because she was under the direct control and
supervision of Seiji Kamura, the corporation’s Technical Consultant. Under the
economic reality test, the petitioner can also be said to be an employee of
10 | L a b o r S t a n d a r d s W e e k 1 - J a z z t i n e A r t i z u e l a
respondent corporation because she had served the company for 6 yrs. before
her dismissal, receiving check vouchers indicating her salaries/wages, benefits,
13th month pay, bonuses and allowances, as well as deductions and Social
Security contributions.
It must also be stressed that when Kasei Corporation reduced petitioner’s salary,
such amounted to an illegal termination of services and constructive dismissal.
Constructive dismissal is an involuntary resignation resulting in cessation of work
resorted to when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to an
employee. Thus, the Court holding that petitioner was constructively dismissed,
Francisco is then entitled to full backwages.
SEVILLA vs CA
G.R. No. L-41182-3 April 16, 1988
FACTS: The petitioners invoke the provisions on human relations of the Civil
Code in this appeal by certiorari.
Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc.,
represented by Mr. Eliseo Canilao as party of the second part, and hereinafter
referred to as appellants, the Tourist World Service, Inc. leased the premises
belonging to the party of the first part at Mabini St., Manila for the former-s use
as a branch office. In the said contract the party of the third part held herself
solidarily liable with the party of the part for the prompt payment of the monthly
rental agreed on. When the branch office was opened, the same was run by the
herein appellant Una 0. Sevilla payable to Tourist World Service Inc. by any
airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to
Lina Sevilla and 3% was to be withheld by the Tourist World Service, Inc.
On November 24, 1961 the Tourist World Service, Inc. appears to have been
informed that Lina Sevilla was connected with a rival firm, the Philippine Travel
Bureau, and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office.
On June 17,1963, appellant Lina Sevilla refiled her case against the herein
appellees and after the issues were joined, the reinstated counterclaim of
Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly
heard following which the court ordered both cases dismiss for lack of merit.
In her appeal, Lina Sevilla claims that a joint bussiness venture was entered into
by and between her and appellee TWS with offices at the Ermita branch office
and that she was not an employee of the TWS to the end that her relationship
with TWS was one of a joint business venture appellant made declarations.
ISSUE: Whether or not the padlocking of the premises by the Tourist World
Service, Inc. without the knowledge and consent of the appellant Lina Sevilla
entitled the latter to the relief of damages prayed for and whether or not the
evidence for the said appellant supports the contention that the appellee Tourist
World Service, Inc. unilaterally and without the consent of the appellant
disconnected the telephone lines of the Ermita branch office of the appellee
Tourist World Service, Inc.?
RULING: The trial court held for the private respondent on the premise that the
private respondent, Tourist World Service, Inc., being the true lessee, it was
within its prerogative to terminate the lease and padlock the premises. It likewise
found the petitioner, Lina Sevilla, to be a mere employee of said Tourist World
Service, Inc. and as such, she was bound by the acts of her employer. The
respondent Court of Appeal rendered an affirmance.
In this jurisdiction, there has been no uniform test to determine the evidence of
an employer-employee relation. In general, we have relied on the so-called right
of control test, "where the person for whom the services are performed reserves
a right to control not only the end to be achieved but also the means to be used
in reaching such end." Subsequently, however, we have considered, 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, in
determining the existence of an employer-employee relationship.
The Decision promulgated on January 23, 1975 as well as the Resolution issued
on July 31, 1975, by the respondent Court of Appeals is hereby REVERSED and
SET ASIDE. The private respondent, Tourist World Service, Inc., and Eliseo
11 | L a b o r S t a n d a r d s W e e k 1 - J a z z t i n e A r t i z u e l a
Canilao, are ORDERED jointly and severally to indemnify the petitioner, Lina
Sevilla, the sum of 25,00.00 as and for moral damages, the sum of P10,000.00,
as and for exemplary damages, and the sum of P5,000.00, as and for nominal
and/or temperate damages.
AMWSLAI vs NLRC
Air Material Wing Services and Loan
FACTS: Private respondent Salas was appointed notarial and legal counsel for
petitioner. The petitioner issued an order reminding Salas of the approaching
termination of his legal services. This prompted Salas to lodge a complaint
against petitioner for separation pay, vacation and sick leave benefits and others.
Petitioner moved to dismiss alleging that there was no employer-employee
relationship between them.
ISSUE: Whether or not employer-employee relationship exists between the
parties.
HELD: Yes. The terms and conditions in the contract show that respondent was
an employee of petitioner. His selection as the company counsel was done by
the board of directors and the respondent was paid with a monthly retainer’s fee.
The petitioner also reserved its power of dismissal by defining the duties of the
respondent as its legal counsel such as acting on all legal matters and seeking
remedies to effect collection of overdue accounts.
As cited in the case of Hydro Resources v. Pagalilauan, “A lawyer, like
any other professional (doctors, nurses, dentists, public relations practitioners),
may very well be an employee of a private corporation or even of the
government. It is not unusual for a big corporation to hire a staff of lawyers as its
in-house counsel, pay them regular salaries, rank them and treat them like its
other officers and employees.”
With regards to Salas’ claim of notarial fees, it is based on his
employment as a notarial officer of the petitioner and thus labor arbiters have the
original and exclusive jurisdiction. As provided under Art. 3 of 217 of the Labor
Code, claims which have reasonable connection with ER-EE relationship are
under the jurisdiction of the labor arbiter.
 In respect to the separate payment of notarial fees to Salas, the contract
does not contain any stipulation about it. Absence of such stipulation does not
entitle the respondent to collect separate payment of notarial fees.
EQUITABLE BANKING VS NLRC
G.R. No. 102467 June 13, 1997
FACTS: Petition to go against the decision of NLRC in holding that Sadac as the
VP for the legal department of bank a regular employee of the bank.
Sadac was appointed VP for the legal department of bank with monthly salary,
allowance and Christmas bonus, with specific legal tasks to perform for the bank.
Later, nine lawyers of the bank's legal department addressed a petition-letter to
the chairman of the board of directors accusing Sadac of abusive conduct,
inefficiency, mismanagement, ineffectiveness and indecisiveness.
Sadac promptly minifested to file criminal, civil and administrative chrges against
the nine lawyers. Then Chairman Morales called the lawyers in attempt to resolve
the differences, but didn't result positively. Morales in the board meeting then
apprised the situation, directors adopted a resolution directing one of the
directors (Banico) to look further into the matter and determine the best course
of action for the bank.
Banico after his meetings with the lawyers and exploring various alternatives to
solve the crisis, but failed wrote to the board of directors his findings affirming
the charges against Sadac. Morales then sent Sadac a memorandum informing
him of the charge, the findings of Banico and the expression of the boards' loss
of confidence upon him and that they advise and awaits for Sadac's resignation.
In reaction to the memorandum, Sadac addressed a letter to Morales with copies
furnish to the directors, stating that the findings of Banico contained libelous
statements and the decision of the board will amount to illegal dismissal; with
request for a full hearing by the directors so he could clear his name.
Vice-chairman Romulo answered Sadac that they are exercising its managerial
prerogative to control, conduct business in the manner deems fit and to regulate
the same.
12 | L a b o r S t a n d a r d s W e e k 1 - J a z z t i n e A r t i z u e l a
In reaction thereto, Sadac requested for a full hearing and formal investigation
but the same remained unheeded. On 9 November 1989, respondent Sadac filed
a complaint for illegal dismissal with damages against petitioner Bank and
individual members of the Board of Directors thereof.
After learning of the filing of the complaint, the Board of Directors, adopted
Resolution No. 5803 terminating the services of private respondent in view of his
belligerence" and the Board's "honest belief that the relationship" between
private respondent and petitioner bank was one of "client and lawyer." Pursuing
their stand that the association between the bank and private respondent was
one of a client-lawyer relationship, herein petitioners filed a motion to dismiss the
complaint with the NLRC on the round of lack of jurisdiction. Private respondent,
opposing the motion, insisted on the existence of an employer-employee
relationship between them.
Private respondent was removed from his office occupancy in the bank and
ordered disentitled, starting 10 August 1989, to any compensation and other
benefits.
Labor Arbiter rendered decision that Sadac’s termination was illegal and entitled
to reinstatement and payment of full back wages. NLRC affirmed the decision
upon appeal by the Bank. Sadac filed for execution of judgment where it gave its
computation which amounted to P 6.03 M representing his back wages and the
increases he should have received during the time he was illegally dismissed.
The Bank opposed to Sadac’s computation. The Labor Arbiter favor Sadac’s
computation. NLRC, upon appeal by the bank, reversed the decision. CA
reversed the decision of NLRC. Hence, this petition.
ISSUE: Whether or not employer-employee relationship exists between the
parties.
RULING: While the Court agrees with private respondent that execution pending
appeal may be ordered by the NLRC,[42] it is equally true, however, that where
the dismissed employee's reinstatement would lead to a strained relation
between the employer and the employee or to an atmosphere of antipathy and
antagonism, the exception to the twin remedies of reinstatement and payment of
backwages can be invoked and reinstatement, which might become anathema
to industrial peace, could be held back pending appeal.[43] Nevertheless, the
Court is not prepared to preempt the NLRC and conclude that the directive for
reinstatement is of dubious character.[44] It can be assumed that had petitioners
waited for NLRCs resolution on the motion for reconsideration, the question on
the regularity in the issuance of the directive for reinstatement could have
perhaps properly been delved into.
The existence of an employer-employee relationship is, itself, a factual question
well within the province of the NLRC. Considering, nevertheless, that its findings
are at odds with the Labor Arbiter, the Court sees it fit to dwell a bit into the issue.
In determining the existence of an employer-employee relationship, the following
elements are considered: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal, and (4) the power to control
the employee's conduct, with the control test generally assuming primacy in the
overall consideration. The power of control refers to the existence of the power
and not necessarily to the actual exercise thereof. It is not essential, in other
words, for the employer to actually supervise the performance of duties of the
employee; it is enough that the former has the right to wield the power.
The NLRC, in the instant case, based its finding that there existed an employer-
employee relationship between petitioner bank and private respondent on factual
settings. It would virtually be foolhardy to so challenge the NLRC as having
committed grave abuse of discretion in coming up with its above findings. Just to
the contrary, NLRC appears to have been rather exhaustive in its examination of
this particular question (existence or absence of an employer-employee
relationship between the parties). Substantial evidence, which is the quantum of
evidence required to establish a fact in cases before administrative and quasi-
judicial bodies, connotes merely that amount of relevant evidence which a
reasonable mind might accept to be adequate in justifying a conclusion.
The existence of an employer-employee relationship, between the bank and
private respondent brings the case within the coverage of the Labor Code. Under
the Code, an employee may be validly dismissed if these requisites are
attendant: (1) the dismissal is grounded on any of the causes stated in Article
282 of the Labor Code, and (2) the employee has been notified in writing and
13 | L a b o r S t a n d a r d s W e e k 1 - J a z z t i n e A r t i z u e l a
given the opportunity to be heard and to defend himself as so required by Section
2 and Section 5, Rule XIV, Book V, of the Implementing Rules of the Labor Code.
Article 282(c) of the Labor Code provides that "willful breach by the employee of
the trust reposed in him by his employer" is a cause for the termination of
employment by an employer. Ordinary breach of trust will not suffice, it must be
willful and without justifiable excuse. This ground must be founded on facts
established by the employer who must clearly and convincingly prove by
substantial evidence the facts and incidents upon which loss of confidence in the
employee may fairly be made to rest; otherwise, the dismissal will be rendered
illegal.
Petitioners' stated loss of trust and confidence on private respondent was
spawned by the complaints leveled against him by the lawyers in his department.
Confident that no employer-employee existed between the bank and private
respondent, petitioners have put aside the procedural requirements for
terminating one’s employment, i.e., (a) a notice apprising the employee of the
particular acts or omissions for which his dismissal is sought, and (b) another
notice informing the employee of the employer's decision to dismiss him. Failure
to comply with these requirements taints the dismissal with illegality. This
procedure is mandatory, any judgment reached by management without that
compliance can be considered void and inexistent.
While it is true that the essence of due process is simply an opportunity to be
heard or, as applied in administrative proceedings, an opportunity to explain
one's side, meetings in the nature of consultation and conferences such as the
case here, however, may not be valid substitutes for the proper observance of
notice and hearing.
The herein questioned Resolution of the NLRC is AFFIRMED with the following
MODIFICATIONS: That private respondent shall be entitled to back wages from
termination of employment until turning sixty (60) years of age (in 1995) and,
thereupon, to retirement benefits in accordance with law; that private respondent
shall be paid an additional amount of P5,000.00; that the award of moral and
exemplary damages are deleted; and that the liability herein pronounced shall
be due from petitioner bank alone, the other petitioners being absolved from
solidary liability.
JARDIN V. NLRC
(G.R. NO. 119268)
FACTS: Petitioners were drivers of private respondent’s taxicabs under the
boundary system whose earnings were regularly deducted washing fee for the
taxi units. Petitioners decided to form a labor union to protect their rights and
interests on the belief that the deductions made were illegal. Upon learning,
respondent refused to let petitioners drive their taxicabs when they reported for
work. Aggrieved, petitioners filed a complaint for illegal dismissal with the Labor
Arbiter but the latter dismissed said complaint. On appeal, the NLRC tribunal
declared that petitioners are employees of private respondent. On
reconsideration however, the decision was reversed by the NLRC tribunal and
held that no employer-employee relationship between the parties exists.
ISSUE: Whether or not petitioner taxi drivers are employees of respondent
company.
RULING: YES. In a number of cases decided by this Court, we ruled that the
relationship between jeepney owners/operators on one hand and jeepney drivers
on the other under the boundary system is that of employer-employee and not of
lessor-lessee. In the case of jeepney owners/operators and jeepney drivers, the
former exercise supervision and control over the latter. The management of the
business is in the owner’s hands. The owner as holder of the certificate of public
convenience must see to it that the driver follows the route prescribed by the
franchising authority and the rules promulgated as regards its operation. Now,
the fact that the drivers do not receive fixed wages but get only that in excess of
the so-called “boundary” they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee.
We have applied by analogy the doctrine to the relationships between bus
owner/operator and bus conductor, auto-calesa owner/operator and driver, and
recently between taxi owners/operators and taxi drivers. Hence, petitioners are
undoubtedly employees of private respondent because as taxi drivers they
perform activities which are usually necessary or desirable in the usual business
or trade of their employer.
On the issue of whether or not employer-employee relationship exists, admitted
is the fact that complainants are taxi drivers purely on the ‘boundary system’.
14 | L a b o r S t a n d a r d s W e e k 1 - J a z z t i n e A r t i z u e l a
Under this system the driver takes out his unit and pays the owner/operator a fee
commonly called ‘boundary’ for the use of the unit. Petitioners are undoubtedly
employees of private respondent because as taxi drivers they perform activities
which are usually necessary or desirable in the usual business or trade of their
employer. The fact that the drivers do not receive fixed wages is not sufficient to
withdraw the relationship from that of employer and employee.
EFREN P. PAGUIO VS NLRC
G.R. No. 147816 May 9, 2003
FACTS: Respondent Metromedia Times Corporation entered into an agreement
with petitioner Efren P. Paguio appointing the latter to be an account executive
of the firm.1 Petitioner’s duty was to solicit advertisements for "The Manila
Times," a newspaper of general circulation, published by respondent company.
It was agreed that petitioner shall receive compensation consisting of a 15%
commission on direct advertisements less withholding tax and a 10%
commission on agency advertisements based on gross revenues less agency
commission and the corresponding withholding tax. The commissions were to be
given after the clients paid for the advertisements. Apart from commissions,
petitioner Paguio was also entitled to a monthly allowance of P2,000.00 as long
as he met the P30,000.00-monthly quota. The points raised by the parties had
something to do with the stipulations of the agreement stating that petitioner is
not an employee of the respondent company; that the company has no
responsibility towards anyone whom Paguio may employ; and that either party
may terminate their agreement at any time by giving written notice to the other,
thirty (30) days prior to effectivity of termination.
Around two months after Paguio renewed his contract with respondent company,
he received a letter from the latter notifying him of their decision to terminate his
services. Apart from allegations of misconduct and pirating clients, no definite
cause for termination was given. Meanwhile, respondent Metromedia Times
Corporation asserted their right to terminate the contract with petitioner pointing
out to the last provision thereof stating that parties may end the contract provided
there is notice regarding the matter thirty days prior to the intended date of
termination. The Labor Arbiter declared Paguio’s dismissal as illegal. It ordered
the reinstatement of petitioner to his former position and payment of other
remuneration accruing from the date of dismissal. A 20,000 php moral damages
was also granted by the Arbiter. The NLRC reversed the decision favoring private
respondent. Thus, herein petition.
ISSUE: Whether or not petitioner Paguio is a regular employee of Metromedia
Times Corporation and was illegally dismissed.
HELD: YES. The petition filed by petitioner Paguio was GRANTED. The decision
of the Labor Arbiter finding Paguio’s dismissal as illegal was REINSTATED by
the Court except with respect to the P20,000.00 moral damages award which
was deleted.
RATIONALE: By cursory reading of Article 280 of the Labor Code, a regular
employee defined as one engaged to perform activities necessary in the usual
business or trade of the employer as against those which are undertaken for a
specific project or are seasonal.
Where a person has rendered at least one year of service, regardless of the
nature of the activity performed or of whether it is continuous or intermittent, the
employment is considered regular as long as the activity exists, it not being
indispensable that he be first issued a regular appointment or be formally
declared as such before acquiring a regular status.11
Regular employment is gauged based from the following factors - a) the manner
of selection and engagement of the putative employee, b) the mode of payment
of wages, c) the presence or absence of the power of dismissal; and d) the
presence or absence of the power to control the conduct of the putative
employee or the power to control the employee with respect to the means or
methods by which his work is to be accomplished.8 In the case at bar,
Metromedia Times Corporation exercised control by requiring petitioner, among
other things, to submit a daily sales activity report and also a monthly sales report
as well. Various solicitation letters also show that Robina Gokongwei, company
president, Alda Iglesia, the advertising manager, and Frederick Go, the
advertising director, directed and monitored the sales activities of petitioner.
Thus, under the “Control Test” services by Paguio were rendered under the
control and supervision of the company making the former a regular employee.
Dismissal must be for a just or authorized cause and must comply with the
rudimentary due process of notice and hearing. There was no showing that
15 | L a b o r S t a n d a r d s W e e k 1 - J a z z t i n e A r t i z u e l a
respondent Metromedia bothered itself in complying with the requirements in
terminating the services of petitioner. The notice of termination recited no valid
or just cause for the dismissal of petitioner Paguio nor does it appear that he has
been given an opportunity to be heard in his defense.
INSULAR LIFE ASSURANCE V. NLRC AND PANTALEON DE LOS REYES
(G.R. NO. 119930)
FACTS: Petitioner Insular Life entered into an agency contract with respondent
Pantaleon de los Reyes authorizing the latter to solicit applications for life
insurance for which he would be paid compensation in the form of commissions.
Sometime after, the parties entered into another contract where Pantaleon was
appointed as Acting Unit Manager responsible for recruitment, training,
organization, development and furtherance of the agency’s goals. He was
prohibited from working for other life insurance companies or with the
government. Pantaleon worked concurrently as agent and Acting Unit Manager
until he was notified of his termination. He thus filed a complaint for illegal
dismissal before the Labor Arbiter. The Labor Arbiter dismissed the complaint
but on appeal was reversed by the NLRC tribunal ruling that Pantaleon was an
employee of petitioner. Petitioner contends that nature of the work has already
been resolved by the Court in the earlier case of Insular Life v. Basiao where
Basiao is declared an independent contractor and not an employee of petitioner.
ISSUE: Whether or not there exists employer-employee relationship between
petitioner and Pantaleon.
RULING: YES. As to the matter involving the power of dismissal and control by
the employer, the latter of which is the most important of the test, unlike Basiao,
herein respondent De los Reyes was appointed Acting Unit Manager, not agency
manager. Petitioner in fact has admitted that it provided De los Reyes a place
and a table at its office where he reported for and worked whenever he was not
out in the field.
Under the managership contract, De los Reyes was obliged to work exclusively
for petitioner in life insurance solicitation and was imposed premium production
quotas. He was proscribed from accepting a managerial or supervisory position
in any other office including the government without the written consent of
petitioner. De los Reyes could only be promoted to permanent unit manager if
he met certain requirements and his promotion was recommended by the
petitioner’s District Manager and Regional Manager and approved by its Division
Manager. As Acting Unit Manager, De los Reyes performed functions beyond
mere solicitation of insurance business for petitioner. As found by the NLRC, he
exercised administrative functions which were necessary and beneficial to the
business of INSULAR LIFE.
Exclusivity of service, control of assignments and removal of agents under
private respondent’s unit, collection of premiums, furnishing of company facilities
and materials as well as capital described as Unit Development Fund are but
hallmarks of the management system in which herein private respondent
worked. This obtaining, there is no escaping the conclusion that private
respondent Pantaleon de los Reyes was an employee of herein petitioner.
*In contrast to the case decided by the Court 10 years earlier, Insular Life
Assurance v. NLRC and Basiao, as quoted:
Petitioner would have us apply our ruling in Insular Life Assurance Co., Ltd. v.
NLRC and Basiao to the instant case under the doctrine of stare decisis,
postulating that both cases involve parties similarly situated and facts which are
almost identical. But we are not convinced that the cited case is on all fours with
the case at bar. In Basiao, the agent was appointed Agency Manager under an
Agency Manager Contract. To implement his end of the agreement, Melecio
Basiao organized an agency office to which he gave the name M. Basiao and
Associates. The Agency Manager Contract practically contained the same terms
and conditions as the Agency Contract earlier entered into, and the Court
observed that, “drawn from the terms of the contract they had entered into,
(which) either expressly or by necessary implication, Basiao (was) made the
master of his own time and selling methods, left to his own judgment the time,
place and means of soliciting insurance, set no accomplishment quotas and
compensated him on the bases of results obtained. He was not bound to observe
any schedule of working hours or report to any regular station; he could seek and
work on his prospects anywhere and at anytime he chose to and was free to
adopt the selling methods he deemed most effective.” Upon these premises,
Basiao was considered as agent — an independent contractor — of petitioner
INSULAR LIFE.
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GREPALIFE VS NLRC
G.R. No. 73887 December 21, 1989
A petition for certiorari seeking reversal of the NLRC’s order that petitioner is a
regular employee.
FACTS: Private respondent worked as an insurance agent of petitioner, known
as debit agent1, under an agreement of agency. Private respondent filed a case
of illegal dismissal against petitioner with money claims, in which the labor arbiter
established there was no employer employee relationship but nevertheless
awarded P 1,000 out of Christian Charity. On appeal by both parties, NLRC ruled
that private respondent was a regular employee, but nevertheless ruled that the
labor arbiter erred in awarding P1,000. Petitioner moved to reconsider, but the
same was denied. Public respondent found that as debit agent, private
respondent had definite work assignments including but not limited to collection
of premiums from policy holders and selling insurance to prospective clients.
Furthermore, private respondent was paid an initial sum of P200 as his 13-week
allowance where he was later promoted as zone supervisor enabling private
respondent to have an additional supervisors allowance of P 110 per week.
Private respondent was however demoted during the third week of November
1981, and was finally dismissed on 28 June 1982. Petitioner contends no E2e
relationship exists because respondent was not required to render service within
a fix number of hours and that his initial 13-week allowance cannot be construed
as a salary but a subsidy to cover the costs of his transportation and meal
expenses when he sells insurance premiums. Stated otherwise, that private
respondent’s compensation was in the form of commissions and bonuses.
Private respondent refutes petitioner’s claim invoking that: (1) he receives a
definite amount as his wage – known as sales reserve; (2) that his failure to
maintain his sales reserve would bring him back to the status of a beginners
employment at a fixed wage of P200 regardless of production outputs; (3) that
he was assigned a definite place to work in the office when he is not out in the
field; and (4) in addition to making canvasses and regular reports, he was tasked
to collect and make regular weekly reports so that failure to do so would lead to
his dismissal. Thus, this petition for certiorari.
ISSUE: Is private respondent a regular employee?
HELD: Yes. There is no doubt private respondent is an insurance agent.
However, there are two types of insurance agents: (1) salaried employees who
have definite hours of work; and (2) registered representatives who work on
commission basis. The second class: (a) are not required to work definite hours;
(b) do not devote their time solely for the company as the efforts they spend on
their work is dependent on their own will and initiative; (c) they are not required
to account for their time nor submit a report of their activities; (d) they shoulder
their own selling expenses including transportation; and (e) they are paid on
commissions based on a percentage of their sales. A focal point is the
determination that such an agent is paid by the investor (the insured) after a
percentage of his commission has been computed and turned over to the
insurance company. On the other hand, the element of control was evident in the
four contentions of the private respondent. Furthermore, his contract of services
with petitioner is not for a piece of work nor for a definite period. The power of
dismissal was also evident in his fourth contention. Undoubtedly, private
respondent, by nature of his position and work, has been a regular employee
and cannot be dismissed without valid and justifiable cause.
FEATI VS. BAUTISTA
G.R. No. L-21278 December 27, 1966
FACTS: The private respondent wrote a letter to president of petitioner informing
her of the organization of the Faculty Club into a registered labor union.
President of the Faculty Club sent another letter containing twenty-six demands
that have connection with the employment of the members of the Faculty Club
by the University, and requesting an answer within ten days from receipt thereof.
The President of the University answered the two letters, requesting that she be
given at least thirty days to study thoroughly the different phases of the demands.
Meanwhile counsel for the University, to whom the demands were referred, wrote
a letter to the President of the Faculty Club demanding proof of its majority status
and designation as a bargaining representative.
President of the Faculty Club filed a notice of strike with the Bureau of Labor
alleging as reason therefore the refusal of the University to bargain collectively.
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The parties were called to conferences but efforts to conciliate them failed.
Members of the Faculty Club declared a strike and established picket lines in the
premises of the University, resulting in the disruption of classes in the University.
President of the Philippines certified to the Court of Industrial Relations the
dispute between the management of the University and the Faculty Club
pursuant to the provisions of Section 10 of Republic Act No. 875.
The Judge endeavored to reconcile the part and it was agreed upon that the
striking faculty members would return to work and the University would readmit
them under a status quo arrangement. On that very same day, however, the
University, thru counsel filed a motion to dismiss the case upon the ground that
the CIR has no jurisdiction over the case, because (1) the Industrial Peace Act
is not applicable to the University, it being an educational institution, nor to the
members of the Faculty Club, they being independent contractors; and (2) the
presidential certification is violative of Section 10 of the Industrial Peace Act, as
the University is not an industrial establishment and there was no industrial
dispute which could be certified to the CIR.
The respondent judge denied the motion to dismiss. The University filed a motion
for reconsideration by the CIR en banc, without the motion for reconsideration
having been acted upon by the CIR en banc, respondent Judge set the case for
hearing but the University moved the cancellation of the said hearing upon the
ground that the court en banc should first hear the motion for reconsideration
and resolve the issues raised therein before the case is heard on the merits but
denied.
Faculty Club filed with the CIR in Case 41-IPA a petition to declare in contempt
of court certain parties, alleging that the University refused to accept back to work
the returning strikers, in violation of the return-to-work order.
The University filed its opposition to the petition for contempt by way of special
defense that there was still the motion for reconsideration which had not yet been
acted upon by the CIR en banc. Hence, this petition.
ISSUE: Whether or not FEATI is an employer within the purview of the Industrial
Peace Act.
HELD: The Supreme Court denied the petition. Based on RA 875 Section 2(c)
The term employer include any person acting in the interest of an employer,
directly or indirectly, but shall not include any labor organization (otherwise than
when acting as an employer) or any one acting in the capacity or agent of such
labor organization.
In this case, the University is operated for profit hence included in the term of
employer. Professors and instructors, who are under contract to teach particular
courses and are paid for their services, are employees under the Industrial Peace
Act.
Professors and instructors are not independent contractors. university controls
the work of the members of its faculty; that a university prescribes the courses
or subjects that professors teach, and when and where to teach; that the
professors’ work is characterized by regularity and continuity for a fixed duration;
that professors are compensated for their services by wages and salaries, rather
than by profits; that the professors and/or instructors cannot substitute others to
do their work without the consent of the university; and that the professors can
be laid off if their work is found not satisfactory. All these indicate that the
university has control over their work; and professors are, therefore, employees
and not independent contractors.
SY VS. CA
G.R. No. 142293. February 27, 2003
FACTS: Private respondent Jaime Sahot started working as a truck helper for
petitioners’ family-owned trucking business named Vicente Sy Trucking.
Throughout all the changes in names and for 36 years, private respondent
continuously served the trucking business of petitioners. When Sahot was
already 59 years old, he had been incurring absences as he was suffering from
various ailments. Particularly causing him pain was his left thigh, which greatly
affected the performance of his task as a driver. Sahot had filed a week-long
leave sometime in May 1994. On May 27th, he was medically examined and
treated for EOR, presleyopia, hypertensive retinopathy G II), HPM, UTI,
Osteoarthritis and heart enlargement. On said grounds, Belen Paulino of the SBT
Trucking Service management told him to file a formal request for extension of
his leave. At the end of his week-long absence, Sahot applied for extension of
his leave for the whole month of June, 1994. It was at this time when petitioners
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allegedly threatened to terminate his employment should he refuse to go back to
work. They carried out their threat and dismissed him from work, effective June
30, 1994. He ended up sick, jobless and penniless.
On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a
complaint for illegal dismissal for recovery of separation pay against Vicente Sy
and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino
Trucking Service, 6B’s Trucking and SBT Trucking, herein petitioners.
Petitioners, on their part, claimed that sometime prior to June 1, 1994, Sahot
went on leave and was not able to report for work for almost seven days. On
June 1, 1994, Sahot asked permission to extend his leave of absence until June
30, 1994. It appeared that from the expiration of his leave, private respondent
never reported back to work nor did he file an extension of his leave. Instead,
he filed the complaint for illegal dismissal against the trucking company and its
owners. Petitioners add that due to Sahot’s refusal to work after the expiration of
his authorized leave of absence, he should be deemed to have voluntarily
resigned from his work. They contended that Sahot had all the time to extend
his leave or at least inform petitioners of his health condition.
The Labor Arbiter ruled in favor of the company. It held that Sahot failed to return
to work. However, upon appeal, the NLRC modified the LA’s decision, ruling that
Sahot did not abandon his job but his employment was terminated on account of
his illness, pursuant to Article 284 of the Labor Code.
Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which
found that respondent Sahot was not an employee but was in fact, petitioners
industrial partner.
Because the Court of Appeals also found that an employer-employee
relationship existed, petitioners aver that the appellate courts decision gives an
imprimatur to the illegal finding and conclusion of the NLRC.
Private respondent, for his part, denies that he was ever an industrial partner of
petitioners. There was no written agreement, no proof that he received a share
in petitioners profits, nor was there anything to show he had any participation
with respect to the running of the business.[18] The elements to determine the
existence of an employment relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the 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 it.[19]
As found by the appellate court, petitioners owned and operated a trucking
business since the 1950s and by their own allegations, they determined private
respondents wages and rest day.[20] Records of the case show that private
respondent actually engaged in work as an employee. During the entire course
of his employment he did not have the freedom to determine where he would go,
what he would do, and how he would do it. He merely followed instructions of
petitioners and was content to do so, as long as he was paid his wages. Indeed,
said the CA, private respondent had worked as a truck helper and driver of
petitioners not for his own pleasure but under the latters control.
Article 1767[21] of the Civil Code states that in a contract of partnership two or
more persons bind themselves to contribute money, property or industry to a
common fund, with the intention of dividing the profits among themselves.[22]
Not one of these circumstances is present in this case. No written agreement
exists to prove the partnership between the parties. Private respondent did not
contribute money, property or industry for the purpose of engaging in the
supposed business. There is no proof that he was receiving a share in the profits
as a matter of course, during the period when the trucking business was under
operation. Neither is there any proof that he had actively participated in the
management, administration and adoption of policies of the business. Thus, the
NLRC and the CA did not err in reversing the finding of the Labor Arbiter that
private respondent was an industrial partner from 1958 to 1994.
ISSUE: Whether or not employer-employee relationship exists between the
parties.
RULING: On this point, we affirm the findings of the appellate court and the
NLRC. Private respondent Jaime Sahot was not an industrial partner but an
employee of petitioners from 1958 to 1994. The existence of an employer-
employee relationship is ultimately a question of fact[23] and the findings thereon
by the NLRC, as affirmed by the Court of Appeals, deserve not only respect but
finality when supported by substantial evidence. Substantial evidence is such
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amount of relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion.[24]
Time and again this Court has said that if doubt exists between the evidence
presented by the employer and the employee, the scales of justice must be tilted
in favor of the latter.[25] Here, we entertain no doubt. Private respondent since
the beginning was an employee of, not an industrial partner in, the trucking
business.
The petition is DENIED and the decision of the Court of Appeals dated February
29, 2000 is AFFIRMED. Petitioners must pay private respondent Jaime Sahot
his separation pay for 36 years of service at the rate of one-half monthly pay for
every year of service, amounting to P74,880.00, with interest of six per centum
(6%) per annum from finality of this decision until fully paid.
ONGKIKO VS NLRC
FACTS: Petitioner Galeria de Magallanes Condominium Association, Inc. is a
nonstock, non-profit corporation formed in accordance with R.A. No. 4726,
otherwise known as the Condominium Act. "Its primary purpose is to hold title to
the common areas of the Galeria de Magallanes Condominium Project and to
manage and administer the same for the use and convenience of the residents
and/or owners."[1] Petitioner Bienvenido Ongkingco was the president of Galeria
at the time private respondent filed his complaint.
On 1 September 1990, Galeria's Board of Directors appointed private respondent
Federico B. Guilas as Administrator/Superintendent. He was given a "monthly
salary of P10,000 subject to review after five (5) months and subsequently
thereafter as Galeria's finances improved."[2]
As Administrator, private respondent was tasked with the maintenance of the
"performance and elegance of the common areas of the condominium and
external appearance of the compound thereof for the convenience and comfort
of the residents as well as to keep up the quality image, and hence the value of
the investment for the owners thereof."[3]
However, on 17 March 1992, through a resolution passed by the Board of
Directors of Galeria, private respondent was not re-appointed as Administrator.
As a result, on 15 May 1992, private respondent instituted a complaint against
petitioners for illegal dismissal and non-payment of salaries with the NLRC. In
response, on 22 July 1992, petitioners filed a motion to dismiss alleging that it is
the SEC, and not the labor arbiter, which has jurisdiction over the subject matter
of the complaint.
Labor Arbiter Lorenzo granted the aforestated motion to dismiss in his order. The
NLRC, however, reversed the Labor Arbiter's order in its resolution. Petitioners
filed a motion for reconsideration but the same was denied in the NLRC's
resolution. Petitioner-corporation filed a petition raising as issue that NLRC
committed a grave abuse of discretion in taking cognizance of a subject matter
that falls within the exclusive jurisdiction of the SEC. The petition is granted.
On the other hand, the Solicitor General contends that the case at bar falls
outside the purview of SEC’s exclusive jurisdiction. He insists that private
respondent was a mere employee of petitioner corporation being tasked mainly,
as administrator/superintendent, with the upkeep of the condominium's common
areas. He, thus, maintains that private respondent cannot be deemed a
corporate officer because "it is the nature of one's functions and not the
nomenclature or title given to one's job which determines one's status in a
corporation."
ISSUE: Whether or not employer-employee relationship exists between the
parties.
HELD: The contentions of public respondent lack merit. That private respondent
is an officer of petitioner corporation and not its mere employee cannot be
questioned. The by-laws of the Galeria de Magallanes Condominium Association
specifically includes the Superintendent/Administrator in its roster of corporate
officers.
Based on the foregoing, we must rule that private respondent was indeed a
corporate officer. He was appointed directly by the Board of Directors not by any
managing officer of the corporation and his salary was, likewise, set by the same
Board. Having thus determined, his dismissal or nonappointment is clearly an
intra-corporate matter and jurisdiction, therefore, properly belongs to the SEC
and not the NLRC.
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The respondents also attack the SEC's jurisdiction over the instant case on
grounds that Guilas was not elected by the Board of Directors but was merely
appointed. This particular argument baffles us. P.D. 902-A cannot be any clearer.
Sec. 5(c) of said law expressly covers both election and appointment of corporate
directors, trustees, officers and managers.
UERMMMC-RDU VS. LAGUESMA
GR NOS. 125425-26
FACTS: The resident physicians formed a union called the UERMMC-Resident
Doctors Union and filed the petition for certification so that it will be recognized
as the exclusive bargaining agent of all the resident physicians in the hospital for
purposes of collective bargaining.
The petition for certification was dismissed by the Undersecretary, acting under
the authority of the Secretary of Labor, on the ground that there exists no
employer-employee relationship between the resident doctors and the hospital.
ISSUE: Whether or not resident doctors are employees of the hospital.
HELD: The resident doctors are not employees of the hospital. It is clear that
physicians undergo residency training in order to hone their skills and develop or
improve their knowledge in a specialized medical field or discipline. Hence,
residency is basically and simply a continuation of their medical course.
However, they are not required or mandated under any law to further undergo a
residence training program. Having passed the medical board examinations,
they are already licensed physicians and could very well engage in the general
practice of medicine. It is for the practice of highly specialized medical disciplines
which necessitates further on-the-job training thereon.
Viewed from this perspective, residency training clearly amounts to a pursuit of
further education on a specific discipline. Thus, the relationship between the
teaching/training hospital and the resident doctor is not one of employer-
employee. The training/teaching hospital may simply be likened to a medical
school/university, but in this instance, the emphasis is on the practical application
and training of its students, the resident doctors.