PART ONE.

INTRODUCTORY MATERIALS
SECTION 6. WORK RELATIONSHIP 6.01. WORK RELATIONSHIP A. Definitions: Employer and Employee Employer A person who controls and directs a worker under an express or implied contract of hire and who pays the workers salary or wages. Blacks Law Dictionary Employee A person who works in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work performance. Blacks Law Dictionary 97 (a), (b), (c); Article 97. Definitions. As used in this Title; (a) Person means an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons. (b) Employer includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions or organizations. (c) Employee includes any individual employed by an employer. Person Individual Partnership Association Corporation Business trust Legal representative Any organized group of persons Individual or single proprietorship Refers to a business unit owned and controlled by only one person Partnership Refers to an association of two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves or for the exercise of a profession

Corporation 1. Stock Corporation refers to one organized for profit and issues shares of stock to its stockholders. 2. Non-stock, non-profit corporation refers to one organized principally for public purposes such as charitable, educational, cultural or similar purposes and does not issue shares of stock to its members. Business trust, legal representatives or any organized group of persons - A business trust is neither a corporation nor a partnership. It is a practice that originated in Massachusetts where a business or certain real estate is vested in a group of trustees which manages it for the benefit of the beneficial owners; the ownership of the latter is evidenced by negotiable/transferable shares. - Legal representatives may refer to agents under the principle of agency in the Civil Code - Any organized group of persons refers to a duly registered association of persons who voluntarily join together to form business establishments which they own, control and patronize. E.g. Cooperatives (credit, consumers, producers, marketing, service or multi-purpose) 167 (f), (g); Article 167. Definition of Terms. As used in this Title, unless the context indicates otherwise: (f) Employer means any person, natural or juridical, employing the services of the employee. (g) Employee means any person compulsorily covered by the GSIS under Commonwealth Act Numbered One hundred eighty-six, as amended, including the members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS under Republic Act Numbered Eleven hundred sixty-one, as amended. Employer Any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment. Classification of employer

Public Sector: covered by the GSIS, comprising the National Government, including GOCCs, the Phil. Tuberculosis Society, the Phil. Natl Red Cross, and the Phil. Veterans Bank Private Sector: covered by the SSS, comprising all employees other than those defined above

them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-and-file employees. Facts: UPSU, a union of supervisory employees, filed a petition for certification election on behalf of the route managers at Pepsi. The petition was denied by the med-arbiter and the Secretary of Labor and Employment on the ground that the route managers are managerial employees, and, therefore, ineligible for union membership under Art. 245. Issues: 1. W/N route managers at Pepsi are managerial employees, not supervisors. 2. W/N Art. 245 violates the Constitution as it prohibits managerial employees from forming, joining or assisting labor unions Ratio: 1. Yes, route managers at Pepsi are managerial employees. A distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-and-file employees. The nature of the job of a route manager, as given in a four-page pamphlet prepared by Pepsi states that a route manager manages his job and his people. They are responsible for the success of the companys main line of business through management of their respective sales teams. They are not mere functionaries with simple oversight functions but business administrators in their own right. Route managers also perform operational, HR, financial and marketing functions for the company. Route managers, therefore, protect and expand the companys business. 2. No, Art. 245 is not unconstitutional. Art. 245, in relation to Art. 212 (m), faithfully carries out the intent of the Constitutional Commission of not allowing top-level and middle managers to organize for labor purposes.

Employee Any person who performs services for an employer Classification of employee o Public Sector: covered by the GSIS, including members of the AFP, elective officials who are receiving regular salary, and any person employed as casual, emergency, temporary, substitute or contractual o Private Sector: comprising the employed workers who are covered by the SSS 212 (e), (f) Article 212. (e) Employer includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (f) Employee includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has no obtained any other substantially equivalent and regular employment. Employee UY v. VILLANUEVA UNITED PEPSI-COLA LAGUESMA SUPERVISORY UNION (UPSU) V.

Date: March 25, 1998 Ponente: Mendoza Doctrine: A distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes

 Those who qualify as top or middle managers are executives who receive from their employers information that not only is confidential but also is not generally available to the public, to their competitors, or to other employees.

for Servaa to qualify as Independent contractor. (did not present contract , did not comply with contract registration requirement) He had been continuously under the employ of TAPE from 1995 until his termination in March 2000, or for a span of 5 years. He is considered a regular employee under Article 280 of the Labor Code. Roberto Servaa had served as a security guard for TAPE from March 1987 until he was terminated on March 3, 2000. He was first connected with Agro-Commercial Security Agency, which assigned him to assist TAPE in its live productions. When the security agencys contract with RPN-9 expired in 1995, respondent was absorbed by TAPE. The parties have agreed that Servaa would render his services until such time that TAPE shall have engaged the services of a professional security agency. TAPE started negotiations for the engagement of a professional security agency, Sun Shield Security Agency. TAPE issued a memorandum to Servaa informing him of his impending dismissal due to TAPEs decision to contract the services of Sun Shield and redundancy. Servaa filed a complaint for illegal dismissal and nonpayment of benefits against TAPE.

B. Employer-Employee Relationship Factual Test TAPE v SERVAA | Tinga, J. GR No. 167648 | January 28, 2008 Nature: Petition for Review on Certiorari of the Decision and Resolution of the CA Petitioner: Television and Production Exponents (TAPE), Antonio Tuviera Respondent: Roberto Servaa Quick Summary: Servaa, a security guard of TAPE stationed at Broadway Centrum, was dismissed due to redundancy and the companys decision to engage the services of a professional security agency. The Court held that although the existence of an employeremployee relationship is a factual issue, the Court can still assume jurisdiction especially if the findings of lower courts/ agencies are conflicting (NLRC with those of CA and Labor Arbiters). Looking at the following facts, the Court held that Servaa is an employee of TAPE: Vis--vis the four fold test o Servaa was absorbed by TAPE, thus, he was hired by TAPE. o He received a fixed amount as monthly compensation for the services he rendered to TAPE. o The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the power to dismiss respondent. o Control is manifested in the bundy cards submitted by respondent in evidence. He was required to report daily and observe definite work hours. Identification card of Servaa shows he is an employee. TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in Policy Instruction No. 40

Facts:

Labor Arbiter: declared Servaa regular employee of TAPE citing nature of his work as necessary and desirable in the usual business activity of TAPE. Termination was valid on the ground of redundancy and ordered the payment of respondents separation pay. NLRC: reversed the Labor Arbiters decision and considered Servaa a mere program employee. CA: regular employee of TAPE. Issue: WON an employer-employee relationship exists between TAPE and Servaa Held/ Ratio: YES. Employee-Employer relationship exists. CA decision modified, exempted Antonio Tuviera from liability absent bad faith. The factors to be considered in determining the existence of employer-employee relationship are: Selection and engagement of the employee

Payment of wages Power of dismissal Employers power to control the employee with respect to the means and method by which the work is to be accomplished

desirable to the usual business of TAPE, he is still considered a regular employee by virtue of A280 of LC. As such, he cannot be terminated except for just cause or when authorized by law. REMINGTON INDUSTRIAL SALES CORP. v. CASTANEDA A. Facts: 1.Erlinda Castaneda had instituted a complaint for illegal dismissal, underpayment of wages, non-payment of overtime service incentive leave pay and non-payment of 13th month pay against Remington (a trading business) before the NLRC. 2.Arguments: a. Castaneda alleged: She started working in August 1983 as company cook for Remington, worked for six days a week. 6 am as she markets until 5:30 pm after employees leave. She continuously worked with Remington until unceremoniously prevented from reporting for work when it transferred to a new site. When she reported for work at the new site but was informed that Remington no longer needed her services. She was illegally dismissed because she was not given the notices required by law. So she filed her complaint for reinstatement without loss of seniority rights etc. Remington: denied that it dismissed Erlinda illegally, saying she was a domestic helper, not a regular employee Her job did not have anything to do with the business of trading in construction or hardware materials. She did not work eight hours. After cooking lunch and snack, her time was hers. Remington did not exercise any degree of control over her work. She did not even need to punch any time card. 3.Labor Arbiter: dismissed Castaneda complaint. She was a domestic helper. 4.NLRC: reversed Labor Arbiter. Not a domestic helper. No allegation that she worked in the house of director or Remington, Mr. Tan. Facts-wise, she worked as a cook in the office so that it benefited not the family of Mr. Tan but his employees. b.

The most important factor involves the control test under which an employer-employee relationship exists when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve the end. Factual Considerations: In 1995, Servaa was absorbed by TAPE or, in TAPEs language, retained as talent. Thus, he was hired by TAPE. He presented his identification card to prove that he is indeed an employee of TAPE. It has been held that in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it. The Memorandum informing Servaa of the discontinuance of his service proves that TAPE had the power to dismiss him. Control is manifested in the Bundy cards submitted by Servaa in evidence. These showed that he was required to report daily and observe definite work hours. NOT Independent Contractor. Servaa cannot be considered as an independent contractor 1 as TAPE alleges. TAPEs reliance on Dept. of Labor Policy No. 40 in classifying Servaa as a program employee 2 and equating him to be an independent contractor is misplaced. The aforementioned theories of TAPE run counter to each other. An independent contractor is not an employee of the employer, while a talent or program employee is an employee. Servaa had been continuously under the employ of TAPE from 1995 until his termination. Regardless of whether or not Servaa had been performing work that is necessary or
1

A legitimate job contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. TAPE failed to show that Servaa has substantial capital or investment to be qualified as an independent contractor. 2 Program employees are those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours.

There is a certification issued by the corporate secretary certifying that she was a bonafide employee. Her work schedule and the fact of being paid a monthly salary indicate that she is a company employee. The food she prepares are part of the benefit the business provides for the employees. 5.CA: affirmed NLRC. B. Issues/Decision: Was Castaneda a regular employee in Remington? YES.

WACK-WACK GOLF AND COUNTRY CLUB v. NLRC Facts: - Nov. 29, 1996: A fire destroyed a large portion of the Wack-wack Golf and Country Club, including its kitchen. Due to the need for reconstruction of the clubhouse, Wack-wack had to suspend the operations of the Food and Beverage Department, requiring the suspension of 54 employees. The Wack-wack Employees Union found the suspension arbitrary and constitutive of union-busting, and went on strike. The parties soon entered into an amicable settlement to resolve the dispute, whereby a special separation benefit/retirement package was formulated. The terms and conditions of the package include the following: 1. The UNION and the affected employees of F & B who are members of the UNION hereby agree to accept the special separation benefit package agreed upon between the CLUB management on the one hand, and the UNION officers and the UNION lawyer on the other, in the amount equivalent to oneand-one-half months salary for every year of service, regardless of the number of years of service rendered. That, in addition, said employees shall also receive the other benefits due them, namely, the cash equivalent of unused th vacation and sick leave credits, proportionate 13 month pay; and other benefits, if any, computed without premium; XXX 4. . All qualified employees who may have been separated from the service under the above package shall be considered under a priority basis for employment by concessionaires and/or contractors, and even by the Club upon full resumption of operations, upon the recommendation of the UNION. The Club may even persuade an employee-applicant for availment under the package to remain on his/her job, or be assigned to another position. - The package was availed of by 3 employees (Cagasan, Dominguez, and Baluyot), who received large sums of money as separation pay.

C. Rationale: Apex Mining Co., Inc. v. NLRC: a househelper in the staff houses of an industrial company was a regular employee of the said firm. The criterion is the personal comfort and enjoyment of the family of the employer in the home of said employer. That she works within company premises and that she does not cater exclusively to the personal comfort of Mr. Tan and his family reflects the existence of Remington's right of control over her functions, which is the primary indicator of the existence of an employer-employee relationship. Wrong to say that if the work is not directly related to the employer's business, then the person performing such work could not be considered an employee. The existence of the employer-employee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved. Doctrine, also laid out in Apex: The mere fact that the househelper or domestic servant is working within the premises of the business , as in staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer. NOTE: It was held she was illegally dismissed. She enjoys security of tenure. She may not be dismissed in the absence of just or authorized cause.

Established MIGUEL v. JCT GROUP, INC.

- Soon after, WW entered into a Management Contract with Business Staffing and Management Inc (BSMI), whereby the latter will provide management services for WW. - Cagasan and Dominguez filed their application for employment with BMSI. They, by reason of the priority given by the separation package, were rehired on probationary status by BMSI. Cagasan was made a personnel officer and Dominguez, a telephone operator. - WW also engaged other contractors in the operations of the club (like janitorial services, Finance and accounting services). Because of the various management service contracts, BMSI made an organizational analysis and manpower evaluation to streamline its operations. It found the positions of Cagasan and Domiguez redundant. In the case of respondent Cagasan, her tasks as personnel officer were likewise taken care of by the different management service contractors; on the other hand, Dominguezs work as telephone operator was taken over by the personnel of the accounting department. BMSI subsequently terminated them. - They then filed complaints in the NLRC for illegal dismissal against WW. NLRC ordered reinstatement ISSUE: 1. WON BMSI is an independent contractor (which will answer the question as WON there was an employer-employee relationship) 2. WON the employees were illegally dismissed HELD 1. YES Reasoning - An independent contractor is one who undertakes job contracting, i.e., a person who: (a) carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business. Jurisprudence shows that determining the existence of an independent contractor relationship, several factors may be considered, such as, but not

necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. - There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. - In December 1993, Labor Sec. Laguesma, in a case, recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers. Thus, there is no employer-employee relation between WW and the workers. 2. NO Ratio As there was no employer-employee relationship between WW and the complainants, there can be no illegal dismissal. Reasoning - The complainants (private respondents herein) were validly terminated upon their option to take the separation package provided by WW. Thus, the same have no cause of action against WW. - When the respondents voluntarily signed their quitclaims and accepted the separation package offered by the petitioner, they, thenceforth, already ceased to be employees of the petitioner. Nowhere does it appear in the Agreement that the petitioner assured the respondents of continuous employment in Wack Wack. Qualified employees were given priority in being hired by its concessionaires and/or contractors such as BSMI when it entered into a management contract with the petitioner. Disposition Petition granted. CA and NLRC decisions set aside

Factors PACIFIC CONSULTANTS SCHONFELD INTERNATIONAL ASIA, INC. v.

Facts: In 1997, PCIJ, a Japan-based company, decided to set itself up in the Philippines. In October 1997, respondent (a Canadian citizen) was employed by PCIJ, through its president, Henrichsen, as Sector Manager of PPI (PCIJs subsidiary in Phil) in its Water and Sanitation Department. However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ. Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract which he subsequently sent to Henrichsen. Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien. As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended respondents contract of employment to the application. On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines. However, on July 24, 1999, Henrichsen, by electronic mail, requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had developed. Respondent continued his work with PPI until October 1, 1999. Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest. Arguments: Petitioners contend that it was the PCIJ which employed respondent as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of respondent. They insist that PCIJ paid respondents salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondents work,

and had the responsibilities of monitoring the "daily administration" of respondent. Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJs letterhead was used to inform him that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only served as a "conduit." Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee of PPI. He said that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI. He emphasized that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president Henrichsen who terminated his employment; PPI also paid his salary. The two corporations have separate and distinct personalities.

Issue: Are the factors in determining the existence of an employeremployee relationship between respondent and petitioner attendant in this case? Held: Yes. Ratio: The SC agreed with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (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. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationshipthat is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. The SC quoted the CA: There is, indeed, substantial evidence on record which would erase any doubt that the respondent company is

the true employer of petitioner. In the case at bar, the power to control and supervise petitioners work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to terminate the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by the petitioner. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements are all present. GABRIEL v. BILON PHILIPPINE GLOBAL COMMUNICATIONS INC V DE VERA 459 SCRA 260 GARCIA; June 7, 2005 NATURE petition for review on certiorari FACTS - Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. - It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981, offered his services to the petitioner, therein proposing his plan of works required of a practitioner in industrial medicine. - The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP CONTRACT which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover the retainership the Company previously had with Dr. K. Eulau and that respondents retainer fee will be at P4,000.00 a month. Said contract was renewed yearly. The retainership arrangement went on from 1981 to 1994 with changes in the retainers fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. On December 1996 Philcom, thru a letter bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the latters retainers contract with the Company

effective at the close of business hours of December 31, 1996 because management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises. - On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process. He averred that he was designated as a company physician on retainer basis for reasons allegedly known only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway he worked on a fulltime basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom. - On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision dismissing De Veras complaint for lack of merit, on the rationale that as a retained physician under a valid contract mutually agreed upon by the parties, De Vera was an independent contractor and that he was not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December 31, 1996. NLRC reversed (the word used is modified) that of the Labor Arbiter, on a finding that De Vera is Philcoms regular employee and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. - Court of Appeals modified NLRCs decision that of the NLRC by deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu of reinstatement. ISSUES WON an employer-employee relationship exists between petitioner and respondent HELD NO - De Vera was an independent contractor beinf the retained physician of petitioner company.

- In a long line of decisions, the Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test, to wit: the selection and engagement of the employee; the payment of wages; the power of dismissal; and the power to control the employees conduct, or the so-called control test, considered to be the most important element. - Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner in the letter which he sent to petitioner. - The letter was substantially the basis of the labor arbiters finding that there existed no employer-employee relationship between petitioner and respondent, in addition to the following factual settings: - The fact that the complainant was not considered an employee was recognized by the complainant himself in a signed letter, the tenor of which indicated that the complainant was proposing to extend his time with the respondent and seeking additional compensation for said extension. This shows that the respondent PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is proposing his own schedule and asking to be paid for the same. This is proof that the complainant understood that his relationship with the respondent PHILCOM was a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work. - De Veras service for the respondent was covered by a retainership contract [which] was renewed every year from 1982 to 1994. Upon reading the contract dated September 6, 1982, signed by the complainant himself (Annex C of Respondents Position Paper), it clearly states that is a retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware that the contract was good only for one year, as he signed the same without any objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis. - The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for

his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employeremployee relationship. - Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary. - We note, too, that the power to terminate the parties relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.Finally, remarkably absent from the parties arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. - Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the private practice of his profession, not to mention the fact that respondents work hours and the additional compensation therefor were negotiated upon by the parties. In fine, the parties themselves practically agreed on every terms and conditions of respondents engagement, which thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work. Disposition petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is REINSTATED.

Control Test LOPEZ v. METROPOLITAN SYSTEM (MWSS) WATERWORKS and SEWERAGE

Facts: Petitioners were engaged by the MWSS as collectors-contractors by virtue of an Agreement wherein the petitioners agreed to collect from the concessionaires of MWSS charges, fees, assessments of rents for water, etc. However, when MWSS entered into a Concession Agreement with Manila Water and Benpress-Lyonnaise, the collection

of the bills was transferred to said private concessionaires. Regular employees of the MWSS (except those who chose to remain with MWSS or retired) were absorbed by the concessionaires. Relying on a Civil Service Commission Resolution, MWSS refused to give the petitioners retirement benefits, saying that they were contract-collectors and not employees. On the other hand, the petitioners claim that they are employees, saying that with the nature and extent of their work at the MWSS, they served as collectors of MWSS only, and that they never provided collections services to customers as an independent business. Issue: W/N petitioners are regular employees. Held and Ratio: According to the Court, they are indeed regular employees of MWSS. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer, which can be determined by looking at the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. UERMMMC R.D.U. V. LAGUESMA (AS CITED IN FELIX V. BUENASEDA) Quick Facts (Felix v. Buenaseda): Felix was employed as a resident physician (temporary status) by the National Mental Hospital. When NMH reorganized itself as the National Center for Mental Health, upon review of the board of the NCMH an in pursuit of new requirements laid down, Felix was dismissed. Felix filed for illegal dismissal. Issue: WON he was legally dismissed. Held: Yes Ratio: (UERMMMC Doctrine used in case): Under this system, residents, specialty those in university teaching hospitals 18 enjoy their right to security of tenure only to the extent that they periodically make the grade, making the situation quite unique as far as physicians undergoing post-graduate residencies and

fellowships are concerned. While physicians (or consultants) of specialist rank are not subject to the same stringent evaluation procedures, 19 specialty societies require continuing education as a requirement for accreditation for good standing, in addition to peer review processes based on performance, mortality and morbidity audits, feedback from residents, interns and medical students and research output. The nature of the contracts of resident physicians meet traditional tests for determining employer-employee relationships, but because the focus of residency is training, they are neither here nor there. Finally, it is crystal clear, from the facts of the case at bench, that the petitioner accepted a temporary appointment (Medical Specialist I). As respondent Civil Service Commission has correctly pointed out 23, the appointment was for a definite and renewable period which, when it was not renewed, did not involve a dismissal but an expiration of the petitioner's term. R TRANSPORT CORP V EJANDRA NATURE Petition for review of the decision of the CFI of Iloilo FACTS - Rogelio Ejandra worked for petitioner bus company as a driver. - On Jan 31 1996, he was apprehended for obstruction of traffic. His license was confiscated. He reported this to his manager, Oscar Pasquin, who gave him P500 to redeem the license. He was able to retrieve the license after a week since the apprehending officer turned it in only then. - On feb 8, 1996, he reported for work. The company said they were reviewing if they were going to allow him drive again. Also, he was being blamed for damage to the bus. Ejandra said the bus was damaged during the week he wasnt able to drive. - Petitioner, on the other hand, claims that Ejandra is a habitual absentee and has abandoned his job. To belie private respondents allegation that his license had been confiscated, petitioner asserted that, had it been true, he should have presented an apprehension report and informed petitioner of his problems with the LTO. But he did not. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis

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- The labor arbiter ruled in favor of Ejandra. It was held that he didnt abandon his work, since there was valid reason for his 1 week absence. He also was not afforded due process. NLRC and CA affirmed. ISSUES 1. WON there was an employee employer relationship 2. WON Ejandra was dismissed for a just cause HELD 1. YES. Petitioner is barred to negate the existence of an employeremployee relationship. In its petition filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. Petitioner maintained that private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioners claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly provides that an employees wages can be in the form of commissions. 2. NO. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Petitioner did not fulfill the requisites. First, Ejandras absence was justified since his license wasnt release until after a week. Second, Ejandra did not want to sever their relationship when he got his license back. Third, labor arbiter Yulo correctly observed that, if private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997 (Rules Implementing Book V of the Labor Code). Petitioner made no such report. - In addition, he wasnt also given due process by not giving him notice and hearing.

Disposition Decision reversed INSULAR LIFE v. NLRC (1989)

Economic Test SEVILLA v. CA | Sarmiento, J. G.R. No. L-41182-3 | April 16, 1988 Petitioner: Dr. Carlos Sevilla and Lina Sevilla Respondent: CA, Tourism World Service, Inc. Quick Summary: Sevilla and Tourism World Service (TWS) entered into a contract involving the management of a branch office of the latter. The issue here is the nature of the relationship between the parties. This stems from the unilateral disconnection of phone lines and padlocking of the said offices by TWS, wherein Sevilla feeling aggrieved, filed a complaint under Articles 19, 20 and 21 of the Civil Code. In this case the petitioner Lina Sevilla claims that a joint business venture was entered into by and between her and Tourist World Service 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. TWS contends that she is an employee, and therefore bound by the acts of TWS, the employer. The Court held, using the Economic test, that she is not an employee: (USING 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) a true employee cannot be made to part with his own money in pursuance of his employer's business (Sevilla bound herself in solidumas and for rental payments of the said office) unlike an employee then, who earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her booking successes.BUT, also held that it is not a joint venture but a contract of agency, thus the unilateral rescission of TWS made it liable for damages. Facts:

Sevilla and TWS entered into a contract in relation to the management of a branch office of the latter. TWS appears to have been informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau, and,

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since the branch office was anyhow losing, the Tourist World Service considered closing down its office. TWS indeed, closed down the premises. Hence Sevillas action for damages. Lina Sevilla claims that a joint business 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. TWS contend that the appellant was an employee of the appellee Tourist World Service, Inc. and as such was designated manager. RTC: TWS, 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 Hence this appeal

True the respondent Court would later minimize her participation in the lease as one of mere guaranty, that does not make her an employee of Tourist World, since in any case, a true employee cannot be made to part with his own money in pursuance of his employer's business, or otherwise, assume any liability thereof. In that event, the parties must be bound by some other relation, but certainly not employment. In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the same was run by the herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare brought in on the effort of Mrs. Lina Sevilla. Under these circumstances, it cannot be said that Sevilla was under the control of Tourist World Service, Inc. "as to the means used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities. It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an employee then, who earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her booking successes. FRANCISCO v. NLRC | Ynares-Santiago, J. G.R. No. 170087 | August 31, 2006 Petitioner: Angelina Francisco Respondent: NLRC, KASEI Corp. Quick Summary: Angelina Francisco filed a complaint for constructive dismissal. Kaseis defense was that no employee-employer relationship exist since he was only hired as a technical consultant. The Court held, using economic test that she is an employee and DEPENDENT to the company since: 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 When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners 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

Issue: WON employee-employer relationship exist (important in the matter of jurisdiction) Held/ Ratio: NO. It is a Contract of Agency, thus lower court has jurisdiction. Court awarded damages to Sevilla. 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 socalled 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 records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means used in connection therewith. In the first place, under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidumas and for rental payments, an arrangement that would be like claims of a master-servant relationship.

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the existence of an employer-employee relationship between petitioner and respondent corporation. IMPORTANT NOTES: In addition to the control test, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers 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. The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers 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 : whether the worker is dependent on the alleged employer for his continued employment in that line of business. Agreement CHAVEZ v. NLRC SAN MIGUEL CORPORATION v. ABELLA Penned by J. Carpio-Morales Facts: Petitioner SMC entered into a one-year Contract of Services (renewable) with Sunflower Multi-Purpose Cooperative. The latter undertakes to provide janitorial, shrimp harvesting, sanitation, and storage services for the Bacolod Shrimp Processing Plant. Noteworthy is the explicit stipulation in the contract that there is no employeremployee relationship between the company and the cooperative or

the company and the cooperatives employees. Pursuant to the contract Sunflower engaged the services of private respondents. After sometime, private respondents filed a complaint praying that they be declared as regular employees which was amended subsequently to include illegal dismissal. In the meantime, SMC filed before the DOLE a Notice of Closure. Labor Arbiter: The private respondents complaint is DISMISSED for lack of merit. The law allows for job contracting. NLRC: Appeal is DISMISSED. Sunflower was an independent contractor. CA: Petition is GRANTED reversing and setting aside the NLRC decision. Issue: Whether private respondents should be considered as employees of SMC. Intertwined to the resolution of this main issue is whether Sunflower is an independent as an independent contractor. Held: Private respondents are employees of SMC. In this case, procedural objections where presented by SMC but the Court brushed away technical infirmities in deference with the time-honored liberality when it comes to labor cases and proceeded to dispose the substantive part. The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of employer, except only as to the results of the work. In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose (w/c is to ensure the employees are paid their wages). In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer. Although, the parties to the contract disavowed the existence of an employer-employee relationship, that did not prevent the Court from examining the totality of the facts and the surrounding circumstances. The relationship between SMC and Sunflower was a labor-only contractorship as inferred from the following indicia: (1) Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor; (2) The lot, building, machineries and all other working tools utilized by respondents were owned by SMC, not to mention that the alleged office of Sunflower is found within the confines of a carinderia with a typewriter (in hindsight, this must be very precious) as the only property; (3) the work assigned to private respondents was directly related to the operations of SMC; (4) Sunflower did not carry an independent business or undertake the performance of its service contract

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according to its own manner and method, free from control and supervision. To reiterate, in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. (I think this is the relevant part with respect to the topic). The law of course provides for two kinds of regular employees: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. As for those of private respondents who were engaged in janitorial and managerial tasks, they fall under the second category and are thus entitled to differential pay and benefits. There was also a discussion about retrenchment but let us not belabor ourselves and just await the wisdom of time for it is still off-topic. By: Mark Xavier Oyales LOPEZ v. METROPOLITAN SYSTEM (MWSS) WATERWORKS and SEWERAGE

According to the Court, they are indeed regular employees of MWSS. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer, which can be determined by looking at the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. SONZA vs. ABS-CBN Facts: ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation where MJMDC as agent agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. Sonza is also the President and General Manager of MJMDC. ABS-CBN agreed to pay for Sonzas services a monthly talent fee. Eventually, Sonza wrote a letter to ABS-CBNs President tendering his irrevocable resignation in view of recent events concerning his programs and career. The letter also served as notice of the rescission of the agreement between the parties. Issue: W/N an employer-employee relationship existed between Sonza and ABS-CBN Held/Ratio: NO. Sonzas claims are all based on the agreement and not on the Labor Code. The present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the parties agreement. Sonzas cause of action is for breach of contract, a civil dispute cognizable by the regular courts. Sonza The discretion used by ABS-CBN in specifically selecting and hiring Sonza over other broadcasters of possibly similar experience and qualification as his belies the claim of independent contractorship. ABS-CBN directly paid Sonza his monthly talent fees and Four-fold Test as Applied by SC The specific selection and hiring of Sonza because of his unique skills, talent and celebrity status not possessed by ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. If Sonza did not possess such unique skills, talent and celebrity status, ABSCBN would not have entered into the agreement with Sonza but would have hired him through its personnel department just like any other employee. The method of selecting and engaging Sonza does not conclusively determine his status. All the talent fees and benefits paid to Sonza were the result of negotiations that led to the agreement. If Sonza were

Facts: Petitioners were engaged by the MWSS as collectors-contractors by virtue of an Agreement wherein the petitioners agreed to collect from the concessionaires of MWSS charges, fees, assessments of rents for water, etc. However, when MWSS entered into a Concession Agreement with Manila Water and Benpress-Lyonnaise, the collection of the bills was transferred to said private concessionaires. Regular employees of the MWSS (except those who chose to remain with MWSS or retired) were absorbed by the concessionaires. Relying on a Civil Service Commission Resolution, MWSS refused to give the petitioners retirement benefits, saying that they were contract-collectors and not employees. On the other hand, the petitioners claim that they are employees, saying that with the nature and extent of their work at the MWSS, they served as collectors of MWSS only, and that they never provided collections services to customers as an independent business. Issue: W/N petitioners are regular employees. Held and Ratio:

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benefits with no part of his fees going to MJMDC.

ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as SSS, Medicare and 13th month pay which the law automatically incorporates into every employer-employee contract. Whatever benefits Sonza enjoyed arose from contract and not because of an employer-employee relationship. Moreover, Sonzas talent fees are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. Such power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. For violation of any provision of the agreement, either party may terminate their relationship. Sonza failed to show that ABSCBN could not terminate his services on grounds other than breach of contract. Such a circumstance indicates an independent contractual relationship between Sonza and ABS-CBN. Whether Sonza rescinded the agreement or resigned from work does not determine his status as employee or independent contractor. Sonza is not an employee but an independent contractor. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The less control the hirer exercises, the more likely the worker is considered an independent contractor. Sonza had a free hand on what to say or discuss in his shows provided that he did not attack ABS-CBN or his interests. ABS-CBNs control was limited only to the result of Sonzas work, whether to broadcast the final product or not. The agreement does not require Sonza to comply with the rules and standards of

performance prescribed for employees of ABS-CBN. The code of conduct imposed on Sonza under the agreement refers to the Television and Radio Code of the KBP which has been adopted by ABS-CBN as its Code of Ethics. In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. General rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs. Lastly, being an exclusive talent does not by itself mean that Sonza is an employee of ABSCBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. INSULAR LIFE ASSURANCE CO. LTD. V. NLRC (1998) Facts: Petitioner Insular Life entered into an agency contract with respondent Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commissions. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. De los Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for termination of the contract. Private respondent was later appointed as Acting Unit Manager under its office and was also expressly obliged to participate in the companys conservation program. Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner that his services were terminated. He filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not paid his salaries and separation pay.

Sonzas rescission of the agreement was not an admission of his status as a nonemployee.

ABS-CBN exercised control over the means and methods of his work, subjected him to its rules and standards of performance, and his exclusivity as a talent.

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Issue: W/N there is an employer-employee relationship. Held/Ratio: Four-fold test, i.e., (a) selection and engagement of employee, (b) payment of wages, (c) power of dismissal, and, (d) power of control most important element. De los Reyes was under the effective control of petitioner in the critical and most important aspects of his work as Unit Manager. This conclusion was derived from the provisions in the contract which appointed private respondent as Acting Unit Manager, to wit: (a) De los Reyes was to serve exclusively the company, therefore, he was not an independent contractor; (b) he was required to meet certain manpower and production quota; and, (c) petitioner controlled the assignment to and removal of soliciting agents from his unit. Doctrine: Not every form of control over the conduct of the party hired in relation to the service rendered establishes employeremployee relationship. Broadcasts Talents - Performers TELEVISION ETC. v. SERVANA, supra DUMAPIT-MURLLO v. CA Facts: Dumapit-Murillo hired as co-anchor for ABC. Her fixed-term contract was for a period of 3 mos but it was renewed by ABC continually for 4 yrs. LA dismissed her complaint for illegal dismissal. NLRC reversed LAs decision, CA reversed NLRC. Issue/Held: W/N she is a fixed employee or regular employee? REGULAR EMPLOYEE Ratio: A 280 provides regular employees are those who were engaged to perform activities w/c are usually necessary or desirable in the usual business or trade of the employer her work as an anchor is obviously desirable for the business of news and public dissemination, also being hired for 4 years is a manifestation of her necessity in the company. Also fixed term contract are only valid when it is not used to circumvent the acquisition of tenurial security and it is shown that both parties agreed to it voluntarily. ABS-CBN v. NAZARENO 503 SCRA 204 (06) Facts:

Petitioner ABS-CBN hired respondents (Nazareno, Gerzon, Deiparine, and Lerasan) as Production Assistants (PAs), with a monthly compensation of P4,000, were issued IDs, and were required to work for a minimum of 8 hours per day, including Sundays and holidays. They were under the control and supervision of the Assistant Station Manager and News Manager. When petitioner and the Rank-and-File Employees Union executed a CBA, petitioner refused to recognize PAs as part of the bargaining unit, and thus, they were not included under the CBA. Thereafter, respondents filed a Complaint with the NLRC for Recognition of Regular Employment Status, Underpayment of OT Pay, Holiday Pay, etc. with Damages against petitioner. As proof of their regular status, they presented machine copies of their Employee IDs and salary vouchers. They want to be declared regular and permanent employees so as to be covered under the CBA and avail of the benefits thereof. On the other hand, petitioner asserts that the respondents are merely considered as talents, not regular employees. Issue: W/N respondents are regular employees. Held and Ratio: The Court gave credence to respondents assertions that where a person has rendered at least 1 year of service, regardless of the nature of the activity performed, or where the work is continuous, the employment is considered regular as long as the activity exists. A customary appointment is not a requisite before one can be formally declared to have attained regular status. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the employers business. In this case, it doesnt matter if the respondents were hired as talents. The factual circumstances (i.e. that they received pre-agreed talent fees instead of salaries, that they did not observe the required office hours, and were permitted to join other productions in their free time) werent conclusive proof of the nature of their employment. They are not talents; rather, they are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors.

Method Wage Payment

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ALMIREZ v. INFINITE CORP. TECHNOLOGY CORP. LAZARO v. SSS Issue: WON an employer-employee relationship exists between the private respondents and the petitioner for purposes of determining employer liability to the petitioner. Held: No employer-employee relationship, McLeod was a managerial employee of PMI from 20 June 1980 to 31 December 1992. Ratio: McLeod could have presented evidence to support his allegation of employer-employee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as testimony of co-employees, may serve as evidence of employee status. It is a basic rule in evidence that parties must prove their affirmative allegations. While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are not enough. They must be supported by substantial evidence at the very least McLeods reliance on Annex M can hardly carry the day for him. Annex M, which is McLeods letter addressed to "Philip Lim, VP Administration," merely contains McLeods proposals for the grant of some benefits to supervisory and confidential employees. Contrary to McLeods allegation, Patricio did not sign the letter. Hence, the letter does not embody any agreement between McLeod and the management that would entitle McLeod to his money claims. Neither can McLeods assertions find support in Annex U. Annex U is the Agreement which McLeod and Universal Textile Mills, Inc. executed in 1959. The Agreement merely contains the renewal of the service agreement which the parties signed in 1956. DOMASIG v. NLRC Doctrine: Substantial evidence is enough to prove the existence of an employer-employee relationship. Substantial evidence defined below. Facts: Eddie Domasig said he started working for Cata Garments Corporation even when its name was still Cato Garments Corporation

Hours of Work LAZARO v. SSS, supra

Proof TELEVISION AND PRODUCTION EXPONENTS, INC. v. SERVANA, supra LOPEZ v. BODEGA CITY MCLEOD v NLRC Jan 23, 2007 Carpio, J:

Facts: John F. McLeod filed a complaint for retirement benefits, vacation and sick leave benefits, non-payment of unused airline tickets, holiday pay, underpayment of salary and 13th month pay, moral and exemplary damages, attorneys fees plus interest against Filipinas Synthetic Corporation (Filsyn), Far Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu. He alleges that at the time of his retirement complainant was receiving P60,000.00 monthly with vacation and sick leave benefits; 13th month pay, holiday pay and two round trip business class tickets on a Manila-London-Manila itinerary every three years which is convertible to cash if unused. Respondents accordingly failed to pay vacation and leave credits and requested complainant to wait as it was short of funds but the same remain unpaid at present. Respondents likewise failed to pay complainants holiday pay up to the present. There were more benefits which were not honored. The Labor Arbiter, held all respondents jointly and severally liable for the money claims of Mcleod. However, the NLRC reversed and made Peggy Mills as the sole entity liable for the retirement pay of Mcleod. This was affirmed by the CA.

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The management of the said corporation dismissed him when they learned that he was being pirated by a rival corporation which had an offer he refused. Domasig went to the Labor Arbiter which ruled in favor of him. Management appealed to the NLRC and the NLRC ruled in favor of the management. The Labor Arbiter found the identification card issued by Cata as well as the salary vouchers of Domasig as sufficient evidence to prove that there was an employer-employee relationship between them. The NLRC on the other hand, said that the Labor Arbiter acted arbitrarily on ruling in favor of Domasig since Cata was asserting that Domasig was merely a commissions agent evidenced by the list of sales collections which included the commissions due, expenses incurred and cash advances received. Issue: Whether or not there enough/sufficient/substantial evidence as to establish the employee-employer relationship between Domasig and Cata Garments. Held: There was enough evidence to establish the employeremployee relationship. It has long been established that substantial evidence is enough to prove the existence of an employer-employee relationship. Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. It was wrong for the NLRC to be not convinced with the uncontested issuance of the identification card which petitioners submitted to prove that there was evidence of an employer-employee relationship. Also, Domasig was employed for more than one year and under the law, he is considered to be a regular employee. Domasig was reinstated in this case.

LOPEZ v. BODEGA CITY, supra

ABANTE v. LAMADRID Petitioner: Empermaco B Abante, Jr Respondents: Lamadrid Bearing & Parts Corp and its President Jose Lamadrid Facts: Abante was employed by the Lamadrid company in 1985 as a salesman for Mindanao w/ a commission of 3% of the total paid-up sales. Petitioner had 5 bad accounts worth P687K in 1998 & Jose warned him that if he doesnt issue his own checks to cover the bad accounts, his commissions wont be released & he will lose his job. He issued checks on condition that these will not be deposited for clearing & that the deficiencies shall be charged against his commissions. The company tricked him into signing a Promissory Note and a Deed of Real Estate Mortgage. Some checks were returned to Abante. Abante was to apply for a salary loan w/ SSS but learned that he wasnt covered. When he inquired w/ Jose, the latter berated & hurled invectives at him. Jose deposited the remaining checks, contrary to their agreement. These were dishonored due to Account Closed. Company demanded that he make good his checks. Abante replied committing his commissions as payment for the balance of the sales. Abantes customer handed to him a letter from the company informing clients that Abante is no longer recognized as a salesman. Abante received a subpoena for violation of BP 22. ABante filed a complaint for illegal dismissal w/ money claims before the NLRC. The respondents aver that Abante is a freelance salesman, not an employee because he was on commission basis, he doesnt have a monthly salary, he doesnt report to work daily, he didnt have a pay-slip, he is not enrolled w/ the SSS, he is also a salesman for 5 other companies, and he shouldnt have executed a Promissory Note & Deed of Real Estate Mortgage.. The Labor Arbiter ruled in favor of Abante. The NLRC reversed the NLRCs decision for lack of cause of action. The CA denied Abantes petition for review.

Absence of Relationship

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Issue/Held: WON Abante is an employee of Lamadrid. NO Ratio: Abante allege that he was doing work that is necessary or desirable in Lamadrids usual business or trade (pursuant to Art 280, Labor Code). He also said that the company had the power of control over him. He collected payments from sales. The company directs him to report in Mindanao for sales & collection activities and sends him to conferences. He says that even though he doesnt report daily to work, it doesnt mean that hes not an employee. The court applied the four-fold test and found out that there was no ER-EE relationship between Lamadrid & Abante. 1. Selection & engagement he was free to offer his services to other companies 2. Payment of wages he was paid on commission 3. Power of dismissal he had no sales quote w/c, if not reached, would be a ground for his dismissal 4. Power of control he was not required to submit a period report on his sales & activities he was not assigned to particular areas only, he was assigned to the whole of Mindanao he was left alone to adopt any style/strategy to sell his products the things he learned from the marketing conferences in Manila served only as guidelines Art 280 is not a crucial factor in determining the existence of an ER-EE relationship. It merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining their rights to certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. While in Songco v NLRC the court said that commission under Art. 96 of the Labor Code was construed as being included in the definition of wage, there is no categorical pronouncement that the payment of compensation on commission basis is conclusive proof of the existence of an employer-employee relationship. After all, commission, as a form of remuneration, may be availed of by both an employee or a non-employee. CA decision affirmed in toto.

Denial Negative Pregnant Rule

R TRANSPORT CORP. v. EJANDRA, supra

6.02. INDEPENDENT CONTRACTOR AND LABOR ONLY CONTRACTOR 106 Contractor or Subcontractor ART. 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. 107 Indirect Employer ART. 107. Indirect employer. - The provisions of the immediately preceding article shall likewise apply to any

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person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. 109 Solidary Liability ART. 109. Solidary liability. - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. Contracting and Subcontracting Arrangements Expressly allowed by law Arrangement whereby a principal or indirect or statutory employer agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed w/in or outside the premises of the principal. Subject to regulation for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization and collective bargaining. - Trilateral arrangement: o Contract for a specific job, work or service bet. principal and contractor/subcontractor o Contract of employment bet. contractor/subcontractor and its workers Principal farms out work, job, task, project or service to a contractor or subcontractor; not the direct employer of the workers employed by the contractor/subcontractor and assigned to the principal; indirect employer; statutory employer; employer Contractor/Subcontractor has the capacity to independently undertake the performance of the work, job, etc.; exercises independent employment and contracts to do a piece of work accdg to its own methods and w/o being subject of control by the principal, except as to the results thereof; direct employer of the contractual employees who are supplied to the principal

Contractual workers engaged by the contractor/subcontractor to accomplish the work, job, etc. Legitimate Job Contracting Conditions to be met: 1. Right of Control Test. The contractor/subcontractor carries on an independent business and undertakes the contract work on his own account under his own responsibility accdg to his own manner and method, free from the control and direction of his employer or principal in all matters connected w/ the performance of the work except as to the results thereof 2. Substantial Capital or Investment Test. The contractor/subcontractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business 3. Legal Rights and Benefits Compliance Test. The agreement between the principal and contractor/subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social and welfare benefits Absence of any of the requisites makes it a labor-only contracting arrangement Other factors indicative of permissible job contracting/subcontracting arrangement 1. Whether the C/SC is carrying on an independent business; 2. Nature and extent of the work; 3. Skill required; 4. Term and duration of relationship; 5. Right to assign the performance of specified pieces of work; 6. Control and supervision of the workers; 7. Power of the employer with respect to the hiring, firing and payment of workers of the contractor; 8. Control of the premises; 9. Duty to supply premises, tools, appliances, materials, and labor; and 10. Mode, manner and terms of payment. Labor-only Contracting (PROHIBITED) A labor-only contractor is one who presents himself as an employer even if he does not have capital to run a business or

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capacity to ensure that his workers are paid their wages and other benefits as prescribed by law. He cannot independently undertake to perform a subcontracted job or service. To allow a labor-only contractor to operate is to give him an opportunity to circumvent the law and to exploit workers. Elements: 1. The C/SC does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such c/sc are performing activities w/c are directly related to the main business of the principal, OR 2. The C/SC does not exercise the right of control over the performance of the work of the contractual employee. Even if only one of the two elements is present, there is laboronly contracting Bases in prohibiting labor-only contracting: a. 3, Art. XIII, 1987 Consti. Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. X X X b. Art. 106, Labor Code. o Objective: Ensure that labor laws are followed Prevent exploitation of workers

organization, and collective bargaining. Labor-only contracting as defined herein shall be prohibited. Section 2 . Coverage. - These Rules shall apply to all parties of contracting and subcontracting arrangements where employer-employee relationship exists. Placement activities through private recruitment and placement agencies as governed by Articles 25 to 39 of the Labor Code are not covered by these Rules. Section 3. Trilateral Relationship in Contracting Arrangements. - In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job work or service. Section 4. Definition of Basic Terms. - The following terms as used in these Rules, shall mean: (a) "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. (b) "Contractor or subcontractor" refers to any person or entity engaged in a legitimate contracting or subcontracting arrangement. (c) "Contractual employee" includes one employed by a contractor or subcontractor to perform or complete a job, work or service pursuant to an arrangement between the latter and a principal. (d) "Principal" refers to any employer who puts out or farms out a job, service or work to a contractor or subcontractor.

DOLE Order No. 18-02, Series of 2002 DEPARTMENT ORDER NO. 18 - 02 (Series of 2002) . . RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDED . . By virtue of the power vested in the Secretary of Labor and Employment under Articles 5 (Rule-making) and 106 (Contractor or Subcontractor) of the Labor Code of the Philippines, as amended, the following regulations governing contracting and subcontracting arrangements are hereby issued: Section 1. Guiding principles. Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulation for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-

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Section 5. Prohibition against labor-only contracting. - Laboronly contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: (i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248 (C ) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. Section 6. Prohibitions. - Notwithstanding Section 5 of these Rules, the following are hereby declared prohibited for being contrary to law or public policy: (a) Contracting out of a job, work or service when not done in good faith and not justified by the exigencies of the business and the same results in the termination of regular employees and reduction of work hours or reduction or splitting of the bargaining unit; (b) Contracting out of work with a "cabo" as defined in Section 1 (ii), Rule I, Book V of these Rules. "Cabo" refers to a person or group of persons or to a labor group which, in the guise of a labor organization, supplies workers to an employer, with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor;

(c) Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances: (i) In addition to his assigned functions, requiring the contractual employee to perform functions which are currently being performed by the regular employees of the principal or of the contractor or subcontractor; (ii) Requiring him to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of future claims; and (iii) Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement; (d) Contracting out of a job, work or service through an inhouse agency which refers to a contractor or subcontractor engaged in the supply of labor which is owned, managed or controlled by the principal and which operates solely for the principal; (e) Contracting out of a job, work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent; (f) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self organization as provided in Art. 248 (c) of the Labor Code, as amended. Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any

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provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following cases as declared by a competent authority: (a) where there is labor-only contracting; or (b) where the contracting arrangement falls within prohibitions provided in Section 6 (Prohibitions) hereof. the

subcontractor, the right of the contractual employee to separation pay or other related benefits shall be governed by the applicable laws and jurisprudence on termination of employment. Where the termination results from the expiration of the contract between the principal and the contractor or subcontractor, or from the completion of the phase of the job, work or service for which the contractual employee is engaged, the latter shall not be entitled to separation pay. However, this shall be without prejudice to completion bonuses or other emoluments, including retirement pay as may be provided by law or in the contract between the principal and the contractor or subcontractor. Section 11. Registration of Contractors or Subcontractors. Consistent with the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor through appropriate regulations, a registration system to govern contracting arrangements and to be implemented by the Regional Offices is hereby established. The registration of contractors and subcontractors shall be necessary for purposes of establishing an effective labor market information and monitoring. Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting. Section 12. Requirements for registration. - A contractor or subcontractor shall be listed in the registry of contractors and subcontractors upon completion of an application form to be provided by the DOLE. The applicant contractor or subcontractor shall provide in the application form the following information: (a) The name and business address of the applicant and the area or areas where it seeks to operate; (b) The names and addresses of officers, if the applicant is a corporation, partnership, cooperative or union; (c) The nature of the applicant's business and the industry or industries where the applicant seeks to operate;

Section 8. Rights of Contractual Employees. - Consistent with Section 7 of these Rules, the contractual employee shall be entitled to all the rights and privileges due a regular employee as provided for in the Labor Code, as amended, to include the following: (a) Safe and healthful working conditions; (b) Labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation pay; (c) Social security and welfare benefits; (d) Self-organization, collective bargaining and peaceful concerted action; and (e) Security of tenure. Section 9. Contract between contractor or subcontractor and contractual employee. - Notwithstanding oral or written stipulations to the contrary, the contract between the contractor or subcontractor and the contractual employee, which shall be in writing, shall include the following terms and conditions: (a) The specific description of the job, work or service to be performed by the contractual employee; (b) The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual contractual employee; and (c) The term or duration of employment, which shall be coextensive with the contract of the principal and subcontractor, or with the specific phase for which the contractual employee is engaged, as the case may be. The contractor or subcontractor shall inform the contractual employee of the foregoing terms and conditions on or before the first day of his employment. Section 10. Effect of Termination of Contractual Employment. In cases of termination of employment prior to the expiration of the contract between the principal and the contractor or

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(d) The number of regular workers; the list of clients, if any; the number of personnel assigned to each client, if any and the services provided to the client; (e) The description of the phases of the contract and the number of employees covered in each phase, where appropriate; and (f) A copy of audited financial statements if the applicant is a corporation, partnership, cooperative or a union, or copy of the latest ITR if the applicant is a sole proprietorship. The application shall be supported by: (a) A certified copy of a certificate of registration of firm or business name from the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), Cooperative Development Authority (CDA), or from the DOLE if the applicant is a union; and (b) A certified copy of the license or business permit issued by the local government unit or units where the contractor or subcontractor operates. The application shall be verified and shall include an undertaking that the contractor or subcontractor shall abide by all applicable labor laws and regulations. Section 13. Filing and processing of applications. - The application and its supporting documents shall be filed in triplicate in the Regional Offices where the applicant principally operates. No application for registration shall be accepted unless all the foregoing requirements are complied with. The contractor or subcontractor shall be deemed registered upon payment of a registration fee of P100.00 to the Regional Office. Where all the supporting documents have been submitted, the Regional Office shall deny or approve the application within seven (7) working days after its filing. Upon registration, the Regional Office shall return one set of the duly-stamped application documents to the applicant, retain one set for its file, and transmit the remaining set to the Bureau of Local Employment. The Bureau shall devise the necessary forms for the expeditious processing of all applications for registration.

Section 14. Duty to produce copy of contract between the principal and the contractor or subcontractor. - The principal or the contractor or subcontractor shall be under an obligation to produce a copy of the contract between the principal and the contractor in the ordinary course of inspection. The contractor shall likewise be under an obligation to produce a copy of the contract of employment of the contractual worker when directed to do so by the Regional Director or his authorized representative. A copy of the contract between the contractual employee and the contractor or subcontractor shall be furnished the certified bargaining agent, if there is any. Section 15. Annual Reporting of Registered Contractors. - The contractor or subcontractor shall submit in triplicate its annual report using a prescribed form to the appropriate Regional Office not later than the 15th of January of the following year. The report shall include: (a) A list of contracts entered with the principal during the subject reporting period; (b) The number of workers covered by each contract with the principal; (c) A sworn undertaking that the benefits from the Social Security System (SSS), the Home Development Mutual Fund (HDMF), PhilHealth, Employees Compensation Commission (ECC), and remittances to the Bureau of Internal Revenue (BIR) due its contractual employees have been made during the subject reporting period. The Regional Office shall return one set of the duly-stamped report to the contractor or subcontractor, retain one set for its file, and transmit the remaining set to the Bureau of Local Employment within five (5) days from receipt thereof. Section 16. Delisting of contractors or subcontractors. Subject to due process, the Regional Director shall cancel the registration of contractors or subcontractors based on any of the following grounds: (a) Non-submission of contracts between the principal and the contractor or subcontractor when required to do so; (b) Non-submission of annual report;

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(c) Findings through arbitration that the contractor or subcontractor has engaged in labor-only contracting and the prohibited activities as provided in Section 6 (Prohibitions) hereof; and (d) Non-compliance conditions. with labor standards and working

employees may have against the former in the case of violations as provided for in Sections 5 (Labor-Only contracting), 6 (Prohibitions), 8 (Rights of Contractual Employees) and 16 (Delisting) of these Rules. In addition, the principal shall also be solidarily liable in case the contract between the principal and contractor or subcontractor is preterminated for reasons not attributable to the fault of the contractor or subcontractor. Section 20. Supersession. - All rules and regulations issued by the Secretary of Labor and Employment inconsistent with the provisions of this Rule are hereby superseded. Contracting or subcontracting arrangements in the construction industry, under the licensing coverage of the PCAB and shall not include shipbuilding and ship repairing works, however, shall continue to be governed by Department Order No. 19, series of 1993. Section 21. Effectivity. - This Order shall be effective fifteen (15) days after completion of its publication in two (2) newspapers of general circulation.

Section 17. Renewal of registration of contractors or subcontractors. - All registered contractors or subcontractors may apply for renewal of registration every three years. For this purpose, the Tripartite Industrial Peace Council (TIPC) as created under Executive Order No. 49, shall serve as the oversight committee to verify and monitor the following: (a) Engaging in allowable contracting activities; and (b) Compliance with administrative reporting requirements. Section 18. Enforcement of Labor Standards and Working Conditions. - Consistent with Article 128 (Visitorial and Enforcement Power) of the Labor Code, as amended, the Regional Director through his duly authorized representatives, including labor regulation officers shall have the authority to conduct routine inspection of establishments engaged in contracting or subcontracting and shall have access to employer's records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order, or rules and regulations issued pursuant thereto. The findings of the duly authorized representative shall be referred to the Regional Director for appropriate action as provided for in Article 128, and shall be furnished the collective bargaining agent, if any. Based on the visitorial and enforcement power of the Secretary of Labor and Employment in Article 128 (a), (b), (c) and (d), the Regional Director shall issue compliance orders to give effect to the labor standards provisions of the Labor Code, other labor legislation and these guidelines. Section 19. Solidary liability. - The principal shall be deemed as the direct employer of the contractual employees and therefore, solidarily liable with the contractor or subcontractor for whatever monetary claims the contractual

A. Independent Contractor

Management Function Determination Need

MANILA ELECTRIC COMPANY v. QUISUMBING

FACTS:

1.

Meralco Workers Association (MEWA) is the duly recognized labor organization of the rank-and-file employees of MERALCO. LOn September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years starting from December 1, 1995 to November 30, 1997.

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2.

MERALCO signified its willingness to re-negotiate through its letter dated October 17, 1995 and formed a CBA negotiating panel for the purpose. On November 10, 1995, MEWA submitted its proposal to MERALCO, which, in turn, presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded. Despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at "terms and conditions acceptable to both of them."

resorted to circumvent the law or must not have been the result of malicious or arbitrary action. Given these realities, we recognize that a balance already exists in the parties' relationship with respect to contracting out; MERALCO has its legally defined and protected management prerogatives while workers are guaranteed their own protection through specific labor provisions and the recognition of limits to the exercise of management prerogatives. From these premises, we can only conclude that the Secretary's added requirement only introduces an imbalance in the parties' collective bargaining relationship on a matter that the law already sufficiently regulates. Hence, we rule that the Secretary's added requirement, being unreasonable, restrictive and potentially disruptive should be struck down. Trilateral Relationship PAL V. LIGON (2008) Ponente: Carpio-Morales, J. Facts: PAL as owner and Synergy as contractor entered into an agreement whereby Synergy undertook to provide loading, unloading, delivery of baggage and cargo and other related services to and from PALs aircraft at the Mactan Station. As provided in the Scope of Services, contractor Synergy shall furnish all the necessary capital, workers, loading, unloading and delivery materials, facilities, supplies, equipment and tools for the satisfactory performance and execution of services. It was also expressly provided that Synergy was an independent contractor and... that there would be no employeremployee relationship between contractor synergy and/or its employees on the one hand, and owner on the other. Respondent Benedicto Auxtero filed a complaint at the NLRC against PAL , Synergy and their respective officers for regularization of employment and later, when he was allegedly illegally dismissed, he filed a complaint against the said parties for illegal dismissal and reinstatement with full backwages. The other respondents filed a complaint at the NLRC against PAL, Synergy and their respective officials for underpayment , non-payment of premium pay for holidays, premium pay for rest days, service incentive leave pay, 13 th month pay and allowances, and for regularization of employment status with PAL. They claimed that they are performing duties for the benefit of PAL since their job is directly connected with its business. NLRC declared Synergy as a labor-only contractor and ordered PAL to accept all the respondents as its regular employees entitled to salaries, allowances and other employment benefits.

3.

MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices. The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement. Faced with the imminence of a strike, MERALCO on May 2, 1996, filed an Urgent Petition with the Department of Labor and Employment which was docketed as OS-AJ No. 0503[1]96 praying that the Secretary assume jurisdiction over the labor dispute and to enjoin the striking employees to go back to work.

4.

The Labor Secretary granted the petition through its Order of May 8, 1996. Thereafter, the parties submitted their respective memoranda and on August 19, 1996, the Secretary resolved the labor dispute through an Order, but both parties were not satisfied with the results, ultimately MERALCO filed a petition contending that the Secretary acted with grave abuse of discretion.

ISSUE: Whether the Secretary's consultation requirement is reasonable or unduly restrictive of the company's management prerogative. HELD: We recognize that contracting out is not unlimited; rather, it is a prerogative that management enjoys subject to well-defined legal limitations. As we have previously held, the company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and the contracting out must not have been

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Issue:/Held: Is Synergy an independent contractor or a labor-only contractor? (This issue resolves whether PAL has an employer-employee relationship with the respondents) Synergy is a labor-only contractor. Thus, respondents could be considered as regular employees of PAL. Ratio: If Synergy is found to be a mere job-only contractor, respondents could be considered as regular employees of petitioner as Synergy would then be a mere agent of PAL in which case respondents would be entitled to all the benefits granted to petitioners regular employees; otherwise, if Synergy is found to be a legitimate contractor, respondents claims against PAL must fail as they would then be considered employees of Synergy. Legitimate contracting and labor-only contracting are defined in Department Order No. 18-02, Series of 2002 or the Rules Implementing Articles 106 to 109 of the Labor Code: Sec. 3. Trilateral relationship in contracting arrangements- In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or or service between the principal and the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. Section 5 thereof provides that labor-only contracting is prohibited. Labor contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements are present: (1) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business or the principal; OR (2) the contractor does not exercise the right to control over the performance of the work of the contractual employee.

In this case, there is no showing that Synergy has a substantial capital to engage in legitimate contracting. Pal also failed to present evidence that it was Synergys supervisors who actually supervised respondents. PAL even admitted to fixing the work schedule of respondents . Just like the regular employees, respondents were referred to as station attendants. Having performed tasks which are usually necessary and desirable in the air transportation business of PAL, they should be deemed its regular employees and Synergy as labor-only contractor.

Requirements Independent Contractor PAL v. LIGON, supra BIG AA MANUFACTURER v. ANTONIO LAKAS v. BURLINGAME CORP. Facts: Petitioners, LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA-PINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME (Lakas) filed a petition in DOLE to represent all rankand-file promo employees of respondent numbering about 70 in all. Respondent, Burlingame Corp. then claimed that there was no emplyer-employee relationship between the workers and itself. It claimed that the workers are really employees of F. Garil Manpower Services (F. Garil), a duly licensed local employment agency.

1. WON F. Garil is an independent contractor? 2. WON the workers have an employer-employee relationship with the respondents. 1. Held and Ratio: No, F Garil fails the control test, Their contract provides that "any personnel found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon request." Corollary to this circumstance would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the inefficient, troublesome, and uncooperative nature of undesirable personnel. Also implied in the provision on replacement of personnel carried upon request by Burlingame is the power to fire personnel. These are indications that F. Garil was not left alone in the supervision and control of its alleged

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employees. Consequently, it can be concluded that F. Garil was not an independent contractor since it did not carry a distinct business free from the control and supervision of Burlingame. 2. Held and Ratio: No, F. Garil was engaged in labor-only contracting, and as such, is considered merely an agent of Burlingame. In laboronly contracting, the law creates an employer-employee relationship to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Since F. Garil is a labor-only contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law. Desirable - Unnecessary MANILA ELECTRIC C. v. BENAMIRA COCA COLA BOTTLERS PHIL. V NLRC FACTS: COCA COLA entered into a contract of janitorial services with Bacolod Janitorial Services (BJS) stipulating that Coca Cola desires to engage the services of BJS as an independent contractor, to perform and provide for the maintenance, sanitation and cleaning services within the building of Coca Cola. Every year thereafter a service contract was entered into between the parties under similar terms and conditions until about May 1994. In 1989, Coca Cola hired private respondent Canonicato as a casual employee and assigned him to the bottling crew as a substitute for absent employees. In April 1990 COCA COLA terminated Canonicato's casual employment. Later that year COCA COLA availed of Canonicato's services, this time as a painter in contractual projects which lasted from 15-30 days. In 1991 Canonicato was hired as a janitor by BJS which assigned him to COCA COLA considering his familiarity with its premises. Goaded by information that COCA COLA employed previous BJS employees who filed a complaint against the company for regularization pursuant to a compromise agreement, Canonicato submitted a similar complaint against COCA COLA to the Labor Arbiter. Without notifying BJS, Cnonicato no longer reported to his Coca Cola assignment since 1993. Canonicato amended his complaint against COCA COLA by citing instead as grounds therefore illegal

dismissal and underpayment of wages. He included BJS therein as a co-respondent. Labor Arbiter ruled that there was no employer-employee relationship between COCA COLA and Canonicato because BJS was Canonicato's real employer and that BJS was a legitimate job contractor, hence, any liability of COCA COLA as to Canonicato's salary or wage differentials was solidary with BJS in accordance with pars. 1 and 2 of Art. 106, Labor Code. The NLRC rejected on appeal the decision of the Labor Arbiter on the ground that the janitorial services of Canonicato were found to be necessary or desirable in the usual business or trade of COCA COLA. ISSUE: whether or not BJS is a legitimate job contractor of Canonicato RATIO: Although janitorial services may be considered directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employer's principal business. This judicial notice rests on the assumption that the independent contractor is a legitimate job contractor so that there can be no doubt as to the existence of an employer-employee relationship between contractor and the worker. In Singer Sewing Machine Company v. Drilon that x x x x [t]he definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. In determining the existence of an employer-employee relationship it is necessary to determine whether the factors in the four-fold test are present, which were all found in the relationship between BJS and Canonicato and not between Canonicato and petitioner COCA COLA. 1) selection and engagement of the janitors for petitioner were done

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by BJS; 2) BJS paid the wages of private respondent; 3) BJS is the one that assigns the janitors to its clients and transfers them when it sees fit and, 4) BJS has the power to control the conduct of the janitors. BJS was truly a legitimate job-contractor and could by itself hire its own employees considering that BJS satisfied all the requirements of a job-contractor under the law, namely, (a) the ability to carry on an independent business and undertake the contract work on its own account under its own responsibility according to its manner and method, free from the control and direction of its principal or client in all matters connected with the performance of the work except as to the results thereof; and, (b) the substantial capital or investment in the form of tools, equipment, machinery, work premises, and other materials which are necessary in the conduct of its business.

liable with Sido. Mercury Drug Corporation filed this petition for review on certiorari. The Court ruled that where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client. The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions. Accordingly, the petition was granted. FACTS Atty. Libunao, herein respondent, bought items from the selfservice section of Mercury Drug in Robinsons Galleria with a friend - When they were about to exit, Mercury Drugs Security Guard Sido asked for the receipt, saying, Yong resibo niyan. It took Libunao some time to produce said receipt because Sido was holding his right arm. Libunao uttered, Wala yatang resibo yan! - When Libunao found the receipt, he held it up to Sidos face and said, Satisfied ka na? Sido replied, Putang-ina mo! Which was Libunaos reply as well. - Sido allegedly lunged at Libunao, hit him on the face twice, and pointed his revolver at Libunao saying, Putang-ina mo, pag hindi kayo lumabas ditto papuputukin ko to sa iyo! - Libunao fled the scene but returned with the chief of security of Robinsons Galleria to arrest Sido. The store manager, Vilma Santos, allegedly said, Ako ang manager dito, hindi ninyo puedeng arestuhin ang security guard kasi on duty pa siya. Magsialis nga kayo dito mga buwisit kayo! But Santos relented and as they were leaving, all the sales ladies of the store surrounded Sido and tried to protect him. - They were able to arrest Sido but Libunao was later found to be suffering from post-traumatic depression syndrome due to the altercation. Libunao filed a complaint for damages against Mercury Drug Corporation, its president, Vilma Santos, and Sido. TC and CA found in favor of Libunao Mercury drug alleges that it is not Sidos employer and that his direct employer was the security agency, Black Shield Security Services Corporation; hence, Mercury Drug Corp. could not be held liable for the damages under A2180 CC.

Proof OREGAS v. NLRC

Employer-Employee Relationship MERCURY DRUG CORPORATION v. LIBUNAO GR No. 144458 | 14 July 2004 | Callejo, Sr., J. | Petition for review on certiorari of the decision and resolution of the CA Relevant Topic: Where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. SYNOPSIS In the complaint for damages filed by Atty. Rodrigo B. Libunao for the delictual and harmful acts committed by Security Guard Remegio Sido, the trial court rendered judgment holding Sido and Mercury Drug Corporation liable for moral damages, exemplary damages, attorney's fees and costs of suits in favor of Atty. Libunao. On appeal, the Court of Appeals rendered judgment affirming with modification the decision of the trial court as it deleted the award of attorney's fees. It ruled that Sido was an employee of Mercury Drug Corporation, and that there was no sufficient evidence to prove that he was an employee of Black Shield Security Services Corporation (BSSC). Thus, Mercury Drug Corporation was jointly and severally,

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ISSUE/HELD W/N Mercury Drug is liable for damages to the respondent for the tortuous and delictual acts of Sido [NO] RATIO Based on the evidence on record, the petitioner was not Sido's employer; hence, the trial and appellate courts erred in applying Article 2180 of the New Civil Code against the petitioner and holding it liable for Sido's harmful acts. In Soliman, Jr. v. Tuazon, we held that where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client. DISPOSITIVE: Petition granted. PAL v. NLRC

the time they were illegally dismissed until finality of the decision. The Labor Arbiter rendered a decision in favor of the guards, ordering Jaguar and Delta to jointly and severally pay the guards. Jaguar filed a petition arguing that as principal, Delta is liable for the awarded wage increases, and that Jaguar should be reimbursed of any payments to be made.

Issues: 1. Topical: W/N both Jaguar and Delta are liable to pay the guards. 2. Side issue: If both parties are liable, can Jaguar claim reimbursement from Delta through a cross-claim filed with the labor court? Ratio: 1. Yes, both companies are liable. Under Articles 106, 107 and 108 of the Labor Code, the joint and several liability of the contractor and principal is mandated to assure compliance of the provisions therein including statutory minimum wage. Jaguar, the contractor, is liable as a direct employer. Delta, as principal, is liable as the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. 2. No, Jaguar cannot claim reimbursement from Delta in that way. There is no employer-employee relationship between Jaguar and Delta. Also, there is no labor dispute involved in the cross-claim against Delta, only a civil dispute. Lastly, the liability of Delta to reimburse Jaguar will only arise if and when Jaguar pays its employees the adjudged liabilities. Date: April 22, 2008 Ponente: Austria-Martinez Doctrine: Under Articles 106, 107 and 108 of the Labor Code, the joint and several liability of the contractor and principal is mandated to assure compliance of the provisions therein including statutory minimum wage. Jaguar, the contractor, is liable as a direct employer. Delta, as principal, is liable as the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them.

Liability JAGUAR SECURITY AND INVESTIGATION AGENCY V. SALES Date: April 22, 2008 Ponente: Austria-Martinez Doctrine: Under Articles 106, 107 and 108 of the Labor Code, the joint and several liability of the contractor and principal is mandated to assure compliance of the provisions therein including statutory minimum wage. Jaguar, the contractor, is liable as a direct employer. Delta, as principal, is liable as the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. Facts: Rodolfo Sales and 5 others were hired as security guards by Jaguar. They were assigned at the premises of Delta Milling Industries, Inc. in Libis. 2 were terminated. They alleged that their dismissals were arbitrary and illegal. All the guard-employees claim for monetary benefits, such as underpayment, overtime pay, rest day and holiday premium pay, etc. In addition, the 2 who were terminated argue that they were entitled to separation pay and back wages, from

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Facts: Rodolfo Sales and 5 others were hired as security guards by Jaguar. They were assigned at the premises of Delta Milling Industries, Inc. in Libis. 2 were terminated. They alleged that their dismissals were arbitrary and illegal. All the guard-employees claim for monetary benefits, such as underpayment, overtime pay, rest day and holiday premium pay, etc. In addition, the 2 who were terminated argue that they were entitled to separation pay and back wages, from the time they were illegally dismissed until finality of the decision. The Labor Arbiter rendered a decision in favor of the guards, ordering Jaguar and Delta to jointly and severally pay the guards. Jaguar filed a petition arguing that as principal, Delta is liable for the awarded wage increases, and that Jaguar should be reimbursed of any payments to be made. Issues: 3. Topical: W/N both Jaguar and Delta are liable to pay the guards. 4. Side issue: If both parties are liable, can Jaguar claim reimbursement from Delta through a cross-claim filed with the labor court? Ratio: 3. Yes, both companies are liable. Under Articles 106, 107 and 108 of the Labor Code, the joint and several liability of the contractor and principal is mandated to assure compliance of the provisions therein including statutory minimum wage. Jaguar, the contractor, is liable as a direct employer. Delta, as principal, is liable as the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. 4. No, Jaguar cannot claim reimbursement from Delta in that way. There is no employer-employee relationship between Jaguar and Delta. Also, there is no labor dispute involved in the cross-claim against Delta, only a civil dispute. Lastly, the liability of Delta to reimburse Jaguar will only arise if and when Jaguar pays its employees the adjudged liabilities.

MERALCO v NLRC | Chico Nazario, J. G.R. No. 145402 | March 14, 2008 Nature: Petition for Review on Certiorari of the Decision of CA Petitioner: MERALCO Industrial Engineering Services Corp. Respondent: Ofelia Landrito General Services/ Ofelia Landrito, NLRC Quick Summary: MERALCO as a principal of an independent contractor (Landrito for janitorial services) cannot be held liable for payment separation pay of dismissed employees (of the independent contractor). The petitioner may be considered an indirect employer only for purposes of unpaid wages. There was no employer-employee relationship that existed between the petitioner and the complainants and, thus, the former could not have dismissed the latter from employment. 3 If the contract order (between MERALCO and Landrito) does not provide for such a liability, this Court cannot just read the same into the contract without possibly violating the intention of the parties. MERALCO is solidarily liable with the Landrito for the judgment awards for underpayment of wages and non-payment of overtime pay (see ratio for discussion). But Landrito have nothing more to recover from MERALCO. MERALCO and LANDRITO executed Contract Order No. 166-84, [4] whereby the latter would supply MERALCO janitorial services, which include labor, materials, tools and equipment, as well as supervision of its assigned employees, at MERALCOs Rockwell Thermal Plant in Makati City. 49 employees (complainants) filed Complaint for illegal deduction, underpayment, non-payment of overtime pay, legal holiday pay, premium pay for holiday and rest day and night differentials, which was latter amended to include illegal dismissal and MERALCO as respondent.

Facts:

The only instance when the principal can also be held liable with the independent contractor or subcontractor for the backwages and separation pay of the latters employees is when there is proof that the principal conspired with the independent contractor or subcontractor in the illegal dismissal of the employees

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Labor Arbiter: dismissed the Complaint against MERALCO for lack of merit, ordered LANDRITO to pay unpaid wages, separation pay and overtime pay; as well as attorneys fees. NLRC: Affirmed Labor Arbiter but held MERALCO solidarily liable with LANDRITO. Also issued Order noting surety bond posted by Landrito, and directed the Labor Arbiter to enforce the monetary award against Landritos surety bond and to determine who should finally shoulder the liability SC: Dismissed petition for certiorari. Labor Arbiter to proceed. Labor Arbiter (on liability): underpayment and on the nonpayment of overtime pay (solidarily liable: Meralco and Landrito); Separation pay: Landrito NLRC: Affirmed CA: Solidarily liable on all: (1) underpayment and on the nonpayment of (2) overtime pay plus (3) separation pay Issue: WON MERALCO should be held liable for complainants separation pay Held/ Ratio: NO. MERALCO as a principal of an independent contractor (Landrito for janitorial services) cannot be held liable for payment separation pay of dismissed employees (of the independent contractor).

same into the contract without possibly violating the intention of the parties. ON LIABILITY MERALCO is solidarily liable with the Landrito for the judgment awards for underpayment of wages and non-payment of overtime pay. o The joint and several liability of the principal with the contractor and subcontractor were enacted to ensure compliance with the provisions of the Labor Code, principally those on statutory minimum wage. This liability facilitates, if not guarantees, payment of the workers compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution BUT with the Courts findings that Landrito having already received from MERALCO the correct amount of wages and benefits, but having failed to turn them over to the complainants, Landrito should now solely bear the liability for the underpayment of wages and non-payment of the overtime pay. EPARWA SECURITY v. LICEO DE CAGAYAN A. Facts 1. Eparwa and LCDU, through their representatives, entered into a Contract for Security Services: in consideration of the security services, LCDU shall pay Eparwa for a certain amount per guard per month, etc. A number of the said security guards filed a complaint before the NLRC against both Eparwa and LDCU for underpayment of salary among other payments. LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards. Labor Arbiter: Security guards entitled to some of the payments claimed and held Eparwa and LDCU solidarily liable pursuant to A109/Labor Code. Eparwa is ordered to reimburse LDCU for whatever amount LDCU may be required to pay the security guards. Eparwa filed an appeal before the NLRC questioning its liability for the security guards claims. NLRC: Eparwa and LDCU solidarily liable for the wage differentials and premium for holiday and rest day work. But Eparwa is not required to reimburse LDCU for its payments to the guards.

2. 3. 4.

The petitioner may be considered an indirect employer only for purposes of unpaid wages. There was no employer-employee relationship that existed between the petitioner and the complainants and, thus, the former could not have dismissed the latter from employment. 4 If the contract order (between MERALCO and Landrito) does not provide for such a liability, this Court cannot just read the

5. 6.

The only instance when the principal can also be held liable with the independent contractor or subcontractor for the backwages and separation pay of the latters employees is when there is proof that the principal conspired with the independent contractor or subcontractor in the illegal dismissal of the employees

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7.

Motion for reconsideration: LDCU questioned NLRCs deletion of LDCUs entitlement to reimbursement by Eparwa. Eparwa prayed that LDCU be made to reimburse it for whatever amount it may pay to the guards. NLRC: although Eparwa and LDCU are solidarily liable to the guards for the monetary award, LDCU alone is ultimately liable. LDCU is ordered to reimburse Eparwa for whatever amount the latter may have paid to complainants arising from the case. CA: found favor in LDCU and reinstated Labor Arbiter decision.

a.

investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of the employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. A107/Labor Code. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership or association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. A109/Labor Code. Solidary liability.The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. Eagle Security Agency, Inc. v. NLRC (on all fours with the case at hand): o The solidary liability of PTSI and Eagle however does not preclude reimbursement from co-debtor by the one who paid (A1217/NCC). The Wage Orders are explicit that payment of the increases are to be borne by the principal or client. But to be borne does not mean that the principal, PTSI, would directly pay the security guards the wage and allowance increases because there is no privity of contract between them. The security guards contractual relationship is with their immediate employer, Eagle. As an employer, Eagle is tasked among others with the payment of their wages. The Wage Orders made specific provision to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. So, what the Wage Orders require thus is the amendment of the contract as to the consideration to cover the service contractors payment of the increases mandated. In the end, ultimate

B. Issue/Decision: Is LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay? YES. C. Rationale: A106/Labor Code. Contractor or subcontractor.- Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provision of the Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with this contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or

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liability for the payment of the increases rests with the principal. But the contract had already expired without being amended consonant with the Wage Orders. So now, if PTSI pays the security guards, it cannot claim reimbursement from Eagle. But in case it is Eagle that pays them, the latter can claim reimbursement from PTSI in stead of an adjustment in the contract of the money to be paid the contractor, since the contract had already expired. In the case at hand: for the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCUs solidary liability. Creditors, such as the security guards, may collect from anyone of the soliday debtors. Solidary liability does not mean that as between themselves, two solidary debtors are liable for only half of the payment. o LDCUs ultimate liability comes into play because of the expiration of the contract. There is no privity of contract between the guards and LDCU but LDCUs liability to the guards remains because of A106, 107 and 109/ Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwas liability to the security guards remains because of their employer-employee relationship. Instead of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the guards. But LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the guards (as payment of the increases is to be borne by the principal or client).

B. Labor Contractor Only Requisites and Prohibition MANDAUE v. ANDALES ABOITIZ HAULERS v. DIMAPATOI Facts: Private respondents Monaorai Dimapatoi, Cecilia Agawin, Raul Mamate, Emmanuel Guerrero and Gemeniano Bigaw worked as checkers in the Mega Warehouse, which is owned by the petitioner, Aboitiz Haulers, Inc. Petitioner claims that respondents are not its employees, rather they are the employees of Grigio Security Agency and General Services (Grigio), a manpower agency that supplies security guards, checkers and stuffers. It allegedly entered into a Written Contract of Service with Grigio on 1 March 1994. By virtue of the aforementioned Written Contract of Service, Grigio supplied petitioner with security guards, checkers and stuffers for petitioners Mega Warehouse. The respondents were among the checkers that were assigned to the petitioners warehouse. Petitioner emphasizes that Grigio retained control over the respondents by providing their own supervisors to oversee Grigios personnel, as well as time cards to monitor the attendance of its personnel. Petitioner also alleges that on 9 May 1996, the respondents left the warehouse and did not report to work thereafter. As a result of the respondents sudden abandonment of their work, there was no orderly and proper turnover of papers and other company property in connection with the termination of the Written Contract for Services. Respondents, on the other hand, claim that most of them worked as checkers in petitioners warehouse even before 1 March 1994. Respondents allege that on 15 May 1996, petitioner Aboitiz dismissed them on the pretext that the Written Contract of Service between Grigio and the petitioner had been terminated. The resepondents thereafter filed a complaint for Illegal Dismissal before the Arbitration Branch of the NLRC. The Labor Arbiter ruled that the complainants failure to offer any evidence showing that Grigio had no substantial capital denotes that Grigio was a legitimate independent job contractor. Thus, the employer-employee relationship existed between Grigio and the respondents, not between the petitioner and the respondents. Nevertheless, petitioner and

Doctrine: In the payment of increases in the salary of employees working via a contractor, the ultimate liability lies upon the principal/indirect employer. So that when adjustment of payment to the contractor may not be done for such increases for reason of expiration of contract, the principal becomes liable alone. However, this does not remove the rule that the contractor is also made solidarily liable with the principal by virtue of A106, 107 and 109 of the Labor Code. Thus to operationalize all the foregoing, when the contractor pays as solidary debtor, he may be reimbursed; when the principal does so, he may not be reimbursed.

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Issue:

Grigio were held solidarily liable for the unpaid wages of the respondents. The labor arbiter also ruled that the respondents were not illegally dismissed by Grigio. NLRC affirmed the findings of the Labor Arbiter. Respondents filed an appeal for certiorari, which was granted by the Court of Appeals. The CA determined that Grigio was not an independent job contractor, despite its claim that it has sufficient capital. Grigio does not carry on an independent business, since the respondents work as warehouse checkers is necessary and desirable to the petitioners business of forwarding and distribution of cargoes. Grigio also does not undertake the performance of its contract free from the control and supervision of its principal since respondents work is performed in the petitioners warehouse under the direct supervision and control of the petitioners officials. The CA ruled that respondents would be dismissed and ordered that the respondents be reinstated, with full status and rights of regular employees, as well as back wages and other benefits. Petitioner filed a Motion for Reconsideration, but the CA denied the same. Petitioner sought relief from the SC.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a competent authority: a. where there is a labor-only contracting; or b. where the contracting arrangement falls within prohibitions provided in Section 6 (Prohibitions) hereof. the

(1) whether or not Grigio is a "labor-only" contractor; YES (2) whether the abandonment. Held/Ratio: (1) YES. The first issue that needs to be resolved is whether Grigio is a "laboronly" contractor, which is tantamount to a finding that the petitioner is the employer of the respondents. Article 106 of the Labor Code explains the relations which may arise between an employer, a contractor and the contractors employees thus: ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. respondents were lawfully dismissed due to

In determining whether or not a "labor-only" contracting exists, Art. 106 of the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides the

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following criteria: (1) where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; (2) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer; and (3) the contractor does not exercise the right to control the performance of the work of the contractual employee. In order that one is considered by law as a "labor-only" contractor, all three aforementioned criteria need not be present. If the contractor enters into an arrangement characterized by any one of the criteria provided, this would be a clear case of "labor-only contracting." The allegation of the petitioner that Grigio is an independent job contractor, and, therefore, this case is one of permissible job contracting, is without basis. In this case, the respondents work, as warehouse checkers, is directly related to the principal business of the petitioner. Petitioner also exercises the right to control and determines not only the end to be achieved, but also the manner and means to be used in reaching that end. Lastly, petitioner failed to sufficiently prove that Grigio had "substantial capital or investment." The respondents, as checkers, were employed to check and inspect these cargoes, a task which is clearly necessary for the petitioners business of forwarding and distributing of cargoes. The petitioner did not dispute the fact that the respondents were hired as checkers as early as 1992. The fact that they were employed before the Written Contract of Services took effect on 24 February 1994, and continued with their jobs until 1996, after the said contract had already expired on 24 February 1995, indicates that the respondents work was indeed necessary for the petitioners business. In addition, Grigio did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal. The work activities, work shifts, and schedules of the respondents, including the time allowed for "recess" were set under the Written Contract of Services. This clearly indicates that these matters, which consist of the means and methods by which the work is to be accomplished, were not within the absolute control of Grigio. By stipulating these matters in a contract, Grigio is constrained to follow these provisions and would no longer be able to exercise the freedom to alter these work shifts and schedules at its own convenience. Such being the case, Grigio cannot be considered as an independent job

contractor. Thus, Grigio is obviously a "labor-only contractor since it did not have substantial capital or investment which relates to the service performed; the respondents performed activities which were directly related to the main business of the petitioner; and Grigio did not exercise control over the performance of the work of the respondents. Consequently, the petitioner is considered as the employer of the respondents. (2) YES. The second issue raised was whether the respondents have been illegally dismissed. The petitioner alleges that the respondents were lawfully dismissed for abandoning their work on 9 May 1996, six days before the contract between Grigio and the petitioner was terminated on 15 May 1996. This allegation was supported by the complaint by one of the respondents, Mamate, for unpaid salaries from 22 April 1996 to 9 May 1996. However, respondents submitted copies of the pertinent pages of the logbook showing that they had in fact reported for work on the dates they were supposed to have abandoned their jobs, from 9 May 1996 until 15 May 1996. One of the respondents, Monaorai Dimapatoi, even submitted a Certification issued by petitioners very own Warehouse Supervisor, Roger R. Borromeo, that Dimapatoi effectively performed her job as warehouse checker and documentation clerk from 16 September 1992 to 15 May 1996. Petitioners allegation that respondents abandoned their work is therefore devoid of legal and factual bases. The Court has repeatedly held that abandonment as a just and valid ground for dismissal requires the deliberate and unjustified refusal of the employee to resume his employment. Mere absence of failure to report for work, after notice to return, is not enough to amount to such abandonment. For a valid finding of abandonment, two factors must be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second element as the more determinative factor being manifested by some overt acts. In abandonment, there must be a concurrence of the intention to abandon and some overt acts from which an employee may be deduced as having no more intention to work. MARAGUINOT v. NLRC FACTS:

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1.

Petitioners' were employed by private respondents(Maraguinot aince 1989 and Enero since 1990), their tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign. Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, they were informed that the private respondents would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal before the Labor Arbiter. Private respondents assert that they contract persons called "producers" also referred to as "associate producers" to "produce" or make movies for private respondents; and contend that petitioners are project employees of the associate producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents.Private respondents further contend that it was the associate producer of the film "Mahirap Maging Pogi," who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that Maraguinot was released upon payment of his last salary, as his services were no longer needed. Anent petitioner Enero, he was hired for the movie entitled "Sigaw ng Puso," later re-titled "Narito ang Puso." He went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the movie had already been completed. Petitioners Maraguinot and Enero obtained a favorable judgment from the Labor Arbiter in an illegal dismissal case they filed against Viva Films. The Labor Arbiter dismissed the

2.

claims of Viva that petitioners were not its employees finding that petitioners were doing activities necessary and essential to the business of Viva which is movie making. When Viva brought the matter to the NLRC, the latter reversed the Labor Arbiter's ruling and ruled that the work activities of the petitioners were that of "project employees," pointing to petitioners' irregular work load and work schedules, and emphasizing its finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies. ISSUE: WON the petitioners were regular employees HELD: The Supreme Court on appeal annulled the NLRC decision and reinstated the Labor Arbiter's decision with modification in the computation of backwages. In disposing of the case, the Supreme Court applied the control test in determining whether there exists an employer-employee relationship or not between petitioners and Viva. While initially, petitioners were hired possibly as project employees, they had attained the status of regular employees in view of Viva's conduct of continuously rehiring them even after cessation of a project. A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twentythree (23) projects. Moreover, as petitioners' tasks involved, among other chores, the loading, unloading and arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films' warehouse, and assisting in the "fixing" of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.

3.

4.

5.

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C. Effect of Finding MANDAUE V. ANDALES, supra SAN MIGUEL CORPORATION V. NATIONAL LABOR RELATIONS COMMISSIONS SMC, petitioner, versus, NLRC and Rafael Maliksi, respondents Penned by J. Garcia Facts: Rafael Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center to compel them to recognize him as a regular employer. He amended the complaint afterwards to include the charge of illegal dismissal. Maliksis employment record shows that he rendered services with Lipercon Services from April 1, 1981 to February 1982 as budget head assigned to SMC- Beer Division, then from July 1983 to April 1985 with Skill Power Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skill Power, Inc as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to October 31, 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. He alleged that Lipercon, Skillpower, and PHILSSEC are labor-only contractors and any one of which had never been his employer. PHILSSEC has contracted with Magnolia to computerize the latters manual accounting reporting systems of its provincial sales. Maliksi was one of those employed by PHILSSEC whose principal function was the manual control of data needed for computerization. The respondents work was controlled by PHILSSECs supervisors, his salary was paid by the agency and he reported directly to the latter. The computerization was terminated in Oct 31, 1990 and so he was terminated. On the other hand, it is SMCs contention that there was no employer-employee relationship between the corporation and Maliksi. Labor Arbiter: Maliksi is a regular employee of PHILSSEC. NLRC: Maliksi is a regular employee of SMC. Court of Appeals: NLRCs decision was Affirmed.

Aggrieved, petitioner appealed the issue for resolution to the Supreme Court. Issue: Whether the respondent is a regular employee of petitioner. Held: Respondent is a regular employee of the petitioner. The court took judicial notice of the fact that Lipercon and Skillpower were declared to be labor-only contractors. In deference to the factual findings of the NLRC and CA, the Court did not detain itself on the issue of whether there was an employer-employee relationship between SMC and Maliksi. It concluded that there was. Indeed, having served SMC for an aggregate period of more than 3 years through employment contracts with these 2 labor contractors, Maliksi should be considered as SMCs regular employee. It is undisputed that he was hired and rehired by SMC to perform administrative and clerical work that was necessary to SMCs business on a daily basis. The Court threaded to jurisprudence as its basis, inter alia, Bustamante v. NLRC where the Court in that case ruled in sum that the hiring and rehiring of the petitioner therein conclusively shows the necessity of petitioners service to the respondents company and that his service (though broken) for more than a year warranted regularization. Also, the Court was at loss to understand why Maliksi should be included in the computerization project as a project employee when he is not a computer expert. To the mind of the Court, his placement in the project was for the purpose of circumventing labor laws. There are various means contrived by employers to countermand labor laws granting regular employment status to workers by tossing them from one job contractor to another. However, the supervening event that SMCs Magnolia Division was acquired by another entity, reinstatement is no longer feasible. Dispositive: Petition DENIED and the assailed decision of CA AFFIRMED with modification that if reinstatement is no longer possible, then petitioner be awarded separation pay. REMANDED for computation of monetary awards. By: Mark Xavier Oyales ABOITIZ HAULERS v. DIMAPATOI, supra

SECTION 7. EMPLOYEE CLASSIFICATION STATUTORY REFERENCE

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Book VI Rule 1 Sec 5 Omnibus Rule (a) Regular employment - The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, employment shall be considered to be regular employment for purposes of Book VI of the Labor Code where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the 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 job, work or service to be performed is seasonal in nature and the employment is for the duration of the season. (b) Casual Employment - There is casual employment where an employee is engaged to perform a job, work or service which is merely incidental to the business of the employer, and such job, work or service is for a definite period made known to the employee at the time of the engagement; provided, that any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and privileges, and shall be subject to the duties and obligations, as may be granted by law to regular employees during the period of their actual employment. 7.01 COVERAGE Art 278 LC Coverage. The provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. 7.02 EMPLOYEE CLASSIFICATION Art 280 LC Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the 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. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

Art 281 LC Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Recognition and Types GLORY PHILIPPINES, INC. v. VERGARA Quick Facts: Respondents were employed by Glory on a month-to-month basis; after the initial month, they were made to sign new contracts for another month long extension. At one point, they were not made to sign contracts for a period of several months but were still made to continue their employment. Later on, they were made to sign contracts retroacting to around half of the months with no contracts till the end of the month of April. Petitioners main branch (based in Japan), ordered that respondents services would no longer be required so petitioner dismissed them (at the end of the work day, they were told my the security guard as they left not to report for employment anymore since their contracts had already expired). Respondents filed for illegal dismissal. Petitioner averred that they were contractual employees and their term had already expired. Respondents won at the CA. Hence this petition for review on certiorari.

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Issue: WON respondents were contractual employees Held: No! They were regular employees hence illegally dismissed Ratio (doctrine in blue highlights): 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 . . . . In Grandspan Development Corporation v. Bernardo, 14 the Court held that the principal test for determining whether particular employees are properly characterized as 'project employees,' as distinguished from 'regular employees,' is whether or not the 'project employees' were assigned to carry out a 'specific project or undertaking,' the duration and scope of which were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. In the instant case, respondents' employment contracts failed to state the specific project or undertaking for which they were allegedly engaged. While petitioner claims that respondents were hired for the transaction with Glory Japan, the same was not indicated in the contracts. As correctly observed by the Court of Appeals, nothing therein suggested or even hinted that their employment was dependent on the continuous patronage of Glory Japan Further, the employment contracts did not indicate the duration and scope of the project or undertaking as required by law. It is not enough that an employee is hired for a specific project or phase of work to qualify as a project employee. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged, which is absent in this case. PANGILINAN v. GENERAL MILLING CORP. Nature of Issue UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) V CABALLEDA, 156644, JULY 28, 2008, NACHURA, J. Facts: Agripino Caballeda was a welder for URSUMCO from March 1989 until June 23, 1997 with a salary of P124 per day while Alejandro Cadalin was a crane operator from 1976 to June 15, 1997, with a salary of P209.30 per day. John Gokongwei Jr., President of URSUMCO, issued a Memorandum establishing the age of compulsory retirement at 60. Subsequently, RA 7641 set the compulsory retirement age, in the absence of a retirement plan or agreement, at 65 and that an employee may retire upon reaching 60. The National Labor Federation, the labor union of the workers of URSUMCO, of which Alejandro Cadalin was a member, entered into a CBA with URSUMCO. Article XV of said CBA particularly provided that the retirement benefits of the members of the collective bargaining unit shall be in accordance with law. Agripino and Alejandro subsequently reached the age of 60 and were allegedly forced to retire. They accepted their separation pays and applied for retirement benefits with the SSS. Alejandro also executed a quitclaim in favor of URSUMCO. They subsequently filed Complaints for illegal dismissal with the Labor Arbiter of Dumaguete City. URSUMCO claimed that Agripino and Alejandro voluntarily retired, that the Memorandum was no longer in effect when they did so, and that RA 7641 cannot be given retroactive effect since there was an existing CBA that covered the retirement benefits of the employees. It further alleged that Agripino was merely a seasonal or project worker and not a casual worker since the sugar milling business is seasonal in nature. Thus, he was not actually forced to retire. The termination of his employment was

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essentially based on the fact that the period in his contract had expired. Issues: WoN RA 7641 has retroactive effect: Yes. The issue of the retroactive effect of RA 7641 has long been settled. It is a curative statute. WoN Agripino is a seasonal or project employee: No. He is a regular employee. WoN the Agripino and Alejandro voluntarily retired: No. The law generally looks with disfavor on quitclaims and releases of employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their responsibilities. Ratio: (On nature of issue to the best of my understanding) Whether or not Agripino was a seasonal/project employee or a regular employee is a question of fact. Time and again, we have held that the Court is not a trier of facts. In this case, it is noteworthy that the LA, the NLRC and the CA are one in ruling that Agripino was not a casual employee, much less a seasonal or project employee. In their findings, Agripino was considered a regular employee of URSUMCO. Consequently, such uniform finding of the LA, the NLRC, and the CA binds this Court. Employer Determination - Effect SAN MIGUEL CORP. v. NLRC SMC, petitioner, versus, NLRC and Rafael Maliksi, respondents Penned by J. Garcia Facts: Rafael Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center to compel them to recognize him as a regular employer. He amended the complaint afterwards to include the charge of illegal dismissal. Maliksis employment record shows that he rendered services with Lipercon Services from April 1, 1981 to February 1982 as budget head assigned to SMC- Beer Division, then from July 1983 to April 1985 with Skill Power Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skill Power, Inc as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to

October 31, 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. He alleged that Lipercon, Skillpower, and PHILSSEC are labor-only contractors and any one of which had never been his employer. PHILSSEC has contracted with Magnolia to computerize the latters manual accounting reporting systems of its provincial sales. Maliksi was one of those employed by PHILSSEC whose principal function was the manual control of data needed for computerization. The respondents work was controlled by PHILSSECs supervisors, his salary was paid by the agency and he reported directly to the latter. The computerization was terminated in Oct 31, 1990 and so he was terminated. On the other hand, it is SMCs contention that there was no employer-employee relationship between the corporation and Maliksi. Labor Arbiter: Maliksi is a regular employee of PHILSSEC. NLRC: Maliksi is a regular employee of SMC. Court of Appeals: NLRCs decision was Affirmed. Aggrieved, petitioner appealed the issue for resolution to the Supreme Court. Issue: Whether the respondent is a regular employee of petitioner. Held: Respondent is a regular employee of the petitioner. The court took judicial notice of the fact that Lipercon and Skillpower were declared to be labor-only contractors. In deference to the factual findings of the NLRC and CA, the Court did not detain itself on the issue of whether there was an employer-employee relationship between SMC and Maliksi. It concluded that there was. Indeed, having served SMC for an aggregate period of more than 3 years through employment contracts with these 2 labor contractors, Maliksi should be considered as SMCs regular employee. It is undisputed that he was hired and rehired by SMC to perform administrative and clerical work that was necessary to SMCs business on a daily basis. The Court threaded to jurisprudence as its basis, inter alia, Bustamante v. NLRC where the Court in that case ruled in sum that the hiring and rehiring of the petitioner therein conclusively shows the necessity of petitioners service to the respondents company and that his service (though broken) for more than a year warranted regularization. Also, the Court was at loss to understand why Maliksi should be included in the computerization project as a project employee when he is not a computer expert. To the mind of the Court, his placement

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in the project was for the purpose of circumventing labor laws. There are various means contrived by employers to countermand labor laws granting regular employment status to workers by tossing them from one job contractor to another. However, the supervening event that SMCs Magnolia Division was acquired by another entity, reinstatement is no longer feasible. Dispositive: Petition DENIED and the assailed decision of CA AFFIRMED with modification that if reinstatement is no longer possible, then petitioner be awarded separation pay. REMANDED for computation of monetary awards. By: Mark Xavier Oyales TABAS v. CALIFORNIA MANUFACTURING CO., INC.

which agreement shall include: (d) A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learners. Types Regular Employees PHILIPS SEMICONDUCTORS VS. FADRIQUELA Facts: Philips Semiconductors employed contractual and regular workers. The employees were subject to periodic performance appraisal based on output, quality, attendance and work attitude. One was required to obtain a performance rating of at least 3.0 for the period covered by the performance appraisal to maintain good standing as an employee. In May 1992, Fadriquela executed a Contract of Employment with Philips in which she was hired as a production operator. Her initial contract was for a period of 3 months but was extended for 2 months when she garnered a performance rating of 3.15. Her contract was repeatedly renewed for a total of 5 times over a period of 13 months. However, she incurred a total of 12 absences from the period April to June 1993. Line supervisor Velayo asked her why she incurred the said absences but the latter failed to explain her side. As a consequence, Fadriquelas performance rating declined to 2.8 and Velayo recommended to Philips that Fadriquelas employment be terminated due to habitual absenteeism. Issue: W/N Fadriquela was still a contractual employee of Philips as of June 1993 Held/Ratio: NO. She was already a regular employee under Art. 280 of the Labor Code on the distinction between regular and casual or contractual employment. Art. 280 was placed in our statute books to prevent the circumvention by unscrupulous employers of the employees right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. The language of the law manifests the intent to protect the security of tenure of the worker who may be denied the rights and benefits due a regular employee because of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual or temporary status for as long as it is

7.03 REGULAR EMPLOYEES Art 280 LC Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the 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. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Art. 281. Probationary employment. An employee who is allowed to work after a probationary period shall be considered a regular employee. (last sentence) Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership agreement with them,

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convenient to it. Art. 280 was designed to put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them temporary or probationary appointments, ad infinitum. The two kinds of regular employees under the law are: 1. 2. Those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and Those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed.

for the workers to wait every morning outside the gates of the sales office of petitioner company. If thus hired, the workers would then be paid their wages at the end of the day. Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company refused. 58 of the temporary workers (respondents) filed with NLRC a complaint for the regularization of their employment with petitioner company and filed a notice of strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. Ratio: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the 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 services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. Although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is

The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. If the employee has been performing the job for at least one year, even if the performance is not continuous, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. The law does not provide the qualification that the employee must first be issued a regular appointment or must be declared as such before he can acquire a regular employee status.

Nature of Work UNIVERSAL ROBINA v. CABALLEDA, supra MAGSALIN V. NATIONAL ORGANIZATION Ponente: VITUG, J. Facts: Coca-Cola Bottlers Phils., Inc., petitioner, engaged the services of respondent workers as sales route helpers for a limited period of five months. After five months, respondent workers were employed by petitioner company on a day-to-day basis. According to petitioner company, respondent workers were hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work. The practice was

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also then deemed to be regular with respect to such activity and while such activity exists. The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. Doctrine: The standard in determining whether an employment should be considered regular or non-regular, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. HACIENDA FATIMA v. NATIONAL FEDERATION OF SUGARCANE WORKERS FOOD AND GENERAL TRADE SKIPPERS UNITED v. NLRC LOPEZ v. METROPOLITAN SYSTEM, supra WATERWORKS AND SEWERAGE

PNOC ENERGY DEVELOPMENT CORP., v. NLRC SANTIAGO v. CF SHARP CREW MANAGEMENT INC.

Hiring Extend Period HANJIN v. IBANEZ SAN MIGUEL CORP. v. NLRC, supra RAYCOR AIRCON SYSTEMS, INC. V SAN PEDRO 2007 Austria-Martinez, J. Facts: Raycor Aircontrol Systems, Inc. hired Mario San Pedro as tinsmith operator subject to the condition that his employment shall commence on August 24, 1995 and shall be effective only for the duration of the contract at Uniwide LasPias after completion of which on November 18, 1995, it automatically terminates without necessity of further notice. As theUniwide Las Pias project (first project) lasted for one year, Raycor extended respondent's contract beyond November 18, 1995. When this first project was finally

completed, Raycor again extended San Pedro's employment by assigning him to its OlivarezPlaza, Bian, Laguna project (second project) until December 1996. Subsequently, Raycor rehired San Pedro as ducting man and assigned him to its Cabuyao, Laguna project (third project) until April 1997. Thereafter, Raycor transferred San Pedro to its Llanas, Alabang project (fourth project) and later, to its Uniwide Coastal project in Baclaran, Paranaque (fifth project). Raycor did not anymore issue new contracts to respondent each time his employment was extended. In a Memorandum dated October 30, 1997, Raycor declared that the contract of employment of respondent was set to expire on November 1, 1997, the same to take effect on November 3, 1997. Thus, when respondent reported for work on November 3, 1997, he was informed by the company timekeeper that he had been terminated. Issues: WON San Pedro is a regular employee or a mere project employee. Held: Regular Ratio: Other than the 1995 employment contract it issued to respondent, which contract we have held to be insufficient evidence of project employment, petitioner utterly failed to adduce additional evidence which would have convinced us that: 1) each time it hired and rehired respondent, it intended for him to accomplish specific tasks in the particular project to which he was assigned; 2) it intended for respondent to carry out these specific tasks in accordance with the project plan it had drawn out and within the limited time it had to complete the same; and 3) it made such restrictions on each engagement known to respondent, and the same were freely accepted by him. Petitioner's failure to present such evidence is inexcusable, given its access to such documents as project contracts, payment remittances, employment records and payslips. Such lapse is dismaying, considering that in Raycor v. National Labor Relations Commission, the Court had signalled to petitioner that, given the peculiar nature of its business, it had a strong case against the regularization of some of its workers. The Court even enumerated the kind of evidence petitioner should present to establish the project employment of its workers. SANTIAGO v. CF SHARP CREW MANAGEMENT INC., supra

Contract to Contract BETA ELECTRIC CORP. v. NLRC UNIVERSAL PLASTIC CORP. v. CATAPANG

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Callejo, Sr | 2005 Petitioners: Universal Robina Corporation and/or Randy Gregorio Respondents: Catapang, Ararao, Alcantara, Alcoran, Aristado, Cabrera, Casano, Cervas, Cuidian, Comendador, Conchada, Coronado, Hiling, Joyosa, Loria, Marikit, Pang-Ao, Platero, Roxas, Salazar, Trinidad, Varela, Villanueva, Villegas Facts: The respondents were hired in Universals duck farim in Laguna under an employment contract provided for a 5-month period. The company would renew and re-employ respondents after expiration. This practice continued from 1991 up to 1996 when the company informed them that they will no longer renew their contracts. Procedural 5
5

Petitioners They claim that the respondents are not regular employees because they are covered by the 5-month contracts. Such contracts are not intended to evade the law & the respondents voluntarily signed them, under no moral dominance. They also claim that they cant be compelled to physically reinstate the 13 other respondents because no positions are available. Respondents They claim that they are regular employees after rendering 1 year of service to the company. The fixed period of employment should be struck down as contrary to public policy, morals, good customs or public order as it was designed to preclude the acquisition of tenurial security. Issue/Held: WON the respondents, hired & re-hired through renewed 5-month contracts, have acquired the status of regular employees Ratio: Procedural the appeal was filed way beyond the reglementary period for filing an appeal. Merits In Abasolo v NLRC: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. The 5-month contracts was used by the company as a convenient subterfuge from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular
from becoming regular employees.

Respondents filed separated complaints for illegal dismissal, reinstatement, backwages, damages, and attys fees. The Labor Arbiter ruled in favor of respondents. Company filed an appeal memorandum to NLRC saying that the respondents are not regular employees. Respondents filed a Motion for Enforcement of Reinstatement Order w/ the Labor Arbiter. The Labor Arbiter issued an Order in their favor, and later on a Writ of Execution. The company said that they can only reinstate 17 out of the 30 employees because the Agricultural Section of the company was phased out and so no positions were available for the respondents. The Sheriff reported that some respondents have not yet been reinstated. The Labor Arbiter directed the petitioner to reinstatement the respondents under pain of contempt but only 17 were reinstated. The Sheriff was ordered to cause the immediate reinstatement of the 13 others. The Labor Arbiter issued a writ to execute the withheld wages of the 17 who were reinstated. He also denied the petitioners motion to quash & the motion to reconsider because of failure to reinstate the 13 other respondents. The NLRC affirmed the NLRCs decision. The CA held that the respondents became regular ecmployees by operation of law after rendering more than 1 year of continuous service, saying that the renewed 5-month contracts were used as subterfuge to prevent them

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employees by simply hiring them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs. The act of the company in re-hiring the respondents for 3-5 years negate their contention that the respondents were hired only for a specific project/undertaking. Petition denied due course. CA decision affirmed. Length of Time MARAGUINOT v. NLRC Facts Petitioner says that he was employed by respondents as part of the filming crew. He was later promoted as an electrician. Petitioners tasks contained of loading movie equipment in the shoothing area. Petitioners sought the assistance of their supervisor, Cesario, to facilitate their request that respondents adjust their salary in accordance with the minimum wage law. Mrs. Cesario informed petitioners that del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioner refused to sign, respondents forced Enero (the other petitioner who worked as a crew member) to go on leave. However, when he reported to work, respondent refused to take him back. Maraguinot was dropped from the company payroll but when he returned, he was again asked to sign a blank employment contract, and when he still refused, respondents terminated his services. Petitioners thus sued for illegal dismissal. Private respondents assert that they contract persons called producers to produce or make movies for private respondents and contend that petitioners are project employees of the associate producers, who act as independent contractors. Thus, there is no employer-employee relationship. However, petitioners cited that their performance of activities is necessary in the usual trade or business of respondents and their work in continuous. Issue/s Was there an employer-employee relationship between VIVA and Maraguinot? Held YES

Ratio With regards to VIVAs contention that it does not make movies but merely distributes motion pictures, there is no sufficient proof to prove this contention. In respect to respondents allegation that petitioners are project employees, it is a settled rule that the contracting out of labor is allowed only in case of job contracting. However, assuming that the associate producers are job contactors, they must then be engaged in the business of making motion pictures. Associate producers must have tools necessary to make motion pictures. However, the associate producers in this case have none of these. The movie-making equipment are supplied to the producers and owned by VIVA. Thus, it is clear that the associate producer merely leases the equipment from VIVA. In addition, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. It was Cesario, the Shooting Supervisor of VIVA, who recruited crew members. Thus, the relationship between VIVA and its producers or associate producers seems to be that of agency. With regards to the issue of illegal dismissal, petitioners assert that they were regular employees who were illegally dismissed. Petitioners in this case had already attained the status of regular employees in view of VIVAs conduct. Thus, petitioners are entitled to back wages. A project employee or a member of a work pool may acquire the status of a regular employee when: a. there is a continuous rehiring of project employees even after a cessation of project b. the tasks performed by the alleged project employee are vital and necessary to the business of employer The tasks of petitioners in loading movie equipment and returning it to VIVAs warehouse and fixing the lighting system were vital, necessary and indispensable to the usual business or trade of the employer. Petition granted. ABESCO CONSTRUCTION RAMIREZ AND DEVELOPMENT CORP. v.

Facts: Abesco Construction hired respondents on different dates from 1976 to 1992 either as labourers, road roller operators, painters or drivers. In 1977, respondents filed a complaint against Abesco Construction for illegal dismissal and claims for non-payment of thirteenth month pay, five days service incetive leave pay, premium pay for holidays and rest days, and moral and exemplary damages. Abesco

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Construction denied liability claiming that the respondents are just project employees whose employments were coterminous with the project to which they were assigned; that they were not regular employees who enjoy security of tenure and entitled to separation pay upon termination from work. The Labor Arbiter declared that the respondents are employees of Abesco Construction because they belong to a work pool from which the company drew workers for assignment to different projects, at its discretion. Because respondents were hired and rehired for over a period of 18 years, they were deemed to be regular employees Issue:/Held: Whether respondents are regular employees? YES, they are regular employees but not for the reasons given by the Labor Arbiter. Ratio: Employee who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of service is not a controlling factor in determining the nature of ones employment. Moreover, members of a workpool may either be project employees or work employees. The principal test for determining whether employees are project employees or regular employees is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed is defined in an employment agreement and is made clear to the employees at the time of hiring. In the case at bar, there was no such agreement and Abesco Construction did not even inform respondents of the nature of the latters work at the time of hiring. Due to this failure, the respondents are considered by the Court as regular employees. Seafarers DELA CRUZ v. MAERSK

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the 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. Defined PNOC ENERGY DEVELOPMENT CORP. V. NLRC, supra ALU-TUCP v. NLRC Facts: - NATIONAL STEEL CORPORATION (NSC), undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. - NSC opted to execute and carry out its Five Yeear Expansion Projects "in house," as it were, by administration - NSC did the work here involved the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery only for itself. Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation. - The petitioners were released/dismissed from their jobs, thus they filed separate complaints for unfair labor practice, regularization and monetary benefits with the NLRC - Petitioners argue that they are "regular" employees of NSC because:

7.04 PROJECT EMPLOYEES

(i) their jobs are "necessary, desirable and work-related to private respondent's main business, steel-making"; and

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(ii) they have rendered service for six (6) or more years to private respondent NSC. - However private respondents claim that the petitioners are merely project employees. - The basic issue of the case is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: 1. the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. 2. Regular employees, in contract, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code.

this kind of "project." During the time petitioners rendered services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and commissioned, steel-making machinery and equipment, or for selling the finished steel products. The Court therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed "project employees." KIAMEO v. NLRC

Project Employees PHILIPPINE JAI ALAI AND AMUSEMENT CORP. VS. CLAVE

Issue: WON the following employees are project-employees Held: Yes, the petitioners are project-employees. Ratio: The Court explained that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project. Secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of

FACTS: Phil. Jai Alai and Amusement Corp. is a corporation operating a jai-alai fronton for sport and amusement. It has its own maintenance group for the upkeep of its premises. For the renovation of its main building, it hired Cadatal, Jr., Delgra and 30 other workers (private respondents) for a period of one month, to continue even after that period should their services be needed further in the renovation work. This renovation was completed by October 1976. However, management decided to construct an Annex to the Building, and private respondents were assigned to work on a fire escape. On November 27, 1976, private respondents received notice of termination effective November 29, 1976, but since minor repairs were still needed, they worked up to December 11, 1976 and were fully paid for their labor up to that date. Petitioner filed with DOLE a report of termination of the services of private respondents and 30 others, due to completion of the project and listed them as "casual emergency workers." Private respondents file a complaint alleging termination without cause. DOLE ordered the reinstatement of private respondents with full backwages, stating that the nature of the jobs performed by private respondents was necessary and desirable in the usual business or trade of petitioner; that they are regular employees pursuant to

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Article 170 (now Article 281) of the Labor Code; and that their termination was without just cause. ISSUE: whether or not private respondents are regular employees entitled to security of tenure RATIO: Art 281 (now 280) of the Labor Code provides: (...) an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the 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 services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists." Private respondents were hired for a specific project - to renovate the main building. It was made known and so understood at the start of the hiring, that their services would last until the completion of the renovation. There could be no other reason, however, than that the termination of private respondents was because their services were no longer needed and they had nothing more to do since the project for which they were hired had been completed. The casual or limited character of private respondents' employment, therefore, is evident. They were engaged for a specific project or undertaking and fall within the exception provided for in Article 281. Not being regular employees. It cannot be justifiably said that petitioner had dismissed them without just cause. They are not entitled to reinstatement with full backwages. SANDOVAL SHIPYARDS, INC. Vs. NLRC (1985) This case made a clarification on what a project employee is and what it includes. FACTS

Private respondents were hired as workers in a shipping company in the construction of a ship/vessel (which is considered as a project). However, after the construction was finished, some of them were dismissed. Others were employed again for another specific project (construction of another ship). The dismissed workers filed a complaint for illegal dismissal. The shipyard company contends that: each vessel is a separate project and that the employment of the workers is terminated with the completion of each project. The workers contend otherwise: They claim to be regular workers and that the termination of one project does not mean the end of their employment since they can be assigned to unfinished projects. ISSUE Whether the workers are project employees or regular employees. HELD They are project employees. RATIO The court anchored its decision on Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-employee relations in the construction industry, provides: "Project employees are those employed in connection with a particular construction project. Non-project (regular) employees are those employed by a construction company without reference to any particular project. "Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. IMBUIDO v. NLRC6 G.R. No. 114734 | 31 March 2000 | Buena, J. | Special civil action for certiorari

Edited Lex Libris Synopsis

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Petitioner: Vivian Imbuido Respondents: National Labor Relations Commission, International Information Services, Inc. and Gabriel Librando Relevant Topic: FACTS Petitioner was employed as data encoder by private respondent. From August 26, 1988 until October 18, 1991, she entered into thirteen (13) separate employment contracts with private respondent, each contract lasting only for a period of three (3) months. On October 18, 1991, her services were terminated due to low volume of work. Charging private respondent with unfair labor practices, petitioner filed a complaint for illegal dismissal. Petitioner alleged that her employment was terminated because she signed a petition for certification election among the rank and file employees of respondent. Private respondent argued that petitioner's employment was for a specific project with a specified period of engagement. - LABOR ARBITER: The Labor Arbiter found petitioner to be a regular employee and that she was illegally dismissed because the alleged reason for her termination is not among the just causes for termination recognized by law. Hence, he ordered her reinstatement without loss of seniority rights and privileges, and the payment of backwages and service incentive leave pay. - NLRC: On appeal, the NLRC dismissed the complaint holding that petitioner's tenurial security is only up to the time the specific project for which she was hired is completed. Hence, this petition for certiorari. ISSUE/HELD W/N Imbuido is a regular employee [YES] RATIO Even as the Supreme Court concurred with the NLRC's findings that petitioner is a project employee, it, however, reached a different conclusion. In the recent case of Maraguinot, Jr. vs. NLRC, the Supreme Court held that "a project employee or a member of a work pool may acquire the status of a regular employee when the following concur:

1) There is a continuous rehiring of project employees even after the cessation of a project; and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer." The evidence on record revealed that petitioner performs activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, and contracted for a total of thirteen (13) successive projects. The Court had previously ruled that "however, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment." Based on the foregoing, the Court concluded that petitioner has attained the status of a regular employee of private respondent. Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just or authorized cause. The alleged causes of petitioner's dismissal are not valid causes for dismissal. Accordingly, the Court reinstated the decision of the Labor Arbiter with modification as to the computation of back wages and service incentive leave pay. DISPOSITIVE: Petition granted. CHUA V CA (SOCIAL SECURITY COMMISSION, SSS, PAGUIO ET AL) 440 SCRA 121 TINGA; October 6, 2004 NATURE This is a petition for review of the Decision of the Court of Appeals in CA-G.R. CV No. 38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioners Motion for Reconsideration, affirming the Order of the Social Security Commission (SSC) dated 1 February 1995 which held that private respondents were regular employees of the petitioner and ordered petitioner to pay the Social Security System (SSS) for its unpaid contributions, as well as penalty for the delayed remittance thereof. FACTS - On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter referred to as respondents) filed a

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Petition with the SSC for SSS coverage and contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction Development, claiming that they were all regular employees of the petitioner in his construction business. Private respondents alleged that petitioner dismissed all of them without justifiable grounds and without notice to them and to the then Ministry of Labor and Employment. They further alleged that petitioner did not report them to the SSS for compulsory coverage in flagrant violation of the Social Security Act. - On the other hand, the petitioner claimed that private respondents were project employees, whose periods of employment were terminated upon completion of the project. Thus, he claimed, no employer-employee relation existed between the parties. There being no employer-employee relationship, private respondents are not entitled to coverage under the Social Security Act. Moreover, petitioner invokes the defense of good faith, or his honest belief that project employees are not regular employees under Article 280 of the Labor Code. The SSC and CA ruled in favor of the respondents. ISSUE WON private respondents were regular employees of the petitioner HELD YES Ratio Elements of the control test: (a) selection and engagement of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. - Even though the employer does not admit, the existence of an employer-employee relationship between the parties can easily be determined by the application of the "control test, the elements of which are: (a) selection and engagement of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. - There is no dispute that private respondents were employees of petitioner. Petitioner himself admitted that they worked in his construction projects, although the period of their employment was allegedly co-terminus with their phase of work. It is clear that private respondents are employees of petitioner, the latter having control over the results of the work done, as well as the means and methods by which the same were accomplished. Suffice it to say that regardless of the nature of their employment, whether it is regular or project, private respondents are subject of the compulsory coverage

under the SSS Law, their employment not falling under the exceptions provided by the law. This rule is in accord with the Courts ruling in Luzon Stevedoring Corp. v. SSS to the effect that all employees, regardless of tenure, would qualify for compulsory membership in the SSS, except those classes of employees contemplated in Section 8(j) of the Social Security Act. - In Violeta v. NLRC, this Court ruled that to be exempted from the presumption of regularity of employment, the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved. This second requirement was not met in this case. - This Court has held that an employment ceases to be co-terminus with specific projects when the employee is continuously rehired due to the demands of the employers business and re-engaged for many more projects without interruption. The Court likewise takes note of the fact that, as cited by the SSC, even the National Labor Relations Commission in a labor case involving the same parties, found that private respondents were regular employees of the petitioner. - Another cogent factor militates against the allegations of the petitioner. In the proceedings before the SSC and the Court of Appeals, petitioner was unable to show that private respondents were appraised of the project nature of their employment, the specific projects themselves or any phase thereof undertaken by petitioner and for which private respondents were hired. He failed to show any document such as private respondents employment contracts and employment records that would indicate the dates of hiring and termination in relation to the particular construction project or phases in which they were employed. Moreover, it is peculiar that petitioner did not show proof that he submitted reports of termination after the completion of his construction projects, considering that he alleges that private respondents were hired and rehired for various projects or phases of work therein - To be exempted from the presumption of regularity of employment, the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved.

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Rationale DE OCAMPO v. NLRC Date: June 6, 1990 Ponente: Cruz Doctrine: The rule in Cartagenas v. Romago Electric Co., that contract workers are not considered regular employees, their services being needed only when there are projects to be undertaken, is not applicable in this case. The rationale of this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense of management. Facts: 65 employees of Makati Development were terminated due to the expiration of their contracts. The employees then filed a complaint for illegal dismissal against MDC. Due to the termination, the Philippine Transport and General Workers Association, of which the complainants were members, filed a notice of strike on the grounds of unionbusting, subcontracting of projects which could have been assigned to the dismissed employees, and unfair labor practice. They then declared a strike and established picket lines in the perimeter of the MDC premises. The MDC then filed with the Bureau of Labor Relations a motion to declare the strike illegal and restrain the workers from continuing the strike. The MDC then filed applications for clearance to terminate 90 of the striking workers, whom it had preventively suspended. 74 were project employees under contract with the MDC. The Labor Arbiter denied the applications for clearance filed by MDC and directed it to reinstate the complainants. The NLRC modified the decision: it granted the applications for clearance to dismiss the union officers, considered severed the project employees due to expiration of their contracts, and reinstated the regular employees. Topical issue: W/N the separation of the project employees was justified. Ratio: Yes, the separation of the project employees was justified.

The rule in Cartagenas v. Romago Electric Co., that contract workers are not considered regular employees, their services being needed only when there are projects to be undertaken, is not applicable in this case. The rationale of this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense of management. Although the contracts of the project workers had expired, the project itself was still ongoing and so continued to require the workers services for its completion. There is no showing that such services were unsatisfactory to justify their termination. The real reason for the termination of their services was the complaint the project workers had filed and their participation in the strike against the private respondent. Policy Instruction No. 20 of the Department of Labor, provides that "project employees are not entitled to separation pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the projects in which they had been employed by a particular construction company." The rule would entitle project employees to separation pay if the projects they are working on have not yet been completed when their services are terminated. This also holds true even if their contracts have expired, on the theory that such contracts would have been renewed anyway because their services were still needed. Applying this rule, we hold that the project workers in the case at bar, who were separated even before the completion of the project at the New Alabang Village are entitled to separation pay. We make this disposition instead of ordering their reinstatement as it may be assumed that the said project has been completed by this time.

Employer Obligation HANJIN v. IBANEZ, supra A.M. ORETA AND CO. INC. v. NLRC G.R. No. 74004 | August 10, 1989

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Nature: A petition for certiorari seeking annulment of the resolution of the NLRC Quick Summary: Employee was hired for 12 months, during 1st month, he met an accident which fractured him. He went back to work after a month but was later terminated by employer because employee was probationary and terminated due to poor performance due to his physical condition. Citing POLICY INSTRUCTION NO. 12 of Minister of Labor, What determines regularity or casualness is not employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, the employment is regular. Otherwise, it is casual employment. In this case, employment contract reveals that it is renewable subject to future agreements of the parties which evinces that the Grulla was hired by the company as a regular employee and not just mere probationary employee. Facts: June 11, 1980: Grulla was engaged by Engineering Construction and Industrial Development Company (ENDECO) through A.M. Oreta and Co., Inc., as a carpenter in its projects in Jeddah, Saudi Arabia for a period of twelve (12) months. He left the Philippines for Jeddah, Saudi Arabia on August 5, 1980. After 10 days (ACCIDENT) August 15, 1980: Grulla met an accident which fractured his lumbar vertebra while working at the jobsite. He was rushed to the New Jeddah Clinic and was confined there for twelve (12) days. After 12 days (DISCHARGED FROM HOSPITAL) August 27, 1980: Grulla was discharged from the hospital and was told that he could resume his normal duties after undergoing physical therapy for two weeks. After 22 days (REPORTED BACK TO WORK) September 18, 1980: Grulla reported back to his Project Manager and presented to the latter a medical certificate declaring the former already fit for work. TERMINATION Since then, he started working again until he received a notice of TERMINATION of his employment on October 9, 1980. Court action

Respondent Grulla filed a complaint for illegal dismissal, recovery of medical benefits, unpaid wages for the unexpired ten (10) months of his contract. Arguments of A.M. Oreta and Company, Inc and ENDECO: Grulla was validly dismissed because the latter was still a probationary employee; and that his dismissal was justified on the basis of his unsatisfactory performance of his job during the probationary period

POEA: Awarded to Grulla the salaries corresponding to the unexpired portion of his employment contract. NLRC: Affirmed Hence this petition for review on Certiorari Issue: WON the employment of respondent Grulla was illegally terminated and therefore entitles him to salaries corresponding to the unexpired portion of his employment contract. Held/ Ratio: YES. Grulla is a regular employee and therefore awarded the salaries corresponding to the unexpired portion of his employment contract. Article 280 of the Labor Code provides: an employment shall be deemed to be regular: where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of employer. An employment shall be deemed to be casual: if it is not covered by the preceding paragraph: Provided, that any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. Policy Instructions No. 12 of Minister of Labor: What determines regularity or casualness is not employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desireable to the main business of the employer, the employment is regular.

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In this case, the employment contract reveals that although the period of employment of Grulla is twelve (12) months, the contract is renewable subject to future agreements of the parties. It is clear from the employment contract that Grulla was hired by the company as a regular employee and not just mere probationary employee. Grulla is a regular employee, not probationary. Article 281 of the Labor Code provides that the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. In the absence of these requisites, there is justification in concluding that respondent Grulla was a regular employee entitled to security of tenure during his period of employment. Assuming that respondent is a probationary employee, still he cannot be removed except for cause during the period of probation. Although a probationary or temporary employee has limited tenure, he still enjoys security of tenure.The alleged ground of unsatisfactory performance is not one of the just causes for dismissal provided in the Labor Code. Neither is it included among the grounds for termination of employment under their contract. They failed to show proof of the particular acts or omissions constituting the unsatisfactory performance of Grulla of his duties, which was allegedly due to his poor physical state after the accident. Dispositive: The instant petition is dismissed for lack of merit and the resolution of the respondent Commission is hereby AFFIRMED.

Facts: Cioco, et al were workers hired by C.E. Construction Corp as carpenters and laborers in various construction projects from 19901999, the latest was GTI Tower in Makati. Before the start of every project, Cioco et al signed invidual employment contracts. In summer of 1999, Cioco et al (with 66 other workers) were terminated by the company on the ground that the phases of the GTI Tower project were already completed. Cioco et al filed a complaint for illegal dismissal. Company: Cioco et al were project employees; due notices of termination were given to them; termination reports were submitted to DOLE, as required. Cioco et al: We were regular workers of the company, hence, entitled to reinstatement and backwages. Issue WON Cioco et al project employees of the company? Were they illegally dismissed? Held Yes. No. Ratio

Specific Period GLORY PHILIPPINES INC., v. VERGARA, supra PUREFOODS CORP. v. NLRC LABAYOG v. M.Y. SAN BISCUITS, INC. Continuous Rehiring CHUA v. CA, supra C.E. CONSTRUCTION CORP. v. CIOCO

We again hold that the fact that the WORKERS have been employed with the COMPANY for several years on various projects, the longest being nine (9) years, did not automatically make them regular employees considering that the definition of regular employment in Article 28011 of the Labor Code, makes specific exception with respect to project employment. The re-hiring of petitioners on a project-toproject basis did not confer upon them regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred.12 It did not change their status as project employees. A review of the records shows that the COMPANY submitted the needed evidence. In its motion for reconsideration of the CAs decision, the COMPANY attached as Annexes "A"17 and "B,"18 Progress

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Billing Reports clearly showing that the GTI Tower project was already 80.9203% and 81.3747% accomplished as of May 31, 1999 and June 30, 1999, respectively. Specifically, the particular form, concreting and masonry works for which the WORKERS had been hired and assigned were already completed or near completion, as shown by Annexes "A-3," "A-4," and "A-6" of the May Progress Billing Report, and Annexes "B-3," "B-4," "B-6" and "B-7" of the June Progress Billing Report. The WORKERS did not question the veracity of the evidence presented and just insisted that they are regular employees of the COMPANY, hence, not liable for termination on mere ground of project completion. Workpool Employees MARAGUINOT v. NLRC, supra AGUILAR CORP. v. NLRC ABESCO CONSTRUCTION RAMIREZ, supra AND DEVELOPMENT CORP. v.

2. ID.; ID.; ID.; PROJECT EMPLOYEES; TEST THEREOF. The principal test for determining whether an employee is a project employee and not a regular employee is whether he was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time he was engaged for that project. DTSaIc 3. ID.; ID.; ID.; ID.; THE FACT THAT EMPLOYEES WORKED FOR THE EMPLOYER UNDER DIFFERENT PROJECT EMPLOYMENT CONTRACTS FOR YEARS CANNOT BE MADE A BASIS TO CONSIDER THEM AS REGULAR EMPLOYEES; CASE AT BAR. It should be noted that there were intervals in petitioners' respective employment contracts with NSC, thus bolstering the latter's position that, indeed, petitioners are project employees. Since its work depends on availability of such contracts or projects, necessarily the employment of its work force is not permanent but co-terminous with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer to retain them as permanent employees and pay them wages even if there are no projects to work on. The fact that petitioners worked for NSC under different project employment contracts for several years cannot be made a basis to consider them as regular employees, for they remain project employees regardless of the number of projects in which they have worked. 4. ID.; ID.; ID.; ID.; LENGTH OF SERVICE IS NOT THE CONTROLLING DETERMINANT OF THE EMPLOYMENT TENURE OF A PROJECT EMPLOYEE. Even if petitioners were repeatedly and successively re-hired on the basis of a contract of employment for more than one year, they cannot be considered regularized. Length of service is not the controlling determinant of the employment tenure of a project employee. As stated earlier, it is based on whether or not the employment has been fixed for a specific project or undertaking, the completion of which has been determined at the time of the engagement of the employee. Furthermore, the second paragraph of Article 280, providing that an employee who has rendered service for at least one (1) year, shall be considered a regular employee, pertains to casual employees and not to project employees such as petitioners. 5. ID.; ID.; ID.; CRITERIA FOR FIXED CONTRACTS OF EMPLOYMENT WHICH DO NOT CIRCUMVENT SECURITY OF TENURE. In the case of Philippine National Oil Company Energy Development Corporation v. NLRC, we set forth the criteria for fixed contracts of employment which do not circumvent security of tenure, to wit: (1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other

Length of Service PALOMARES v. NLRC Quick Facts: Petitioners were hired as contractual employees for several specific projects for private respondents 5-year expansion plan. They filed for regularization but private respondent denied it. Thus they filed for illegal dismissal. NLRC found they were project employees and not entitled to regularization or reinstatement. Thus this petition on certiorari. Issue: WON petitioners were contractual employees Held: Yes, they were contractual employees Ratio (doctrine in blue highlights):

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circumstances vitiating his consent; or (2) It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. FILIPINAS PRE-FABRICATED BUILDING SYSTEMS v. PUENTE PNOC ENERGY DEVELOPMENT CORP v. NLRC, supra 7.05 CASUAL EMPLOYEES Art. 280. Regular and casual employment. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Nature of Work A.M. ORETA AND CO. INC. v. NLRC, supra

did not object to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with Kimberly was coursed through an independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters. Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with the Bureau of Labor Relations, charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal of union members (KILUSANOLALIA); (2) non-regularization of casuals/contractuals with over six months service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of minimum wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency of a petition for certification election. This was later amended to withdraw the charge of coercion but to add, as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the reinstated Emerito Fuentes. Kimberly petitioned MOLE to assume jurisdiction of the dispute which it did so and ordered the workers top stop their strike. KILUSAN-OLALIA terminated its strike and picketing activities effective June 1, 1986 after a compliance agreement was entered into by it with KIMBERLY.

One Year Service KIMBERLY v. DRILON Facts: The CBA between Kimberly-Clark Philippines, Inc. and United Kimberly-Clark Employees Union-Philippine Transport and General Workers' Organization (UKCEU-PTGWO) expired June 30, 1986. Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal of the aforementioned CBA, some members of the bargaining unit formed another union called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (KILUSANOLALIA). On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No. IV, Ministry of Labor and Employment (MOLE). Kimberly and (UKCEU-PTGWO)

On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case issued an order declaring the following as eligible to vote in the certification election, thus: 1. The regular rank-and-file laborers/employees of the respondent company consisting of 537 as of May 14, 1986 should be considered qualified to vote; 2. Those casuals who have worked at least six (6) months as appearing in the payroll months prior to the filing of the instant petition on April 21, 1986; and 3. Those contractual employees who are allegedly in the employ of an independent contractor and who have also worked for at least six (6) months as appearing in the payroll month prior to the filing of the instant petition on April 21, 1986. During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-PTGWO) on the ground that they are not employees of KIMBERLY but of RANK. It was agreed by all the parties that the 64 voters shall be allowed to

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cast their votes but that their ballots shall be segregated and subject to challenge proceedings. The certification election was conducted on July I., 1986, with the following results: 1. KILUSAN-OLALIA = 246 votes 2. (UKCEU-PTGWO) = 266 votes 3. NO UNION = 1 vote 4. SPOILED BALLOTS = 4 votes 5. CHALLENGED BALLOTS = 64 votes TOTAL 581 votes On November 13, 1986, then Minister Sanchez rendered a decision the disposition wherein is summarized as follows: 1. The service contract for janitorial and yard maintenance service between KIMBERLY and RANK was declared legal; 2. The other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision; 3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as the exclusive bargaining representative of KIMBERLY's employees; 4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered; 5. Roque Jimenez was ordered reinstated without backwages, the period when he was out of work being considered as penalty for his misdemeanor; 6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes with backwages was declared as already final and unappealable; 7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983. Issue: WoN workers, not performing janitorial or yard maintenance service, became regular employees of KIMBERLY and are thus eligible to vote. Held: Yes. Ratio: The law thus provides for two. kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the

mechanics, electricians, machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons. It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification election by KILUSAN-OLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law. On the basis of the foregoing circumstances, and as a consequence of their status as regular employees, those workers not perforce janitorial and yard maintenance service were performance entitled to the payment of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to regular employees under the CBA, from the day immediately following their first year of service in the company. These regular employees are likewise entitled to vote in the certification election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted and considered for the purpose of determining the certified bargaining representative. SAN MIGUEL CORP. v. ABELLA, supra INTEGRATED CONTRACTOR AND PLUMBING WORKS, INC. v. CA

7.06 CONTRACT FIXED PERIOD Test Validity BRENT SCHOOL V. ZAMORA LABAYOG v. M.Y. BISCUITS, INC., supra

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CIELO v. NLRC Facts: Cielo is a truck driver who claims he was illegally dismissed by the Henry Lei Trucking Company. The agreement between the parties contained the following stipulations: 1. That the term of said agreement is for a period of 6 months, unless otherwise earlier terminated at the option of either party; That the net income shall be divided between the trucking company and the driver on 90/10% basis in favor of the former; That there is no employer/employee relationship between the parties since the agreement was contractual in nature.

agreement and of the affidavit. The trucking company merely filled in the blanks with the corresponding data, such as the drivers name and address, the amount received by him, and the date of the document. Each driver was paid through individual vouchers rather than a common payroll. It is obvious that the purpose behind these individual contracts was to evade the application of the labor laws by making it appear that the drivers of the trucking company were not its regular employees. Under these arrangements, the trucking company hoped to be able to terminate the services of the drivers without the inhibitions of the Labor Code. All it had to do was refuse to renew the agreements, which were uniformly limited to a six-month period. No cause had to be established because such renewal was subject to the discretion of the parties. In fact, the trucking company did not even have to wait for the expiration of the contract as it was there provided that it could be earlier terminated at the option of either party. By this clever scheme, the trucking company could also prevent the drivers from becoming regular employees and thus be entitled to security of tenure and other benefits, such as a minimum wage, costof-living allowances, vacation and sick leaves, holiday pay, and other statutory requirements. It was a clear attempt to exploit the unwitting employee and deprive him of the protection of the Labor Code by making it appear that the stipulations of the parties were governed by the Civil Code as in ordinary private transactions. In reality, however, the agreement was a contract of employment into which were read the provisions of the Labor Code and the social justice policy mandated by the Constitution. It was a deceitful agreement cloaked in the habiliments of legality to conceal the selfish desire of the employer to reap undeserved profits at the expense of its employees. As such, the agreement should be struck down or disregarded as contrary to public policy, morals, etc. CAPAROSO v. CA FABELA v. SAN MIGUEL CORP. PNOC ENERGY DEVELOPMENT CORP. v. NLRC

2.

3.

A week before the agreement was about to expire, however, Cielo was formally notified by the trucking company of the termination of his services on the ground of expiration of their contract. Cielo came to Court claiming that he had worked for the trucking company for more than 6 months and had thus acquired the status of a regular employee. As such, he could no longer be dismissed except for lawful cause. He also contended that he had been removed before of his refusal to sign, as required by the trucking company, an affidavit stating that he has received his salary and allowances from said company and had no more claim against them. Issue: W/N the six-month period fixed by the contract between the parties is valid Held/Ratio: It is void ab initio since, from the circumstances, it is apparent that the six-month period has been imposed to preclude acquisition of security of tenure by the employee. While insisting that it is the agreement that regulates its relations with Cielo, the trucking company is ensnared by its own words. The agreement specifically declared that there was no employer-employee relationship between the parties. Yet the affidavit the trucking company prepared required Cielo to acknowledge that he has received his salary and allowances from them, suggesting an employment relationship. According to its position paper, Cielos refusal to sign the affidavit constituted disrespect or insubordination which had some bearing on the renewal of his contract of employment with the trucking company. The records show that all the drivers of the trucking company have been hired on a fixed contract basis, as evidenced by the mimeographed form of the

Seasonal Employees MAGALOS v. NLRC PHIL. TOBACCO v. NLRC

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SAN MIGUEL CORP. v. NLRC, supra MANILA HOTEL v. CIR INDUSTRIAL ETC. v. CIR HACIENDA BINO v. CUENCA April 15, 2005 Callejo, Sr., J.: Facts: Hacienda Bino is a 236-hectare sugar plantation owned by Hortencia L. Starke located at Barangay Orong, Kabankalan City, Negros Occidental. The 76 individual respondents were part of the workforce of Hacienda Bino consisting of 220 workers, performing various works, such as cultivation, planting of cane points, fertilization, watering, weeding, harvesting, and loading of harvested sugarcanes to cargo trucks. On July 18, 1996, during the off-milling season, Starke issued an Order or Notice which stated To all Hacienda Employees: Please bear in mind that all those who signed in favor of CARP are expressing their desire to get out of employment on their own volition. The Labor Arbiter, NLRC and CA ruled in favor of the laborers and declared that Hacienda Bino is liable to the laborers for illegal dismissal. Issue: WON they are seasonal or regular employees. Held: Regular Ratio: The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employee. There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season. While the records sufficiently show that the respondents work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that

the employer has the burden of proving the lawfulness of his employees dismissal.

POSEIDON FISHING v. NLRC

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