Sevilla vs.

CA (1988)
ISSUE: WON Lina Sevilla is an employee of Tourist World Services
19 Oct 60: Mrs. Segundina Noguera (1st party), Tourist World
Services, Inc. represented by Mr. Eliseo Canilao (2nd party), & Dr.
Carlos Sevilla, Lina Sevilla entered into a contract. Tourist World
leased the premises of Noguera for its use as a branch office. In said
contract, Lina Sevilla held herself solidarily liable with Tourist World for
the prompt payment of monthly rental agreed on.
When branch office was opended, the same was run by Lina Sevilla,
payable to Tourist World by any airline for any fare brought in on the
efforts of Mrs. Sevilla 4% was to go to Lina Sevilla & 3% was to be
withheld by Tourist World.
24 Nov 61: Tourist World appears to have been informed that Lina
Sevilla was connected with a rival firm, PH Travel Bureau. Since
branch office was anyhow losing, Tourist World considered closing
down its office. Two resolutions of the BOD were issued first
abolished that office of the manager & VP of Tourist World Ermita
Branch & second authorized the corporate secretary to receive the
properties of Tourist World.
3 Jan 62: contract with Noguera for the use of the Branch Office
premises was terminated & while effectivity thereof was 31 Jan,
Sevillas no longer used it. CS Canilao went over to the branch office &
found the premises locked, unable to contact Lina, he padlocked the
premises to protect the interest of Tourist World.
Lina Sevilla & other employees could not enter the premises. So filed a
complaint against Noguera & Tourist World.
Linas contentions: a joint business venture was entered into by &
between her & TWS with offices at Ermita branch office & that she was
not an employee of TWS to the end that her relationship was one of a
joint business venture. She alleged that she did not receive any salary
from TWS, that she earned commissions for her own passengers, her
own bookings, her own business, that she shared in the expenses of
maintaining A. Mabini St. office, that she would be given title of branch
manager for appearances sake only.
TWS contention: Lina Sevilla was an employee of TWS as manager.
As such, she had no say on the lease executed with Noguera.
Negative. If the relation between the parties was in the character of
employer and employee, court has no jurisdiction, labor disputes being
the exclusive domain of CIR, later, the Bureau Of Labor Relations.
No uniform test to determine the evidence of

employer-

employee relation. In general, however, we have the 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, the existing economic
conditions prevailing between the parties, like the inclusion of the
employee in the payrolls were added.
Lina Sevilla was not subject to control by TWS either as to the result of
the enterprise or as to the means used in connection therewith.
First, under the contract of lease covering the TWS Ermita office, she
had bound herself in solidum as and for rental payments, an
arrangement that would be like claims of a master-servant relationship.
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.

Second, when the branch office was opened, the same was run by
Lina payable to TWS by any airline for any fare brought in on the
efforts of Lina. It cannot be said that Sevilla was under the control of
TWS "as to the means used." Sevilla obviously relied on her own gifts
and capabilities.
Also, Sevilla was not in the company's payroll. For her efforts, she
retained 4% in commissions from airline bookings, the remaining 3%
going to TWS. Unlike an employee then, who earns a fixed salary
usually, she earned compensation in fluctuating amounts depending on
her booking successes.
Fact that she has been designated as branch manager does not
make her an employee. Employment is determined by the right-ofcontrol test and certain economic parameters. But titles are weak
indicators.
However, the parties had not embarked on a joint venture or
partnership. Sevilla herself did not recognize the existence of such a
relation. In her letter of 28 Nov 61, she expressly concedes to TWS
right to stop the operation of the branch office. In effect, she was
accepting TWS control over the manner in which the business was
run. A joint venture, including a partnership, presupposes generally a of
standing between the joint co-venturers or partners, in which each
party has an equal proprietary interest in the capital or property
contributed and where each party exercises equal rights in the conduct
of the business. Further, the parties did not hold themselves out as
partners. The building itself was embellished with the electric sign
Tourist World Service, Inc.
When Sevilla agreed to man the Ermita branch, she must have done
so pursuant to a contract of agency. The agent renders services "in
representation or on behalf of another. Sevilla solicited airline fares,
but she did so for and on behalf of principal, TWS. As compensation,
she received 4% of the proceeds in the concept of commissions.
Hence, there is a principal-agent relationship.
Unlike simple grants of power of attorney, agency cannot be revoked at
will of the principal. Lina Sevilla is a bona fide travel agent herself, and
as such, she had acquired an interest in the business entrusted to her.
Moreover, she had assumed a personal obligation for the operation
thereof, holding herself solidarily liable for the payment of rentals. She
continued the business, using her own name, after TWS had stopped
further operations. Her interest, obviously, is not to the commissions
she earned as a result of her business transactions, but one that
extends to the very subject matter of the power of management
delegated to her. Hence, Sevilla is entitled to damages.
Wherefore, TWS & Eliseo Canilao are ordered to jointly & severally
indemnify Lina Sevilla the sum of P25k, P10k moral damages, P10k
exemplary damages, P5k nominal/temperate damages.
Domasig vs. NLRC (1996)
ISSUE: WON Domasig is an employee or a commission agent
Eddie Domasig filed a complaint against Cata Garments Corp,
company engaged in garments business & its owner/manager Otto
Ong & Catalina Co for illegal dismissal, unpaid commission & other
monetary claims. Alleged that he started working on 6 Jul 86 as
salesman when company was still named Cato Garments. 3 yrs ago,
because of a complaint filed by its workers, it changed its name to
Cata Garments.
29 Aug 92: Domasig was dismissed with Cata learned that he was
being pirated by a rival corporation which offer he refused. Prior to
dismissal, he alleged that he was receiving P1.5k/month plus
commission.

3 Sep 92: Domasig filed complaint.

Catas contentions: Domasig is not a regular employee. He is a mere
commission agent who receives commission of P5/pc of article sold at
regular price & P2.50/pc sold at bargain price. Domasig received fixed
allowance of P1.5/month. He had no regular time schedule.
Domasigs entitlement to monetary benefits.
In a business establishment, an identification card is usually provided
not only as a security measure but mainly to identify the holder thereof
as a bona fide employee of the firm that issues it. Together with the
cash vouchers covering Domasigs salaries for the months stated
proved that he is indeed an employee of Cata Garments.
The list presented by Cata would even support Domasigs allegation
that, aside from a monthly salary of P1,500, he also received
commissions for his work as a salesman of Cata.
As to contention that Cata terminated his employment due to the
suspicion: this was not refuted by Cata. Hence, illegal dismissal.
It was error for NLRC to remand the case for further proceedings to
determine WON Domasig was Catas employee. This would only
prolong the final disposition of the complaint. There should be speedy
administration of justice in labor cases. After all, NLRC & LA have
authority under the Labor Code to decide a case based on the position
papers and documents submitted without resorting to the technical
rules of evidence.

any intention of returning back. Sps. Flores were only compelled to

leave the premises, which they regarded as their home, when Nuestro
inflicted physical injuries upon Herminio Flores. Apparently, what they
had given up was only their place of residence but not their jobs. The
immediate filing of a complaint for illegal dismissal with a prayer for
reinstatement shows that spouses were not abandoning their work.
Lastly, where there is a finding of illegal dismissal, the general rule is
that an employee is entitled to reinstatement and to receive backwages
from the date of his dismissal up to the time of his reinstatement.
However, in this case, reinstatement is no longer feasible. Any possible
confrontation between the parties in view of their already strained
relationship should be avoided.
Wherefore, Sps. Flores are entitled to backwages equivalent to 6
months pay & cost of living allowances from Oct 80-82.
Equitable vs. NLRC (1997)
ISSUE: WON an employer-employee relationship exists
1 Aug 81: Ricardo Sadac was appointed as VP for Legal Department
of Equitable Banking Corp. by Pres. Manuel Morales, with monthly
salary of P8k + allowance of P4.5k & Christmas bonus worth to a 2-mo
salary.
8 Dec: Sadac was also designated as the banks General Counsel. He
had these functions: provides legal advice to BOD, takes charge of all
bank cases arising from bank transactions, insures effective conduct of
litigation,

Flores vs. Nuestra (1988)

ISSUE: WON there was an employer-employee relationship
Herminio & Herminia Flores worked for Fortunato Nuestro in his
funeral parlor known as Funeraria Nuestro since Jun 76, as helperutility man & bookkeeper, embalmer, & cashier.
7 Oct 80: Nuestro registered the Floreses with SSS as his employee
with monthly salary of P200 each. Thereafter, Herminio was paid
P750/month + P200 monthly allowance while Herminia was paid
P500/month. They were given living quarters right inside the
compound of the funeral parlor.
30 Oct 82: Herminio & Nuestro had an altercation, during which
Herminio was physically assaulted by Nuestro & suffered a punctured
wound on the lower & an abrasion in the scapular region. Herminio
filed an action for slight physical injuries. Herminio & his family, then,
was compelled to vacate his living quarters at the funeral parlor & had
to seek protection from Integrated National Police of Pilar, Bataan.

directs, plans, coordinates & maintains supervision & control, provides

for & insures proper documentation & notarization, etc.
26 Jun 89: 9 lawyers of the banks Legal Dept, who were all under
Sadac, addressed a letter-petition to the Chairman of BOD, accusing
Sadac
of
abusive
conduct,
inefficiency,
mismanagement,
ineffectiveness & indecisiveness.
Sadac responded & manifested an intention to file criminal, civil &
administrative charges against the 9 lawyers. Morales called the
lawyers to a conference in his office in an attempt to resolve their
differences. However, this did not amount to much & only resulted in a
broad commitment of the parties to implement the existing procedures
& practices in the Legal Dept. There was heated altercation between
Sadac & subordinates.
17 Jul 89: Banico met with the 9 lawyers. He was warned that if Sadac
were to be retained in his position, lawyers would resign en masse.
Banico then saw Sadac. Sadac denied the charges against him.

15 Nov 82: Sps. Flores filed complaint against Nuestro for illegal
dismissal, underpayment of living allowances, non-payment of five (5)
days incentive leave and non-payment of overtime compensation.

10 Aug 89: Morales issued a memorandum to Sadac, stating that the

bank is waiting for his vonluntary resignation due to the lack of
confidence in him by his subordinates.

Nuestros contention: no employer-employee relationship. Sps. Flores

even abandoned their work on 30 Oct 82.

14 Aug: Sadac addressed a letter to Morales, stating that the report of

Banico contained libelous statements & implementation of the
memorandum would lead to an illegal dismissal. He requested for a full
hearing by BOD so that he could clear his name.

NLRCs Decision: there was employer-employee relationship but since

Sps. Flores abandoned their work, they are precluded from seeking
reinstatement with backwages.
Affirmative. The fact that Nuestro registered Sps. Flores with SSS is
proof that they were indeed his employees. The coverage of Social
Security Law is predicated on the existence of an employer-employee
relationship.
As to issue of abandonment: to constitute abandonment, there must be
a clear and deliberate intent to discontinue one's employment without

17 Aug: Ricardo Romulo, Board VP Chairman, answered Sadac. He

stressed that Sadacs services were not terminated by the Board. It
was merely exercising its managerial prerogative to control, conduct its
business in the manner it deems fit & to regulate the same. That all the
Board is saying is that it has lost its confidence in Sadac & is awaiting
his resignation.
28 Aug: Sadac made a request for a full hearing.

31 Aug: Romulo wrote back, expressing that Sadac is free to remain in

the employ of the bank even if the bank were to incur tremendous
expense of continuing to pay his high salary.

cases, the question of whether or not the parties had an

employeremployee relationship was not the focal point of controversy.

9 Nov: Sadac filed a complaint for illegal dismissal & damages.

After learning of this complaint, BOD adopted Resolution 5803,
terminating the services of Sadac in view of his belligerence & the
Boards honest belief that relationship between them was one of client
& lawyer.

In Hydro Resources: A lawyer, like any other professional, may very

well be an employee of a private corporation or even of the
government. It is not unusual for a big corporation to hire a staff of
lawyers as its in-house counsel, pay them regular salaries, rank them
in its table of organization, and otherwise treat them like its other
officers and employees.

Sadacs contention: there is employer-employee relationship.

LAs Decision: lawyer-client relationship existed.
NLRCs Decision: Sadac was an employee of bank. Illegal dismissal.
Elements of employer-employee relationship: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power
of dismissal, and (4) the power to control the employee's conduct, with
the control test generally assuming primacy in the overall
consideration. Power of control refers to the existence of the power
and not necessarily to the actual exercise thereof. It is not essential, in
other words, for the employer to actually supervise the performance of
duties of the employee; it is enough that the former has the right to
wield the power.
Affirmative, Sadac is an employee of bank. Morales appointed &
assigned Sadac to the Legal Dept as VP with same salary, privileges &
benefits granted by bank to its ranking senior officers. He was not hired
as a lawyer on retainership basis but as an officer of the bank. He
received monthly salary of P8k, monthly allowance of P4.5k &
Christmas bonus.
Then, position of General Counsel of the bank was created & extended
to Sadac. In addition to his duties as VP, Sadacs duties &
responsibilities were defind as to prove that he was a bank officer
working under the supervision of the Pres & BOD of bank.
In his more than 8 yrs employment with bank, Sadac was given the
usual payslips to evidence his monthly gross compensation. As
employer, the bank withheld the taxes due to BIR from complainants
salary as employee. Moreover, the bank enrolled Sadac as its
employee under SSS & Medicare programs. Sadac contributed to the
banks Employees Provident Fund.
When the bank changed its payroll accounting system, Sadac was
included as one of the corporate officers. Also, there were further
proofs:
1.
Sadacs monthly attendance was recorded by Chief Security
Officer & reported to OP
2.
Sadac was authorized by Pres to sign for & in behalf of the
bank contracts covering legal services of lawyers
3.
Sadac participated as part of management in annual
Management Planning Conferencess on objective-setting & long-range
planning
4.

Bank extended to Sadac the benefit of a car plan

5.
Since 82, bank continuously reported & included Sadac as
one of its senior officers in its statements of financial condition as VP

Since there is an employer-employee relationship, the case is within

the coverage of LC. Under LC, an employee may be validly dismissed
if these requisites are attendant: (1) the dismissal is grounded on any
of the causes stated in Article 282 of the Labor Code, and (2) the
employee has been notified in writing and given the opportunity to be
heard and to defend himself. Article 282(c) of the Labor Code provides
that "willful breach by the employee of the trust reposed in him by his
employer" is a cause for the termination of employment by an
employer. Ordinary breach of trust will not suffice, it must be willful and
without justifiable excuse. This must be founded on facts established
by the employer who must clearly & convincingly prove by substantial
evidence the facts & incidents upon which loss of confidence may be
fairly made to rest. Otherwise, illegal dismissal.
The alleged loss of confidence was spawned by the lawyers
complaints

Sadac insults lawyers, even in the presence of his clients;

outburst of temper on inconsequential matters; mismanagement,
ineffectiveness as head & indecisiveness on basic legal questions.
A wide latitude of discretion is given an employer in terminating the
employment of managerial employees on the ground of breach of trust
and confidence. In order to constitute just cause for dismissal, the act
complained of must be related to the performance of the duties of the
employee such as would show him to be thereby unfit to continue
working for the employer.
Here, the grievances of the lawyers, in main, refer to what are
perceived to be certain objectionable character traits of Sadac.
Although petitioners have charged Sadac with allegedly mishandling
two cases in his long service with the bank, it is quite apparent that
Sadac would not have been asked to resign had it not been for the
letter-complaint of his associates in the Legal Department. Confident
that no employer-employee existed between the bank and Sadac,
petitioners have put aside the procedural requirements for terminating
ones employment notice apprising him of particular acts/omissions
for which dismissal is sought, & another notice informing him of
employers decision to dismiss him.
Failure to comply with these requirements taints the dismissal with
illegality. This procedure is mandatory, any judgment reached by
management without that compliance can be considered void and
inexistent. While it is true that the essence of due process is simply an
opportunity to be heard or, as applied in administrative proceedings, an
opportunity to explain one's side, meetings in the nature of consultation
and conferences such as the case here, however, may not be valid
substitutes for the proper observance of notice and hearing.
As to moral damages: petitioners have not been motivated by malice
or bad faith nor have they acted in wanton, oppressive or malevolent
manner such as to warrant a judgment against them for moral and
exemplary damages. It follows, then, that the individual petitioners may
not be held solidarily liable with the bank. A corporation is a juridical
entity with legal personality separate and distinct from those acting for
and in its behalf and, in general, from the people comprising it. The

rule is that obligations incurred by the corporation, acting through its

directors, officers and employees, are its sole liabilities. It was not
shown that Bank has had a direct hand in the dismissal of Sadac. But
reinstatement is no longer possible.
Wherefore, entitled to backwages from termination of employment until
turning 60 yrs of age, retirement benefits, + P5k.
Phil. Fuji vs. NLRC (1996)
ISSUE: WON an employer-employee relationship exists between Fuji
Xerox & Garado
6 May 77: Fuji Xerox entered into an agreement under which
Skillpower, Inc. supplied workers to operate copier machines of Fuji
Xerox as part of the latters Xerox Copier Project in its sales offices.
Pedro Garado was assigned as key operator at Fuji Xeroxs Buendia
Branch in Feb 80.
Feb 83: Garado went on leave & his place was taken over by a
substitute. Upon his return in March, he discovered there was spoilage
of over 600 copies. Afraid he might be blamed, he tried to talk to a
service
But technician refused. This incident came to the knowledge of Fuji
Xerox.
31 May 83: Fuji Xerox reported the matter to Skillpower. Next day,
Skillpower wrote Garado, ordering him to explain. In the meantime, it
suspended him from work. Garado filed complaint for illegal dismissal.
LAs Findings: Garado applied for work to Skillpower. In 80, he was
employed & made to sign a contract. Although he received his salaries
regularly from Fuji, it was Skillpower which exercised control &
supervision over his work. Skillpower had substantial capital &
investments in machinery, equipment & service vehicles. Hence,
Garado was an employee of Skillpower & was merely assigned by
Skillpower to Fuji Xerox. Dismissed complaint.
NLRCs Findings: Garado is an employee of Fuji Xerox & was illegally
dismissed. Although Garados request was wrongful, dismissal would
be a disproportionate penalty. Although Skillpower had substantial
capital assets, the fact was that the copier machines, which Garado
operated, belonged to Fuji Xerox, and that although it was Skillpower,
which suspended Garado, the latter merely acted at the behest of Fuji
Xerox.
Fuji Xeroxs argument: Skillpower is an independent contractor &
Garado is its employee. Garado was recruited by Skillpower; wrork
done by Garado was not necessary to the conduct of business of Fuji;
salaries & benefits were paid directly by Skillpower; Garado worked
under control of Skillpower, etc.
Affirmative. Once employed, Garado was never assigned to any other
client of Skillpower. In fact, although under the agreement, Skillpower
was supposed to provide only temporary services, Skilipower actually
supplied Fuji Xerox the labor which the latter needed for its Xerox
Copier Project for 7 years, from 77-84.
Garado signed a contract entitled as Appointment as Contract Worker,
stating that his status was that of a contract worker for a definite period
from 1 Jan 83 to 30 Jun 83. As such, his employment was considered
temporary, to terminate automatically 6 months after. Garado was
made to understand that he was an employee of Skillpower, and not of
the client to which he was assigned. Therefore, the termination of the
contract or any renewal/extension thereof did not entitle him to become
an employee of the client and the latter was not under any obligation to
appoint him as such, notwithstanding the total duration of the contract
or any extension or renewal thereof. However, this is nothing but a

crude attempt to circumvent the law and undermine the security of

tenure of private respondent by employing workers under six-month
contracts which are later extended indefinitely through renewals.
To uphold the contractual arrangement between the bank and CESI
would in effect be to permit employers to avoid the necessity of hiring
regular or permanent employees and to enable them to keep their
employees indefinitely on a temporary or casual status. (See: Art. 106,
LC)
As to contention that the service provided by Skillpower is not directly
related nor necessary to the business of selling & leasing copier
machines of Fuji: untenable. the Xerox Copier Project of petitioners
promotes goodwill for the company. It may not generate income for the
company but there are activities which a company may find necessary
to engage in because they ultimately redound to its benefit. Operating
the companys copiers at its branches advertises the quality of their
products and promotes the companys reputation and public image. It
also advertises the utility and convenience of having a copier
machine. It is noteworthy that while not operated for profit the copying
service is not intended either to be promotional, as, indeed, Fuji
charged a fee for the copies made. Wrong to say that if a task is not
directly related to the employers business, or it falls under what may be
considered housekeeping activities, the one performing the task is a
job contractor. The determination of the existence of an employeremployee relationship is defined by law according to the facts of each
case, regardless of the nature of the activities involved.
As to contention that Fuji never exercised control over the conduct of
Garado: this claim was belied by two letters by Atty. Luis to Nick
Macaraig. Letters reveal the role which Fuji Xerox played in the
dismissal of Garado. They dispel any doubt that Fuji Xerox exercised
disciplinary authority over Garado and that Skillpower issued the order
of dismissal merely in obedience to the decision of Fuji.
As to contention that Skillpower is a highly-capitalized business
venture, registered as an independent employer: the service being
rendered by Garado was not a specific or special skill that Skillpower.
was
in the business of providing. Although in the Neri case the telex
machine operated by the employee belonged to the employer, the
service was deemed permissible because it was specific and
technical. This cannot be
said of the service rendered by Garado.
(Cited: Bk III, Rule VIII, Sec. 8, IRR & Art. 106 LC) The typewriters
and vehicles bear no direct relationship to
the job for which
Skillpower contracted its service of operating copier
that Skillpower did not have copying machines of its own. What it did
was simply to supply manpower to Fuji Xerox. One who does not have
an independent business for undertaking the job contracted for is just
an agent of the employer.
As to the agreement between Fuji & Skillpower that Skillpower is an
independent contractor: The nature of ones business is not determined
by self-serving appellations one attaches thereto but by the tests
provided by statute and prevailing case law. Skilipower is, therefore, a
labor-only contractor and Garado is not its employee. No grave abuse
of discretion can thus be imputed to the NLRC for declaring Fuji Xerox
guilty of illegal dismissal of Garado.
AFP vs. NLRC (1997)
ISSUE: WON an employer-employee relationship exists

Eutiquio Bustamante had been an insurance underwriter of AFP

Mutual Benefit Assoc. Inc. since 75. The Sales Agents Agreement
between them provided: sales agent shall be entitles to commission
due for all premiums actually due & received by AFMBAI, there shall
be no employer-employee relationship between the parties & sales
agent is an independent contractor, among others.

not indicative of control. Insurance solicitors are never affected or

covered by the rules and regulations concerning employee conduct
and penalties for violations thereof, work standards, performance
appraisals, merit increases, promotions, absenteeism/attendance,
leaves of absence,
Bustamante failed to rebut these.

5 Jul 89: AFPMBAI dismissed Bustamante for misrepresentation & for

simultaneously selling insurance for another life insurance company in
violation of said agreement.
At the time of dismissal, Bustamante was entitled to accrued
commissions equivalent to 24 mos/Sales Agent Agreement & as stated
in account summary. Said summary showed that Bustamante had total
commission receivable of P438,835, of which only P78,039.89 had
been paid to him.
Bustamante wrote AFPMBAI, seeking release of his commission for
said
24 mos. AFPMBAI replied that he was entitled to only P75k-P100k.
Believing this, Bustamante signed a quitclaim in favor of AFPMBAI.
Oct 89: Bustamante was informed that his check was ready for
release. In collecting his check, he discovered that his total
commissions for 24 months actually amounted to P354,796.09 from an
account summary attached. However, Bustamante was paid only
P35k.
23 Nov 89: Bustamante filed a complaint with Ofc of Insurance
Commissioner praying for the payment of correct amount of his
commission. He was advised that DOLE had jurisdiction.
26 Feb 90: Bustamante filed complaint with DOLE,
claiming
commission for 2 yrs from termination of employment equivalent to
30% of premiums remitted during employment, P354k as commission
earned, etc.
AFMBAIs arguments: there is no employer-employee relationship
between them.
LA Decision: dismissal was just & valid. Claim for separation pay is
denied. The proviso in the SAA assigning Bustamante to a specific
area of responsibility & production quota signals existence of
employer-employee relationship. Affirmed by NLRC.
The existence of an employer-employee relationship is ultimately a
question of fact and that the findings thereon by LA and NLRC shall be
accorded not only respect but even finality when supported by
substantial evidence. Determinative factor in such finality is the
presence of substantial evidence to support said finding; otherwise,
such cannot bind this Court.
Absence of control. The fact that Bustamante was required to solicit
business exclusively for AFPMBAI could hardly be considered as
control in labor jurisprudence. Insurance agents are barred from
serving more than one insurance company, in order to protect the
public and to enable insurance companies to exercise exclusive
supervision over their agents in their solicitation work. Thus, the
exclusivity restriction clearly springs from a regulation issued by the
Insurance Commission, and not from an intention by AFPMBAI to
establish control over the method and manner by which private
respondent shall accomplish his work. This feature is not meant to
change the nature of the relationship between the parties, nor does it
necessarily imbue such relationship with the quality of control
envisioned by the law.
The fact that Bustamante was bound by company policies,
memo/circulars, rules and regulations issued from time to time is also

As to territorial assignments given to sales agents, cannot be held as

indicative of the exercise of control over an employee. First of all, the
place of work in the business of soliciting insurance does not figure
prominently in the equation. And more significantly, Bustamante failed
to rebut AFPMBAI's allegation that it had never issued him any
territorial assignment at all. Court cannot draw the same inference from
this feature. Again, the significant factor in determining the relationship
of the parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service being
rendered, and the degree to which the principal may intervene to
exercise such control. The presence of such power of control is
indicative of an employment relationship, while absence thereof is
indicative of independent contractorship. In other words, 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 the employer except only as to the result of the work. Not every form
of control that a party reserves to himself over the conduct of the other
party in relation to the services being rendered may be accorded the
effect of establishing an employer-employee relationship.
Bustamante is an independent contractor. He was free to sell
insurance at any time as he was not subject to definite hours or
conditions of work and in turn was compensated according to the result
of his efforts. By the nature of the business of soliciting insurance,
agents are normally left free to devise ways and means of persuading
people to take out insurance. There is no prohibition for Bustamante to
work for as long as he does not violate the Insurance Code. He was
free to solicit life insurance anywhere he wanted and he had free and
unfettered time to pursue his business. He did not have to punch in
and punch out the bundy clock as he was not required to report to the
office regularly. He was not covered by any employee policies or
regulations and not subject to the disciplinary action of management
on the basis of the Employee Code of Conduct. He had complete
control over his occupation. He was free to engage in other occupation
or practice other profession for as long as he did not commit any
violation of the ethical standards prescribed in the Sales Agent's
Agreement.
The line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it,
and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike
the second, which address both the result and the means used to
achieve it. It is, therefore, usual and expected for an insurance
company to promulgate a set of rules to guide its commission agents in
selling its policies that they may not run afoul of the law and what it
requires or prohibits.
As to issue of jurisdiction of NLRC & LA: Bustamante had never been
AFPMBAIs employee, but only its commission agent. As an
independent contractor, his claim for unpaid commission should have
been litigated in an ordinary civil action. The jurisdiction of LA & NLRC
is set forth in Article 217 LC. Only to disputes arising out of or in
connection with an employer- employee relationship.
FEATI vs. Bautista (1996)

ISSUE: WON an employer-employee relationship exists

14 Jan 63: President of FEATI University Faculty Club PAFLU wrote a
letter to Mrs. Victoria Araneta, President of Feati Uni, informing her of
the organization of the Faculty Club into a registered labor union.
The Faculty Club is composed of members who are professors and/or
instructors of the Uni.
22 Jan 63: President of Faculty Club sent another letter containing 26
demands that have connection with the employment of the members of
the Faculty Club by the Uni & requesting an answer within 10 days
from receipt. President of Uni answered, requesting that she be given
at least 30 days to study through the different phases of the demands.
Meanwhile, counsel for the Uni wrote a letter to the PFC demanding
proof of its majority status & designation as a bargaining
representative.
1 Feb 63: PFC again wrote the PU, rejecting request for extension of
time. On the same day, filed a notice of strike with BOL, alleging that
Uni refused to bargain collectively.
18 Feb 63: Members of FC declared a strike & established picket lines
in the premises of the Uni, resulting in disruption of classes.
Despite
arrived at.
21 Mar 63: Pres. Of PH certified to CIR the dispute between the
management of Uni & FC pursuant to Sec 10, RA 875.
In connection with the dispute between Uni & FC, various cases were
filed with CIR. In a case, the Judge issued an Order, ordering the
strikers to return immediately to work & the Uni to take them back.
Before the said order was issued, Uni had employed professors &
instructors to take the places of those professors & instructors who had
struck. FC filed with CIR a petition to declare in contempt of court,
alleging that Uni refused to accept back to work the returning strikers.
Universitys contentions: FC has no right to unionize/organize as a
labor union for collective bargaining purposes and to be certified as a
collective bargaining agent within the purview of the Industrial Peace
Act, and consequently it has no right to strike and picket on the ground
of FEATIs alleged refusal to bargain collectively where such duty does
not exist in law and is not enforceable against an educational
institution. Also alleged that RA 875 is not applicable to the University
because it is an educational institution and not an industrial
establishment and hence not an "employer" in contemplation of said
Act; and neither is RA 875 applicable to the members of the Faculty
Club because the latter are independent contractors and, therefore, not
employees within the purview of the said Act.
Court has ruled that certain educational institutions and other juridical
entities are beyond the purview of RA 875 in the sense that the Court
of Industrial Relations has no jurisdiction to take cognizance of charges
of unfair labor practice filed against them, but it is nonetheless true that
the principal reason of this Court in ruling such is that those entities are
not organized, maintained and operated for profit and do not declare
dividends to stockholders.
University of San Agustin vs. CIR: USA is an educational institution
conducted and managed by a religious non-stock corporation duly
organized and existing under the laws of the Philippines. It was
organized not for profit or gain or division of the dividends among its
stockholders, but solely for religious and educational purposes. The
main issue involved in the present case is WON a charitable institution
or one organized not
for profit but for more elevated purposes,

charitable, humanitarian, etc., like the BSP, be included in the definition

of "employer" contained in RA 875, and whether the employees of said
institution fall under the definition of "employee" also contained in the
same RA. If they are included, then any act which may be considered
unfair labor practice, within the meaning of said Republic Act, would
come under the jurisdiction of the Court of Industrial Relations; but if
they do not fall within the scope of said Republic Act, particularly, its
definitions of employer and employee, then the Industrial Court would
have no jurisdiction at all. CA 103, creating CIR down through the Eight
Hour Labor Law, was intended by the Legislature to apply only to
industrial employment and to govern the relations between employers
engaged in industry and occupations for purposes of profit and gain,
and their industrial employees, but not to organizations and entities
which are organized, operated and maintained not for profit or gain,
but for elevated and lofty purposes, such as, charity, social service,
education and instruction, hospital and medical service, the
encouragement and promotion of character, patriotism and kindred
virtues in youth of the nation, etc.
Same doctrine was affirmed in UST vs. Hon. Villanueva, La
Consolacion Colleged vs. CIR. However, in FEU vs. CIR, he Court
upheld the finding that FEU, also an educational institution, was guilty
of unfair labor practices. This was because FEU made profits from SY
52-53 to 58-59.
The Industrial Peace Act would apply also to non-profit organizations
or entities, the only exception being the Govt, including any political
subdivision or instrumentality thereof, insofar as govt functions are
concerned. Hence, IPA is applicable to any organization or entity
whatever may its purpose when it was created that is operated for
profit or gain.
Does the University operate as an educational institution for profit?
Does it declare dividends for its stockholders? If it does not, it must be
declared beyond the purview of RA 875; but if it does, RA 875 must
apply to it.
FEATI itself admits that it has declared dividends. It realizes profits &
parts of such earning is distributed as dividends to private stockholders
or individuals. Hence, RA 875 is applicable.
As to contention that it is not an employer within contemplation of RA
875 because it is not an industrial establishment: no merit. Sec. 2 OF
ra 875 provides, employer includes any person acting in the interest of
an employer, directly or indirectly, but shall not include any labor
organization (otherwise than when acting as an employer) or any
one acting in the capacity or agent of such labor organization.
not intend to give a complete definition of "employer", but rather that
such
definition should be complementary to what is commonly understood
as employer. The statutory definition includes not only "a principal
employer but also a person acting in the interest of the employer", and
secondly, the Act itself specifically enumerates those who are not
included in the term "employer", namely: (1) a labor organization
(otherwise than when acting as an employer), (2) anyone acting in the
capacity of officer or agent of such labor organization (Sec. 2[c]), and
(3) the Government and any political subdivision or instrumentality
thereof insofar as the right to strike for the purpose of securing
changes or modifications in the terms and conditions of employment is
concerned. Among these statutory exemptions, educational institutions
are not included; hence, they can be included in the term "employer."
This Court, however, has ruled that those educational institutions that
are not operated for profit are not within the purview of RA 875.
RA 875 does not give a comprehensive but only a complementary
definition of the term employer. The lexical definition is "one who

employs; one who uses; one who engages or keeps in service;" and
"to employ" is "to provide work and pay for; to engage ones service; to
hire. The Workmens Compensation Act defines employer as including
"every person or association of persons, incorporated or not, public or
private, and the legal representative of the deceased employer" and
"includes the owner or lessee of a factory or establishment or place of
work or any other person who is virtually the owner or manager of the
business carried on in the establishment or place of work but who, for
reason that there is an independent contractor in the same, or for any
other reason, is not the direct employer of laborers employed there."
The Minimum Wage Law states that "employer includes any person
acting directly or indirectly in the interest of the employer in relation to
an employee and shall include the Government and the government
corporations." The Social Security Act defines employer as "any
person, natural or juridical, domestic or foreign, who carries 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, except the Government and any of its
political subdivisions, branches or instrumentalities, including
corporations owned or controlled by the Government."
Under none of the above definitions may the University be excluded,
especially so if it is considered that every professor, instructor or
teacher in the teaching staff of the University, as per allegation of the
University itself, has a contract with the latter for teaching services,
albeit for one semester only. The University engaged the services of
the professors, provided them work, and paid them compensation or
salary for their services. Even if the University may be considered as a
lessee of services under a contract between it and the members of its
Faculty, still it is included in the term "employer." Running through the
word "employ" is the thought that there has been an agreement on
the part of one person to perform a certain service in return for
compensation to be paid by an employer.
As to contention that it is not an industrial establishment: Sec. 2(c) of
RA 875 does not state that the employers included in the definition of
the term "employer" are only and exclusively "industrial
establishments". On the contrary, the term "employer" encompasses all
employers except those specifically excluded by the Act. In the second
place, even the Act itself does not refer exclusively to industrial
establishment and does not confine its application thereto.
It cannot be denied that running a university engages time and
attention; that it is an occupation or a business from which the one
engaged in it may derive profit or gain. The University is not an
industrial establishment in the sense that an industrial establishment is
one that is engaged in manufacture or trade where raw materials are
changed or fashioned into finished products for use. But for the
purposes of the Industrial Peace Act the University is an industrial
establishment because it is operated for profit and it employs persons
who work to earn a living.
As to contention that even if it were an employer, still there would be
no employer-employee relationship because the members of FC are
not employees within purview of RA 875: Sec. 2(d) of RA 875 provide
that, employee shall include any employee end shall not be limited
to the employee of a particular employer unless the act explicitly
states otherwise and shall include any individual whose work has
ceased as a consequence of,
or in connection with, any current
labor dispute or because of any unfair labor practice and who has not
obtained any other substantially equivalent and regular employment."
"Teachers" are not to be included among those who perform "physical
labor" (teachers are not workers), but it does not mean that they are
not employees. University instructors as employees and declared RA
875 applicable to them in their employment relations with their school.
The

be employees when they struck, for Sec. 2 of RA 875 includes among

employees any individual whose work has ceased as a consequence
of, or in connection with a current labor dispute. Striking employees
maintain their status as employees of the employer.
As to contention that the professors & instructors are independent
contractors because FEATI does not exercise control over their work: a
University controls the work of the members of its faculty; that a
university prescribes the courses or subjects that professors teach,
and when and where to teach; that the professors work is
characterized by regularity and continuity for a fixed duration; that
professors are compensated for their services by wages and salaries,
rather than by profits; that the professors and/or instructors cannot
substitute others to do their work without the consent of the university;
and that the professors can be laid off if their work is found not
satisfactory. All these indicate that the university has control over their
work; and professors are, therefore, employees and not independent
contractors.
Independent contractors can employ others to work and accomplish
contemplated result without consent of contractee, while employee
cannot substitute another in his place without consent of his employer.
Even if university professors are considered independent contractors,
still they would be covered by RA 875. The Act did not exclude
independent contractors from the orbit of employees.
Since members of the FC are employees, it follows that they have a
right to unionize in accordance with Sec. 3 of Magna Carta of Labor.
This right is also guaranteed by the Constitution.
As to contention that members of the FC cannot unionize & FC cannot
exist as a valid labor org: record shows that the Faculty Club is a duly
registered labor organization, and this fact is admitted by counsel for
the University.
As to contention that taking in of replacements was valid & return-towork order was an impairment of its contract with the replacements:
The faculty members, by striking, have not abandoned their
employment but, rather, they have only ceased from their labor. They
have not lost their
right to go back to their positions, because the
declaration of a strike is not a renunciation of their employment and
their employee relationship with the University. The employment of
replacement was not authorized by CIR.
At most, that was a
temporary expedient resorted to by the University, which was
subject to the power of the CIR to allow to continue or not.
The return-to-work order cannot be considered as an impairment of the
contract entered into by petitioner with the replacements. Besides,
labor contracts must yield to the common good and such contracts are
subject to the special laws on labor unions, collective bargaining,
strikes and similar subjects.
The University, in the case before Us, does not claim that it no longer
needs the services of professors and/or instructors; neither does it
claim that it was imperative for it to lay off the striking professors and
instructors because of impending bankruptcy. On the contrary, it was
imperative for the University to hire replacements for the strikers.
When the professors and instructors struck on 18 Feb 63, they
continued to be employees of the University for the purposes of the
labor controversy notwithstanding the subsequent termination of their
teaching contracts.

Jardin vs. NLRC (2000)

ISSUE: WON an employer-employee relationship exists

Petitioners were drivers of Philjama Intl. Inc., a domestic corporation
engaged in the operation of Goodman Taxi. They used to drive
Goodmans taxicabs every other day on a 24-hr work schedule under
the boundary system. Under this arrangement, petitioners earned an
average of P400 daily. Nevertheless, Goodman admittedly regularly
deducts from petitioners daily earnings the amount of P30 supposedly
for washing of taxi units. Petitioners decided to form a labor union to
protect their rights & interests.

Upon learning of this plan, Goodman refused to let petitioners drive

their taxicabs when they reported for work on 6 Aug 91. Petitioners
suspected that they were singled out because they were the leaders &
active members of the union. Aggrieved, they filed a complaint for
unfair labor practice, illegal dismissal & illegal deduction of washing
fees.
LA dismissed. NLRC reversed, ruling that petitioners are employees of
Goodman & their dismissal must be for just cause & after due process.
But upon motion for reconsideration, reversed itself.
Admitted is the fact that complainants are taxi drivers purely on the
boundary system. Under this system, the driver takes out his unit &
pays use of the unit.
Applying four-fold test, control is the most important. Under the control
test, an employer-employee relationship exists if 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. Otherwise, no such relationship exists.
Affirmative. The relationship between jeepney owners/operators on
one hand and jeepney drivers on the other under the boundary system
is that of employer-employee and not of lessor-lessee. In the lease of
chattels, the lessor loses complete control over the chattel leased
although the lessee cannot be reckless in the use thereof, otherwise
he would be responsible for the damages to the lessor. In the case of
jeepney owners/operators and jeepney drivers, the former exercise
supervision and control over the latter. The management of the
business is in the owner's hands. The owner as holder of the certificate
of public convenience must see to it that the driver follows the route
prescribed by the franchising authority and the rules promulgated as
regards its operation. Now, the fact that the drivers do not receive fixed
wages but get only that in excess of the so-called "boundary" they pay
to the owner/operator is not sufficient to withdraw the relationship
between them from that of employer and employee.
Hence, petitioners are undoubtedly employees of private respondent
because as taxi drivers they perform activities which are usually
necessary or desirable in the usual business or trade of their employer.
Again, termination of employment must be effected in accordance with
law. Petitioners, being employees of Goodman, can be dismissed only
for just and authorized cause, and after affording them notice and
hearing prior to termination. In the instant case, Goodman had no valid
cause to terminate the employment of petitioners. Neither were there 2
written notices sent by Goodman informing each of the petitioners that
they had been dismissed from work.
Under the law, an employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his

other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. Thus, employees illegally dismissed prior to March 21,
1989, are entitled to backwages up to 3 years without deduction or
qualification, while those illegally dismissed after that date are granted
full backwages inclusive of allowances and other benefits or their
monetary equivalent from the time their actual compensation was
withheld from them up to the time of their actual reinstatement.
Considering that petitioners were terminated from work on August 1,
1991, they are entitled to full backwages on the basis of their last
daily earnings.
As to issue of deduction for washing fees: it is not illegal. After a tour of
duty, it is incumbent upon the driver to restore the unit he has driven to
the same clean condition when he took it out. Car washing after a tour
of duty is indeed a practice in the taxi industry and is in fact dictated by
fair play. Hence, the drivers are not entitled to reimbursement of
washing charges.
Makati vs. NLRC (1989)
ISSUE: WON an employer-employee relationship exists
Private respondents have been working for Makati Haberdashery, Inc.
as tailors, seamstresses, sewers, basters, & plantsadoras. They are
paid on a piece-rate basis except Maria Angeles & Leonila Serafine
who are paid on a monthly basis. In addition to this, they are given
daily allowance of P3 provided they report for work before 9:30am
everyday.
They were required to work from/before 9:20am up to 6/7pm from
Monday TO Saturday & during peak periods even on Sundays &
holidays.
20 Jul 84: Sandigan ng Manggagawang Pilipino, a labor organization
of respondent workers, filed a complaint for underpayment of the
basic wage, underpayment of living allowance, nonpayment of
overtime work, nonpayment of holiday pay, nonpayment of service
incentive pay, 13th month pay & benefits provided under Wage Orders
Nos. 1-5.
During pendency, Dioscoro Pelobello left with Salvador Rivera, a
salesman of Haberdashery, an open packaged which was discovered
to contain a jusi barong tagalog. When confronted, Pelobello replied
that the same was ordered by Casimiro Zapata for his customer.
Zapata allegedly admitted that he copied the design of Haberdashery.
But in the afternoon, when questioned again, Pelobello & Zapata
denied ownership.
Memorandum was issued to each of them to explain why no action
should be taken against them. But they allegedly did not submit their
explanation & did not report for work. Hence, they were dismissed by
Affirmative. The important requisite of control is present. When a
customer enters into a contract with the haberdashery or its proprietor,
the latter directs an employee who may be a tailor, pattern maker,
sewer or "plantsadora" to take the customer's measurements, and to
sew the pants, coat or shirt as specified by the customer. Supervision
is actively manifested in all these aspects the manner and quality of
cutting, sewing and ironing.
Further, the presence of control is immediately evident in this
memorandum issued by Asst. Manager Inocencio dated 30 May 81:
new procedures shall be followed follow instruction & orders from
Valderama; before accepting job orders, tailors must check the
materials, job orders, due dates & other things; among others.

From this memorandum alone, it is evident that Haberdashery has

reserved the right to control its employees not only as to the result but
also the means and methods by which the same are to be
accomplished. That private respondents are regular employees is
further proven by the fact that they have to report for work regularly
from 9:30 am to 6/7 p.m. and are paid an additional allowance of P3
daily if they report for work before 9:30 a.m. and which is forfeited
when they arrive at or after 9:30 a.m.

9 Jul 92: Caurdanetaan filed a petition for certification election. While

pending, also filed a complaint for illegal dismissal, unfair labor
practice,

Since they are regular employees, they are not independent

contractors. Private respondents did not exercise independence in
their own methods, but on the contrary were subject to the control of
petitioners from the beginning of their tasks to their completion. Unlike
independent contractors who generally rely on their own resources, the
equipment, tools, accessories, and paraphernalia used by private
respondents are supplied and owned by petitioners. Private
respondents are totally dependent on Haberdashery.

reinstatement and attorneys fees, against Corfarm.

As to issue of entitlement to Minimum Wage: affirmative. All employees

paid by the result shall receive not less than the applicable new
minimum wage rates for 8 hours work a day, except where a payment
by result rate has been established by the Secretary of Labor.
LA decided that for lack of sufficient evidence to support the claims of
the complainants for alleged violation of the minimum wage, their
claims for underpayment re violation of the Minimum Wage Law under
Wage Orders Nos. 1-5 must perforce fall. Records show that private
respondents did not appeal the above ruling of the Labor Arbiter to the
NLRC; neither did they file any petition raising that issue in the
Supreme Court. Accordingly, insofar as this case is concerned, that
issue has been laid to rest. But they can claim cost of living allowance
& 13th month pay. However, they are not entitled to service incentive
leave pay because as piece-rate workers being paid at a fixed amount
for performing work irrespective of time consumed in the performance
thereof, they fall under one of the exceptions stated in Sec. 1(d), Rule
V, IRR, Book III, LC. They also cannot claim holiday pay.
As to issue of illegal dismissal: the copied barong tagalog, was in the
possession of Pelobello who pointed to Zapata as the owner. When
required by their employer to explain in a memorandum issued to each
of them, they not only failed to do so but instead went on AWOL,
waited for the period to explain to expire and for petitioner to dismiss
them. Assuming that such acts do not constitute abandonment of their
jobs as insisted by private respondents, their blatant disregard of their
employer's memorandum is undoubtedly an open defiance to the
lawful orders of the latter, a justifiable ground for termination of
employment by the employer. The right of an employer to dismiss an
employee whose continuance in
the service is inimical to the
employer's interest. Hence, no illegal dismissal.
Caurdanetaan vs. Laguesma (1998)
ISSUE: WON an employer-employee relationship exists
Caurdanetaan Piece Workers Union has 92 members who worked as
cargador at the warehouse & ricemills of Corfarm Grains. As
cargadores, they loaded, unloaded and piled sacks of palay from the
warehouse to the cargo trucks and those brought by cargo trucks for
delivery to different places. They were paid by Corfarm on a piece rate
basis. When Corfarm denied some benefits to these cargadores, the
latter organized Caurdanetaan union.
Upon learning of its formation, Corfarm barred its members from
working with them and replaced them with non-members of the union
sometime in the middle of 92.

various pecuniary benefits provided by laws, damages, legal

interest,

Laguesmas decision: dismissed the petition for certification election for

lack of employer-employee relationship.
Corfarms contentions: it had no power of control. Petitioners were
street-hired workers engaged from time to time to do loading &
unloading work. There was no superintendent-in-charge to give orders
& there were no gate passes issued, nor tools, equipment &
paraphernalia issued by Corfarm for loading/unloading.

Affirmative. The existence of an independent contractor relationship is

generally established by the following criteria. 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 a specified piece of work; the control
and supervision over the workers; payment of the contractors workers;
the control and the supervision over the workers; the control of the
premises; the duty to supply the premises, tools, appliances, materials
and laborers, and the mode, manner and terms of payment. None of
the above criteria exists here.
The absence of a written contract which specifies the performance of a
specified piece of work, the nature and extent of the work and the term
and duration of the relationship between petitioner and Corfarm belies
the latters allegation that the former is indeed and independent
contractor. Also, Corfarm failed to show by clear and convincing proof
that respondent has the substantial capital or investment to qualify as
an independent contractor under the law. The premises, tools,
equipment and paraphernalia are all supplied by Corfarm. It is only the
manpower or
labor force which the alleged contractor supplies,
suggesting the existence of a labor only contracting scheme which is
prohibited by law. Further, if petitioners are indeed independent
contractors, they should have offered their services to other companies
& not to work exclusively for Corfarm.
However, Laguesma inexplicably reversed his previous ruling of
existence of employer-employee relationship. Why the sudden change
of mind? No additional pieces of evidence were adduced and no
existing ones were identified by Laguesma to support such strange
reversal. The unblemished fact is that Corfarm was the recruiter and
employer of petitioners members.
The applicable law in independent contractorship is Art. 106, LC.
Undeniable that petitioners members worked as cargadores
for
Corfarm. They loaded, unloaded and piled sacks of palay from the
warehouses to the cargo trucks and from the cargo trucks to the
buyers. This work is directly related, necessary and vital to the
operations of Corfarm. Moreover, Corfarm did not even allege, much
less prove, that petitioners members have substantial capital or
investment in the form of tools, equipment, machineries, and work
premises, among others. Furthermore, Corfarm did not contradict
petitioners allegation that it paid wages directly to these workers
without the intervention of any third-party independent contractor.

Applying Art. 280 LC, CPWU members were regular employees of

Corfarm. Their tasks were essential in the usual business of Corfarm.
As to alleged admission of lack of employer-employee relationship:
alleged admissions cannot be taken against petitioners cause. First,
the contents of the admissions are highly suspect. The records reveal
that the admissions of Juanito Costales, Jr., Carlito Costales and
Juanito Medenilla were in the form of affidavits of adhesion which were
identical in content, differentiated only by the typewritten names and
the signatures of the workers. Second, only three of the workers
executed such affidavits. Such pro forma and identical affidavits do not
prove lack of employer- employee relationship against all members of
petitioner. Third, the employer-employee relationship is clearly proven
by substantial evidence. Corfarm sorely failed to show that petitioners
members were independent contractors. We rule that no particular
form of proof is required to prove the existence of an employeremployee relationship. Any competent and relevant evidence may
show the relationship. Fourth, and in any event, the alleged admissions
of the three workers that they worked with other rice mills do not work
against them. Assuming arguendo that they did work with other rice
mills, this was required by the imperative of meeting their basic needs.

the service incentive leave and underpaid wages. Each employee is to

be paid the remaining underpaid wages from the date of his or her
hiring in accordance with the then prevailing wage legislations.
Likewise, a refund of P12 shall be computed for each day of service of
each employee, to be reckoned from the date such employee was
hired. The damages awarded should be sustained because the
employer acted in bad faith.
Ruga vs. NLRC (1990)
ISSUE: WON an employer-employee relationship exists
Petitioners were the fishermen-crew members of 7/B Sandyman II,
one of the several fishin vessels owned & operated by De Guzman
Fishing Enterprises. Petitioners rendered service aboard said vessel in
various capacities: Alipio Ruga & Jose Parma as patron/pilot, Jaime
Barbin as master fisherman, Nicanor Francisco as second
fisherman, Philip Cervantes & Eleuterio Barbin as fishermen.

Since employee-employer relationship exists, the holding of a

certification election necessarily follows. There should be no
unnecessary obstacle to the holding of such election, for it is a
statutory policy that should not be circumvented.

For services rendered in the conduct of De Guzmans regular business

of trawl fishing, petitioners were paid on percenatage commission
basis in cash by Mrs. Pilaw de Guzman, cashier of De Guzman. As
agreed upon, they received 13% of the proceeds of the sale of the fishcatch if the total proceeds exceeded the cost of crude oil consumed
during the fishing trip; otherwise, they received 10% of the toal
proceeds of the sale.

As to illegal dismissal, alleged order of remand will only prolong the

agony of 92 union members: LA rendered decision on the case in favor
of petitioners based on position paper filed by the latter & the available

The patron/pilot, chief engineer & master fishermen received minimum

income of P350/wk while assistant engineer, 2nd fisherman, &
fisherman- winchman received a minimum income of P206/wk.

should be set aside for lack of procedural due process.

11 Sep 83: upon arrival at the port, petitioners were told by Jorge de
Guzman to proceed to the police station for investigation on the report
that they sold some of their fish-catch at midsea to the prejudice of De
Guzman. However, petitioners denied this charge & alleged that it was
a countermove to their having formed a labor union & becoming
members of Defender of Industrial Agricultural Labor Organizations &
General Workers Union.

However, Corfarm was not denied procedural due process, and the
labor arbiters decision was based on competent, credible and
substantial evidence. Corfarm had been duly informed of the pendency
of the illegal dismissal case, but it chose not to participate therein
without any known justifiable cause. The labor arbiter sent notices of
hearing or arbitration to the parties, requiring them to submit position
papers. Corfarm did not attend the hearing. Corfarm failed to file its
position paper. Clearly, Corfarm was given an opportunity to present
its evidence, but it failed or refused to avail itself of this opportunity
without any legal reason. Due process is not violated where a person
is given the opportunity to be heard, but chooses not to give his side
of the case.
The finding that Juanito Costales, Jr. was an employee of Corfarm was
allegedly inconsistent with his admission that he was the owner of
Carcado Contracting Services. As earlier observed, the inconsistency
is irrelevant. Juan Costales, Jr. was an employee of Corfarm. Owning
this alleged outfit is not inconsistent with such employment. The NLRC
also questioned the amount of the employees compensation. In one
instance, the workers stated that they were receiving P45/days work of
eight hours. In another, they claimed that they were paid P0.12 per
sack or cavan. alleged inconsistencies are more apparent than real.
Records reveal that the P57 was the promised compensation;
however, there was an unauthorized deduction of P12; thus, the
amount of P45/day. The claim of P0.12 per sack or cavan is the basic
computation of how workers or haulers earn their wage for the day.
There is also unfair labor practice. Instead of sitting down with the
individual complainants or the union officers to discuss their demands,
Corfarm resorted to mass lay-off of all the members of the union and
replaced them with outsiders. (See: Art. 248 LC)
The thirteenth month pay awarded should be computed for each year
of service from the time each employee was hired up to the date of his
actual reinstatement. The same computation applies to the award of

During investigation, no witnesses were presented. Notwithstanding,

De Guzman refused to allow petitioners to return to the fishing vessel
to resume their work on the same day.
22 Sep: petitioners individually filed their complaints for illegal
dismissal & non-payment of 13th moth pay, emergency cost of living
allowance & service incentive pay.
24
Oct 83: De Guzman submitted position paper, denying
employer- employee relationship. Rather, they were engaged in joint
venture.
NLRC Decision: there was joint venture arrangement.
undisputably shown by the testimony of Alipio Ruga, the patron/pilot of
7/B Sandyman II, to be under the control and supervision of De
Guzmans operations manager. Matters dealing on the fixing of the
schedule of the fishing trip and the time to return to the fishing port
were shown to be the prerogative of De Guzman. While performing
the fishing operations, petitioners received instructions via a singleside band radio from De Guzmans operations manager who called
the patron/pilot in the morning. They are told to report their activities,
their position, and the number of tubes of fish-catch in one day.
Clearly thus, the conduct of the fishing operations was monitored by
De Guzman thru patron/pilot of 7/B Sandyman II who is
responsible for disseminating the instructions to the crew members.
Conclusion that there had been no change in the situation of the
parties since 68 when De Guzman obtained favorable judgment in

Case 708, exempting it from compulsory coverage of SSS Law is not

supported by evidence on record.
Herein petitioners were directly hired by De Guzman Fishing, through
its general manager, Arsenio de Guzman, and its operations manager,
Conrado de Guzman and have been under the employ of De Guzman
Fishing for a period of 8-15 years in various capacities, except for
Laurente Bautu who was hired on August 3, 1983 as assistant
engineer.
While tenure or length of employment is not considered as the test of
employment, nevertheless the hiring of petitioners to perform work
which is necessary or desirable in the usual business or trade of
private respondent for a period of 8-15 years since 1968 qualify them
as regular employees within the meaning of Art. 281 of LC as they
were indeed engaged to perform activities usually necessary or
desirable in the usual fishing business or occupation of De Guzman
Fishing.
Also, petitioners received compensation on a percentage commission
based on the gross sale of the fish-catch i.e. 13% of the proceeds of
the sale if the total proceeds exceeded the cost of the crude oil
consumed during the fishing trip, otherwise only 10% of the proceeds
of the sale. Such compensation falls within the scope and meaning of
the term "wage" as defined under Art. 97(f) of LC.
Further, the fact that on mere suspicion based on the reports that
petitioners allegedly sold their fish-catch at midsea without the
knowledge and consent of private respondent, petitioners were
unjustifiably not allowed to board the vessel on 11 Sep 83 to resume
their activitieswithout giving them the opportunity to air their side on the
accusation against them unmistakably reveals the disciplinary power
exercised by De Guzman over them and the corresponding sanction
imposed in case of violation of any of its rules and regulations. The
virtual dismissal of petitioners from their employment was
characterized by
undue
haste when less extreme measures
consistent with the requirements of due process should have been first
exhausted. In that sense, the dismissal of petitioners was tainted with
illegality.
Even on the assumption that they sold the fish-catch at midsea, act of
virtual dismissal contradicts theory of joint fishing venture. A joint
venture, including partnership, presupposes generally a parity of
standing between the joint co-venturers or partners, in which each
party has an equal proprietary interest in the capital or property
contributed and where each party exercises equal lights in the conduct
of the business. It would be inconsistent with the principle of parity of
standing between the joint co-venturers as regards the conduct of
business, if De Guzman would outrightly exclude petitioners from the
conduct of the business without first resorting to other measures
consistent with the nature of a joint venture undertaking. Instead of
arbitrary unilateral action, De Guzman should have discussed with an
open mind the advantages and disadvantages of petitioners' action
with its joint co-venturers if indeed there is a "joint fishing venture"
between them.
Wherefore, reinstatement to former positions with 3-yr backwages &
other monetary benefits.
Agro vs. NLRC (1989)
ISSUE: WON an employer-employee relationship exists between a
security agency & its security guards
Private respondents (46) worked as security guards and/or janitors
under individual contracts with Agro Commercial Security Services
Agency. They were assigned to firms & offices where Agro had
contracts providing security & janitorial services. Their individual

contracts provides: security guard, agrees to temporary suspension of

his employment completely
to include such changes in his
employment status with the Agency, in case of termination of contract
between the Agency and its Client, or reduction in force of same.
government
previously

agencies

to

which

private

respondents

were

assigned had been terminated generally due to the sequestration of

said offices by the PCGG. Accordingly, many of private respondents
were placed on floating status on 16 Sep 86. Floating status" means
an indefinite period of time when private respondents do not receive
any salary or financial benefit provided by law. A number of them later
obtained employment in other security agencies.
25
Jul 86: on account of uncertainty of their employment,
private respondents filed complaint for illegal dismissal. They sought
payment of their respective separation pay, 13th month pay for 86 &
service incentive leave pay.

Affirmative. Private respondents are regular employees of Agro. Their

individual length of service ranges from 4 to more than 10 years. They
worked as security guards/janitors. Their employment contracts
provide, among others security guard upon acceptance of his
position or undertaking for employment, shall observe, follow and obey
all rules, regulations, code of conduct required by the agency; security
guard upon acceptance of his position or undertaking for employment,
shall observe, follow and obey all rules, regulations, code of conduct
required by the agency; security guard, agrees to temporary
suspension of his employment completely to include such changes;
agency may terminate or dismiss the security guard.
It was Agro who determined how much private respondents received
as their monthly salary, overtime/night differential pay, mid-year and
Christmas bonus and 13th month pay, uniforms and meal allowances
and other benefits mandated by law. Private respondents were
reported by the Agro as its employees for purposes of social security
coverage. Agro remitted their withholding taxes to BIR and made
monthly contributions to the Pag-ibig fund for their benefit. It was Agro
who determined and decided on the assignments, promotions and
salary increases of private respondents, their working hours, the
firearms to be issued to them and janitorial devices and tools to be
used. Likewise, it was Agro who imposed the appropriate disciplinary
measures on private respondents by way of reprimand, suspension
and dismissal.
Elements of existence of employer-employee relationship: 1) the
selection and engagement of the employees; 2) payment of wages; 3)
the power of dismissal and 4) the power to control the employees'
conduct
Hence, private respondents are Agros regular employees who enjoy
security of tenure & who cannot be dismissed except for cause.
As to alleged illegal dismissal: filing of complaint was premature. At the
time they filed their complaint, most of them were still on the job or on
assignments and it was only in Sep 86 when most of them were
placed on "floating status."
It appears that 27 of the private respondents accepted employment in
other security agencies without previously resigning from employment
with Agro. Hence, this is just cause for termination of their services &
as such, they are no entitled to any separation pay.
As to the other 17 private respondents, they admittedly remained in
floating status for more than 6 months. Such a 'floating status" is not

unusual for security guards employed in security agencies as their

assignments primarily depend on the contracts entered into by the
agency with third parties. Such a stipulated status is, therefore, lawful.
Floating status should only last for a reasonable time. When the
floating status of the private respondents lasts for more than 6
months, they may be considered to have been illegally dismissed from
their service. Thus, entitled to the corresponding benefits for their
separation.
As to allegation of Agro that it was denied due process: without basis.
Agro was afforded the opportunity to file its position paper. It even
entered into a stipulation of facts with private respondent.
Maraguinot vs. Viva Films (1998)
ISSUE: WON an employer-employee relationship exists
18 Jul 89: Alejandro Maraguinot Jr. was employed by Viva Films as
part of the filming crew with salary of P375/wk. 4 months later, he was
designated as Asst. Electrician with weekly salary of P400, increased
to P450 in May 90.
Jun 91: Maraguinot was promoted to the rank of Electrician with
weekly salary of P475, increased to P593 in Sep 91.
On the other hand, Jun 90: Paulino Enero was employed by Viva
Films as member of the shooting crew with weekly salary of P375,
increased to P425, then P475.
Their tasks
equipment
cameraman,
tasks that

consisted of loading, unloading and arranging movie

in the shooting area as instructed by the
fixing of the lighting system, and performing other
the cameraman and/or director may assign.

May 92: Maraguinot & Enero sought the assistance of their supervisor,
Mrs. Alejandria Cesario, to facilitate their request that Viva Films adjust
their salary in accordance with the minimum wage law.
Jun 92: Mrs. Cesario informed them that Mr. Vic del Rosario would
agree to increase their salary only if they signed a blank employment
contract. But they refused.
Jun 92: Viva Films forced Enero to go on leave but when he reported
back to work, he was not taken back.
Meanwhile, Maraguinot was dropped from the company payroll from 821 Jun 92 but was returned on 22 Jun. Again, he was asked to sign a
blak employment contract but when he refused, Viva Films terminated
his services on 20 Jul 92. They sued for illegal dismissal.
Viva Films contentions: they contract persons called producers -- also
referred to as associate producers -- to produce or make movies for
Viva Films. Also, Maraguinot & Enero are project employees of the
associate producers who, in turn, act as independent contractors. As
such, there is no employer-employee relationship. Further contend
that it was the associate producer of film Mahirap Maging Pogi who
hired Maraguinot. Movie was shot from 2 Jul 22 Jul & only then that
Maraguinot was relased upon payment of his last salary. As to Enero,
he was hired for movie Sigaw ng Puso (retitled Narito ang Puso). He
went on vacation & by the time he reported for work, shooting had
already been completed.
NLRC Decision: reversed LA. They are project employees.
Affirmative. Contracting out of labor is allowed only in case of job
contracting (Sec. 8, Rule VIII, Book III, IRR).

Assuming that the associate producers are job contractors, they must
then be engaged in the business of making motion pictures. As such,
and to be a job contractor under the preceding description, associate
producers must have tools, equipment, machinery, work premises, and
other materials necessary to make motion pictures. However, the
associate producers here have none of these.
Viva Films evidence reveals that the movie-making equipment are
supplied to the producers and owned by Viva. These include
generators, cables and wooden platforms, cameras and shooting
equipment; in fact, Viva likewise owns the trucks used to transport the
equipment. Clear that the associate producer merely leases the
equipment from Viva.
Viva Films further narrated that Vivas generators broke down during
petitioners last movie project, which forced the associate producer
concerned to rent generators, equipment and crew from another
company. This only shows that the associate producer did not have
substantial capital nor investment in the form of tools, equipment and
other materials necessary for making a movie. Viva in effect admit that
their producers, especially petitioners last producer, are not engaged
in permissible job contracting.
If Viva insist that their associate producers are labor contractors, then
these producers can only be labor-only contractors, defined under
Art. 106 LC & Sec. 9, Rule VIII, Bk III, IRR.
As labor-only contracting is prohibited, the law considers the person or
entity engaged in the same a mere agent or intermediary of the direct
employer. But even by the preceding standards, the associate
producers of Viva cannot be considered labor-only contractors as
they did not supply, recruit nor hire the workers.
It was Juanita Cesario, Shooting Unit Supervisor and an employee of
Viva, who recruited crew members from an available group of freelance workers which includes the complainants Maraguinot and Enero.
And in their Memorandum, Viva declared that the associate producer
hires the services of... 6) camera crew which includes (a) cameraman;
(b) the utility crew; (c) the technical staff; (d) generator man and
electrician; (e) clapper; etc. This clearly showed that the associate
producers did not supply the workers required by the movie project.
The relationship between Viva and its producers or associate
producers seems to be that of agency, as the latter make movies on
behalf of Viva, whose business is to make movies. As such, the
employment relationship between petitioners and producers is actually
one between petitioners and Viva, with the latter being the direct
employer.
Also, the four elements are present here. Vivas control is evident in its
mandate that the end result must be a quality film acceptable to the
company. The means and methods to accomplish the result are
likewise controlled by Viva, viz., the movie project must be finished
within schedule without exceeding the budget, and additional expenses
must be justified; certain scenes are subject to change to suit the taste
of the company; and the Supervising Producer, the eyes and ears of
Viva and del Rosario, intervenes in the movie-making process by
assisting the associate producer in solving problems encountered in
making the film.

comply with Vivas requirements to ensure that a quality film is

completed within schedule and without exceeding the budget. At
bottom, the director is akin to a supervisor who merely oversees the
activities of rank-and-file employees with control ultimately resting on
the employer. By commanding crew members to observe the rules
and regulations promulgated by Viva, the appointment slips only
emphasize Vivas control over petitioners.
Aside from control, the element of selection and engagement is
likewise present in the instant case and exercised by Viva by virtue of
the appointment slips. Nowhere in the appointment slip does it appear
that it was the producer or associate producer who hired the crew
members; moreover, it is Vivas corporate name which appears on the
heading of the appointment slip. What likewise tells against Viva is that
it paid petitioners salaries as evidenced by vouchers, containing Vivas
letterhead, for that purpose.
As to illegal dismissal: Viva expressly admitted that petitioners were
part of a work pool and, while petitioners were initially hired possibly as
project employees, they had attained the status of regular employees
in view of Vivas conduct.
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 curing which the employee
was continuously rehired is not controlling but merely serves as a
badge of regular employment.

Ruling here is meant to give life to the constitutional policy of

strengthening the labor sector but not at the expense of management.
Ruling does not mean that simply because an employee is a project or
work pool employee even outside the construction industry, he is
deemed, ipso jure, a regular employee.
Since they have gained regular status, their dismissal was illegal. They
are entitled to backwages & reinstatement, without loss of seniority
rights & other benefits that may have accrued.

Bautista vs. Inciong (1988)

ISSUE: WON there exists an employer-employee relationship
72: Reynaldo Bautista was employed by Associated Labor Unions as
Organizer. He paid his monthly SSS contributions, with ALU as his
employer.
15 Mar 79: he was left in the office of ALU while his other coorganizers were in Cainta, Rizal attending a certification election at
Chrysler.
benefits application form signed by ALUs physician was given to ALU
forsubmission to SSS.
Upon expiration of his leave, he reported back for work but was
informed by ALUs Area VP for Luzon of his termination effective 15
Mar. Bautista filed a complaint.

Enero was employed for a total of 2 years and engaged in at least 18

projects, while Maraguinot was employed for some 3 years and worked
on at least 23 projects. The tasks of petitioners were vital, necessary
and indispensable to the usual business or trade of the employer,
considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety.

Deputy Ministers Decision: Bautista was merely accommodated by

ALU after he was dismissed by his former employer in 72. His
membership coverage with SSS, which shows that ALU is the one
paying the employers share in the premiums is not conclusive proof
that Bautista is ALUs employer. There was no employer-employee
relationship.

As to work pool: A work pool may exist although the workers in the pool
do not receive salaries and are free to seek other employment during
temporary breaks in the business, provided that the worker shall be
available when called to report for a project. Although primarily
applicable to regular seasonal workers, this set-up can likewise be
applied to project workers insofar as the effect of temporary cessation
of work is concerned. This is beneficial to both the employer and
employee for it prevents the unjust situation of coddling labor at the
expense of capital and at the same time enables the workers to attain
the status of regular employees.

Affirmative. The mere fact that ALU is a labor union does not mean that
it cannot be considered an employer of the persons who work for it.
Much less should it be exempted from the very labor laws which it
espouses as labor organization.

As to contention that workers were not regularly maintained in the

payroll & were free to offer services to other companies when there
were no on-going projects: cannot defeat the workers status of
regularity. There is foreseeable suspension of work.
However, the import of this decision is not to impose a positive and
sweeping obligation upon the employer to re-hire project employees.
What this decision merely accomplishes is a judicial recognition of the
employment status of a project or work pool employee in accordance
with what is fait accompli, i.e., the continuous re-hiring by the employer
of project or work pool employees who perform tasks necessary or
desirable to the employers usual business or trade. Project or work
pool employees who have gained the status of regular employees are
subject to the no work-no pay principle. A work pool may exist although
the workers in the pool do not receive salaries and are free to seek
other employment during temporary breaks in the business, provided
that the worker shall be available when called to report for a project.

Bautista was an employee of ALU as reflected in the latter's individual

payroll sheets and shown by Bautista's membership with SSS and the
ALUs share of remittances in hiss favor. Even more significant, is the
ALU's act of filing a clearance application with the MOL to terminate
the Bautistas services. Bautista was selected and hired by the Union.
He was paid wages by the Union. ALU had the power to dismiss him
as indeed it dismissed him. And definitely, the Union tightly controlled
the work of Bautista as one of its organizers.
However, the records show that antipathy and antagonism between
Bautista and ALU militate against the former's reinstatement. ALU
would not want to have a union organizer whom it does not trust and
who could sabotage its efforts to unionize commercial and industrial
establishments. Severance pay, therefore, is more proper in order.
Hence, instead of returning Bautista to his former position, ALU is
ordered to pay him an amount equal to his backwages for only three
years and the separation pay to which he may be entitled as of the
end of the three year period.
David vs. Macasio (2014)
ISSUE: WON there exists an employer-employee relationship
Statement of facts by John Macasio:

6 Jan 95: Macasio had been working as butcher for Ariel David, in
Yiels Hog Dealer. David exercised effective control & supervision over
his work, pointing out that David set the work day, reporting time &
hogs to be chopped, as well as manner by which he was to perform his
work. David also paid his salary of P700 & approved or disapproved
his leaves.
It was also alleged that David owned the hogs delivered for chopping,
as well as the work tools & implements. David also rented the
workplace & employes about 25 butchers & delivery drivers.
Jan 09: Macasio filed a complaint before LA for non-payment of
overtime pay, holiday pay, 13th month pay & service incentive leave.
Davids defense:
He claimed he started hog dealer business in 2005 & only has 10
employees. Alleged that he hired Macasio as a butcher/chopper on
pakyaw or task basis who is, therefore, not entitled to overtime pay,
holiday pay & 13th month pay. Also pointed out that Macasio usually
starts his work at 10pm & ends at 2am, that he received fixed amount
of P700/engagement regardless of actual number of hours he spent
chopping & that he was not engaged to report for work & did not
receive any fee when no hogs were delivered. Hence, he claimed that
Macasio was not his employee as he hired him on pakyaw basis. Also,
alleged that he issued the certification of employment upon Macasios
request.
LA Decision: dismissed complaint for lack of merit. Gave credence to
claim that David engaged Macasio on pakyaw or task basis. Also
noted that Macasio received fixed amount of P700 for every work
done, regardless of number of hours that he spent working or the
volume of hogs he had to chop per engagement; that Macasio worked
for only 4 hours; that P700 fixed wage exceeds the prevailing daily
minimum wage.
NLRC affirmed LA ruling. However, CA reversed. Macasio is still
entitled to monetary claims. as a task basis employee, Macasio is
excluded from the coverage of holiday, SIL and 13th month pay only if
he is likewise a "field personnel." A "field personnel" is one who
performs the work away from the office or place of work and whose
regular work hours cannot be determined with reasonable certainty.
Elements are lacking in this case.
Affirmative. David confuses engagement on "pakyaw" or task basis
with the lack of employment relationship. Impliedly, David asserts that
their "pakyawan" or task basis arrangement negates the existence of
employment relationship. No merit to this. Engagement on "pakyaw" or
task basis does not characterize the relationship that may exist
between
contractorship. Art. 97(6), Article 101 LC speaks of workers paid by
results or those whose pay is calculated in terms of the quantity or
quality of their work output which includes "pakyaw" work and other
non-time work.
LA and NLRC denied Macasios claim not because of the absence of
an employer-employee but because of its finding that since Macasio is
paid on pakyaw or task basis, then he is not entitled to SIL, holiday
and 13th month pay. However, existence of an employer-employee
relationship is in fact a non-issue in this case. At any rate, employing
the control test, there is an employer-employee relationship.
First, David engaged the services of Macasio, thus satisfying the
element of "selection and engagement of the employee." In the
Sinumpaang Salaysay, David stated that nag apply po siya sa akin at
kinuha ko siya na chopper. Second, David paid Macasios wages. He
had been paying him P700/day after the latter had finished his days

task. This satisfies the element of payment of wages. Third, David had
been setting the day & time when Macasion should report for work.
This power to determine the work schedule implies power of control.
By having the power to control Macasios work schedule, David could
regulate Macasios work & could even refuse to give him any
assignment. Fourth, David had the right & power to control & supervise
Macasios work as to the means & methods of performing it. Also,
David rents the place where Macasio had been performing his tasks.
Moreover, Macasio would leave the workplace only after he had
finished chopping all of the hog meats given to him for the days task.
Since Macasio performed his tasks at Davids workplace, David could
easily exercise control and supervision over the former. Also, David
would still engage Macasios services and have him report for work
even during the days when only few hogs were delivered for
butchering.
Under this overall setup, all those working for David, including
Macasio, could naturally be expected to observe certain rules and
requirements and David would necessarily exercise some degree of
control as the chopping of the hog meats would be subject to his
specifications. Accordingly, whether or not David actually exercised this
right or power to control is beside the point as the law simply requires
the existence of this power to control or, as in this case, the existence
of the right and opportunity to control and supervise Macasio.
As to pakyaw basis: a distinguishing characteristic of "pakyaw" or
task basis engagement, as opposed to straight-hour wage payment, is
the non-consideration of the time spent in working. In a task-basis
work, the emphasis is on the task itself, in the sense that payment is
reckoned in terms of completion of the work, not in terms of the
number of time spent in the completion of work. Once the work or task
is completed, the worker receives a fixed amount as wage, without
regard to the standard measurements of time generally used in pay
computation.
Macasio would usually start his work at 10pm. Thereafter, regardless
of the total hours that he spent at the workplace or of the total number
of the hogs assigned to him for chopping, Macasio would receive the
fixed amount of P700 once he had completed his task. Clearly, these
circumstances show a "pakyaw" or task basis engagement.
As to entitlement to holiday, 13th month & SIL pay: general rule is that
holiday and SIL pay provisions cover all employees. To be excluded
from their coverage, an employee must be one of those that these
provisions expressly exempt, strictly in accordance with the exemption.
Under the IRR, exemption from the coverage of holiday and SIL pay
refer to "field personnel and other employees whose time and
performance is unsupervised by the employer including those who are
engaged on task or contract basis. The IRR on holiday and SIL pay do
not exclude employees "engaged on task basis" as a separate and
distinct category from employees classified as "field personnel."
Rather, these employees are altogether merged into one classification
of exempted employees.
The payment of an employee on task or pakyaw basis alone is
insufficient to exclude one from the coverage of SIL and holiday pay.
They are exempted from the coverage of Title I (including the holiday
and SIL pay) only if they qualify as "field personnel." The IRR therefore
validly qualifies and limits the general exclusion of "workers paid by
results" found in Article 82 from the coverage of holiday and SIL pay.
The phrase "other employees whose performance is unsupervised by
the employer" must not be understood as a separate classification of
employees to which service incentive leave shall not be granted.
Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those "whose
actual hours of work in the field cannot be determined with reasonable
certainty." The same is true with respect to the phrase "those who are

engaged on task or contract basis, purely commission basis." Said

phrase should be related with "field personnel," applying the rule on
ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow.

workers, working regulations, transfer of employees, work supervision,

lay-off of workers and the discipline, dismissal and recall of work.
Every business enterprise endeavors to increase its profits. In the
process, it may adopt or devise means designed towards that goal.

basis" is entitled to holiday and SIL pay, the presence (or absence) of
employer supervision as regards the workers time and performance is
the key: if the worker is simply engaged on pakyaw or task basis, then
the general rule is that he is entitled to a holiday pay and SIL pay
unless exempted from the exceptions specifically provided under
Article 94 (holiday pay) and Article 95 (SIL pay) of LC. However, if the
worker engaged on pakyaw or task basis also falls within the meaning
of "field personnel" under the law, then he is not entitled to these
monetary benefits.
However, Macasio does not fall under the classification of field
personnel. First, Macasio regularly performed his duties at Davids
principal place of business; second, his actual hours of work could be
determined with reasonable certainty; and, third, David supervised his
time and performance of duties. Since Macasio cannot be considered
a "field personnel," then he is not exempted from the grant of holiday,
SIL pay even as he was engaged on "pakyaw" or task basis.
San Miguel vs. Ople (1989)
ISSUE: WON the new marketing scheme adopted by San Miguel
violates the collective bargaining agreement
17 Apr 78: a collective bargaining agreement was entered into by San
Miguel Corp Sales Force Union & San Miguel Corp, effective on 1 May
78 to 31 Jan 81. Sec. 1 of Art. IV provides: Employees within the
appropriate bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective sales.
Sep 79: SMC introduced a marketing
scheme
known
as
Complementary Distribution System whereby its beer products were
offered for sale directly to wholesalers through SMs slaes offices.
The labor union filed complaint for unfair labor practice in the Ministry
of Labor, with notice of strike. Alleged that the CDS was contrary to the
existing marketing scheme whereby the Route Salesmen were
assigned specific territories within which to sell their stocks of beer,
and wholesalers had to buy beer products from them, not from the
company. Also alleged that the new marking scheme violates Section
1, Article IV of the collective bargaining agreement because the
introduction of the CDS would reduce the take-home pay of the
salesmen and their truck helpers for the company would be unfairly
competing with them.
However, Minister dismissed the notice of strike by the union nothing
in the record as to suggest that the unilateral action of the employer in
inaugurating the new sales scheme was designed to discourage union
organization or diminish its influence, but rather it is undisputable that
the establishment of such scheme was part of its overall plan to
improve efficiency and economy and at the same time gain profit to the
highest. Also found that corollary to the adoption of the assailed
marketing technique is the effort of the company to compensate
whatever loss the workers may suffer because of the new plan over
and above than what has been provided in the collective bargaining
agreement.
Negative. CDS is a valid exercise of management prerogatives. Except
as limited by special laws, an employer is free to regulate, according to
his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, time, place and manner of
work, tools to be used, processes to be followed, supervision of

So long as a company's management prerogatives are exercised in

good faith for the advancement of the employer's interest and not for
the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, Court will uphold them.
San Miguel Corporation's offer to compensate the members of its sales
force who will be adversely affected by the implementation of the CDS
by paying them a so-called "back adjustment commission" to make
up for the commissions they might lose as a result of the CDS proves
the company's good faith and lack of intention to bust their union.
Sonza vs. ABS-CBN (2004)
ISSUE: WON an employer-employee relationship exists
with Mel & Jay Management & Devt Corp, represented by Jose Sonza.
MJMDC agreed to provide Sonzas services exclusively to ABS-CBN
as talent for radio & television. The agreement listed the services
Sonza would render: co-host for Mel & Jay radio program 8-10am MF, co-host for Mel & Jay tv program 5:30-7pm S. ABS-CBN agreed to
pay Sonzas services a monthly talent fee of P310k for first year &
P317k for 2nd & 3rd year.
1 Apr 96: Sonza wrote a letter to ABS-CBN President Lopez, informing
that Mr. Sonza irrevocably resigned in view of recent events
concerning his programs & career.
30 Apr: Sonza filed a complaint against ABS-CBN, alleging that it did
not pay his salaries separation pay, service incentive leave pay, 13th
month pay, signing bonus, travel allowance and amounts due under
the Employees Stock Option Plan.
10 Jul: ABS-CBN filed motion to dismiss on the ground that no
employer-employee relationship existed between them. Meanwhile, it
continued to remit Sonzas monthly talent fees through his account at
PCIB. Also opened new account with same bank where ABS-CBN
deposited Sonzas talent fees & other payments due him.
LAs Decision: Sonza was engaged by ABS-CBN by reason of his
peculiar skills and talent as a TV host and a radio broadcaster. Unlike
an ordinary employee, he was free to perform the services he
undertook to render in accordance with his own style. The benefits
conferred to complainant under the May 1994 Agreement are certainly
very much higher than those generally given to employees. Whatever
benefits Sonza enjoyed arose from specific agreement by the parties
and not by reason of employer-employee relationship. The fact that he
was made subject to respondents Rules and Regulations, likewise,
does not detract from the absence of employer-employee relationship.
NLRC & CAs Rulings: no employer-employee relationship. MJMDC
entered into the contract merely as an agent of Sonza, the principal.
Sonzas contentions: there is employer-employee relationship, such
that LA has jurisdiction over him.
Negative, independent contractorship. First, ABS-CBN engaged
Sonzas services to co-host its television and radio programs because
of Sonzas peculiar skills, talent and celebrity status. 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, ABS-CBN would not have entered into the

Agreement with Sonza but would have hired him through its personnel
department just like any other employee.
Independent contractors often present themselves to possess unique
skills, expertise or talent to distinguish them from ordinary employees.
Second, ABS-CBN directly paid Sonza his monthly talent fees with no
part of his fees going to MJMDC. All the talent fees and benefits paid to
Sonza were the result of negotiations that led to the Agreement. If
Sonza were 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. Whatever benefits
SONZA enjoyed arose from contract and not because of an employeremployee relationship.
Sonzas talent fees, amounting to P317k monthly in the second and
third year, are so huge and out of the ordinary that they indicate more
an independent contractual relationship rather than an employeremployee relationship. ABS-CBN agreed to pay Sonza such huge
talent fees precisely because of Sonzas unique skills, talent and
celebrity status not possessed by ordinary employees. Obviously,
Sonza acting alone possessed enough bargaining power to demand
and receive such huge talent fees for his services. The 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.
Also, the payment of talent fees directly to Sonza and not to MJMDC
does not negate the status of Sonza as an independent contractor. The
parties expressly agreed on such mode of payment.
Third, for violation of any provision of the Agreement, either party
may terminate their relationship. Sonza failed to show that ABS-CBN
could terminate his services on grounds other than breach of contract,
such as retrenchment to prevent losses as provided under labor laws.
During the life of the Agreement, ABS-CBN agreed to pay Sonzas
talent fees as long as agent and Jay Sonza shall faithfully and
completely perform each condition of this Agreement. Even if it
suffered severe business losses, ABS-CBN could not retrench Sonza
because ABS-CBN remained obligated to pay Sonzas talent fees
during the life of the Agreement. This circumstance indicates an
independent contractual relationship between Sonza and ABS-CBN.
CBN still paid him his talent fees. Plainly, ABS-CBN adhered to
itsundertaking in the Agreement to continue paying Sonzas talent fees
during the remaining life of the Agreement even if ABS-CBN cancelled
Sonzas programs through no fault of Sonza.
If it were true that complainant was really an employee, he would
merely resign, instead. Sonza did actually resign from ABS-CBN but he
also, as president of MJMDC, rescinded the Agreement. However, this
is immaterial. Whether Sonza rescinded the Agreement or resigned
from work does not determine his status as employee or independent
contractor.
Fourth, a television program host is an independent contractor,
according to foreign case law (Alberty). Applying control test, Sonza is
not an employee but an independent contractor. The control test is the
most important test our courts apply in distinguishing an employee
from an independent contractor. Test is based on the extent of control
the hirer exercises over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker is deemed an
employee.
ABS-CBN engaged Sonzas services specifically to co-host the Mel &
Jay programs. ABS-CBN did not assign any other work to Sonza. To
perform his work, Sonza only needed his skills and talent. How Sonza

delivered his lines, appeared on television, and sounded on radio were

outside ABS- CBNs control. Sonza did not have to render eight hours
of work per day. The Agreement required Sonza to attend only
rehearsals and tapings of the shows, as well as pre- and postproduction staff meetings. ABS-CBN could not dictate the contents of
Sonzas script. However, the Agreement prohibited Sonza from
criticizing in his shows ABS-CBN or its interests. The clear implication
is that Sonza had a free hand on what to say or discuss in his shows
provided he did not attack ABS-CBN or its interests. ABS-CBNs sole
concern was the quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means and
methods of performance of Sonzas work.
Although ABS-CBN did have the option not to broadcast Sonzas show,
ABS-CBN was still obligated to pay Sonzas talent fees. Thus, even if
ABS- CBN was completely dissatisfied with the means and methods of
Sonzas performance of his work, or even with the quality or product of
his work, ABS-CBN could not dismiss or even discipline Sonza. All that
ABS-CBN could do is not to broadcast Sonzas show but ABS-CBN
must still pay his talent fees in full.
As to contention that there is control over means & methods of his
work: Clearly, ABS-CBNs right not to broadcast Sonzas show,
burdened as it was by the obligation to continue paying in full Sonzas
talent fees, did not amount to control over the means and methods of
the performance of Sonzas work. ABS-CBN could not terminate or
discipline Sonza even if the means and methods of performance of his
work - how he delivered his lines and appeared on television - did not
meet ABS-CBNs approval. This proves that ABS-CBNs control was
limited only to the result of Sonzas work, whether to broadcast the
final product or not. Either case, has to pay talent fees in full.
As to contention that ABS-CBN has control because it supplied all
equipment & crew: However, the equipment, crew and airtime are not
the tools and instrumentalities Sonza needed to perform his job. What
Sonza principally needed were his talent or skills and the costumes
necessary for his appearance.
As to contention that ABS-CBN subjected him to its rules & standards
of performance: The Agreement stipulates that Sonza shall abide with
the rules and standards of performance covering talents of ABS-CBN.
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 refers to the TV & Radio Code of KBP. The KBP code
applies to broadcasters, not to employees of radio and television
stations. Broadcasters are not necessarily employees of radio and
television stations. Clearly, the rules and standards of performance
referred to in the Agreement are those applicable to talents and not to
employees of ABS- CBN.
Not all rules imposed by the hiring party on the hired party indicate
that the latter is an employee of the former. In this case, Sonza failed
to show that these rules controlled his performance. We find that these
general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio
programs that comply with standards of the industry. Not every form of
control that a party reserves to himself over the conduct of the other
party in relation to the services being rendered may be accorded the
effect of establishing an employer-employee relationship.
As to contention that the exclusivity clause in the Agreement is the
most extreme form of control which ABS-CBN exercised over him: no
merit. Being an exclusive talent does not by itself mean that Sonza is
an employee of ABS-CBN. Even an independent contractor can validly
provide

industry, exclusivity is not necessarily the same as control. The hiring

of

studio technician. Their schedule & other assignments were revised.

Gerzon was assigned as full-time PA of TV News Dept.

exclusive talents is a widespread and accepted practice in the

entertainment industry. 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.

12 Oct: respondents filed Complaint for Recognition of Regular

Employment Status, Underpayment of Overtime Pay, Holiday Pay,
Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month
Pay with Damages.

MJMDC was an agent of Sonza. In a labor-only contract, there are

three parties involved: (1) the labor-only contractor; (2) the employee
who is ostensibly under the employ of the labor-only contractor; and (3)
the principal who is deemed the real employer. Under this scheme, the
labor- only contractor is the agent of the principal. The law makes the
principal responsible to the employees of the labor-only contractor as if
the principal itself directly hired or employed the employees. These
circumstances are not present in this case.

Respondents allegations: they were employed as regular & full-time

employees for continuous period of more than 5 years with monthly
salary of P4k. They insisted that they belonged to a work pool from
which ABS- CBN chose persons to be given specific assignments at its
discretion, & were thus under its direct supervision & control. They
pray that they be declared as regular & permanent employees as
condition precedent for their admission into the union.

MJMDC merely acted as Sonzas agent. The records do not show that
MJMDC acted as ABS-CBNs agent. It is absurd to hold that MJMDC,
which is owned, controlled, headed and managed by Sonza, acted as
agent of ABS-CBN in entering into the Agreement with Sonza, who
himself is represented by MJMDC. That would make MJMDC the
agent of both ABS- CBN and Sonza. MJMDC is a management
company devoted exclusively to managing the careers of Sonza and
his broadcast partner, Tiangco. MJMDC is not engaged in any other
business, not even job contracting.
Again, talents are independent contractors. The right of labor to
security of tenure as guaranteed in the Constitution arises only if there
is an employer-employee relationship under labor laws. Not every
performance of services for a fee creates an employer-employee
relationship. If radio and television program hosts can render their
services only as employees, the station owners and managers can
dictate to the radio and television hosts what they say in their shows.
This is not conducive to freedom of the press.
Lastly, Sonzas claims are all based on the May 1994 Agreement and
stock option plan, and not on the Labor Code. Clearly, the present
case does not call for an application of the Labor Code provisions but
an interpretation and implementation of the May 1994 Agreement.

ABS-CBNs contentions: respondents were PAs who basically assist in

the conduct of a particular program ran by an achor or talent. They
perform leg work. Hence, they are considered as program employees
since they are basically engaged by the station for a particular or
specific program broadcasted by the radio station. Maintained that
PAs, reporters, anchors & talents occasionally sideline for other
programs they produce. As program
employees,
a
PAs
engagement is coterminous with the
provided that the program is on-going; a PA may also be assigned to
newprograms upon the cancellation of one program and the
commencement of another. As such, their compensation is computed
on a program basis,
a fixed amount for performance services
irrespective of the time consumed.
NLRCs Ruling: respondents were entitled to the benefits under the
CBA because they were regular employees who contributed to the
profits of petitioner through their labor.
Where a person has rendered at least one year of service, regardless
of the nature of the activity performed, or where the work is continuous
or intermittent, the employment is considered regular as long as the
activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained
regular status. (See: Art. 280 LC)

ABS-CBN vs. Nazareno (2006)

ISSUE: WON an employer-employee relationship exists
ABS-CBN employed Nazareno, Gerzon, Deiparine & Lerasan as
production assistants on different dates. They were assigned at the
news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation of P4k. They were
issued ABS-CBN employees IDs and were required to work for a
minimum of eight hours a day, including Sundays and holidays. Their
tasks includes: preparing & arranging the airing of commercial
broadcasting, coordinating & arranging personalities for air interviews,
coordinating & preparing schedule of reporters for scheduled news
reporting, among others.
They were under the control & supervision of Asst. Station Manager
Dante Luzon & News Manager Leo Lastimosa.
19
Dec 96: ABS-CBN & Rank-and-file employees executed a
Collective Bargaining Agreement to take effect during 11 Dec 96 to 11
Dec 99. However, ABS-CBN refused to recognize PAs as part of the
bargaining unit, respondents were not included in the CBA.
20
Jul 00: ABS-CBN through Luzon issued a Memorandum
informing PAs that effective 1 Aug, they would be assigned to nondrama programs & that DYAB studio operations would be handled by

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.
Not considered regular employees are "project employees," the
completion or termination of which is more or less determinable at the
time of employment and "seasonal employees" whose employment by
its nature is only desirable for a limited period of time. Even then, any
employee who has rendered at least 1 year of service, whether
continuous or intermittent, is deemed regular with respect to the
activity performed & while such activity actually exists.
Affirmative. Of no moment that ABS-CBN hired respondents as
"talents." The fact that respondents received pre-agreed "talent fees"
instead of salaries, that they did not observe the required office hours,

and that they were permitted to join other productions during their free
time are not conclusive of the nature of their employment.
Respondents cannot be considered "talents" because they are not
actors or actresses or radio specialists or mere clerks or utility
employees. They are regular employees who perform several different
duties under the control and direction of ABS-CBN executives and
supervisors.
Two kinds of regular employees: (1) those engaged to perform
activities which are necessary or desirable in the usual business or
trade
of the employer; and (2) 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.
What determines whether a certain employment is regular or otherwise
is not the will or word of the employer, to which the worker oftentimes
acquiesces, much less the procedure of hiring the employee or the
manner of paying the salary or the actual time spent at work. It is the
character of the activities performed in relation to the particular trade or
business taking into account all the circumstances, and in some cases
the length of time of its performance and its continued existence. It is
obvious that one year after they were employed by ABS-CBN,
respondents became regular employees by operation of law.
Respondents cannot be considered as project or program employees
because no evidence was presented to show that the duration and
scope of the project were determined or specified at the time of their
engagement. Under existing jurisprudence, project could refer to two
distinguishable types of activities. First, a project may refer to a
particular job or undertaking that is within the regular or usual business
of the employer, but which is distinct and separate, and identifiable as
such, from the other undertakings of the company. Second, the term
project may also refer to a particular job or undertaking that is not
within the regular business of the employer. Such a job or undertaking
must also be identifiably separate and distinct from the ordinary or
regular business operations of the employer.
The principal test 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. Respondents had continuously performed the
same activities for an average of five years. Their assigned tasks are
necessary or desirable in the usual business or trade of ABS-CBN.
While length of time may not be a sole controlling test for project
employment, it can be a specific undertaking or in fact tasked to
perform functions which are vital,necessary and indispensable to the
usual trade or business of the employer.

Fourth. The degree of control and supervision exercised by ABS-CBN

over respondents through its supervisors negates the allegation that
respondents are independent contractors.
Ergo, respondents are entitled to the benefits provided for in the
existing CBA between ABS-CBN and its rank-and-file employees. As
regular employees, respondents are entitled to the benefits granted to
all other regular employees of ABS-CBN under the CBA.
A collective bargaining agreement is a contract entered into by the
union representing the employees and the employer. However, even
the non-member employees are entitled to the benefits of the contract.
It is binding on all employees of the company. Therefore, whatever
benefits are given to the other employees of ABS-CBN must likewise
be accorded to private respondents who were regular employees of
ABS-CBN. Besides, only talent-artists were excluded from the CBA
and not production assistants who are regular employees of the
respondents.
Murillo vs. CA (2007)
ISSUE: WON an employer-employee relationship exists
2 Oct 95: Associated Broadcasting Company hired Thelma DumpitMurillo as newscaster & co-anchor for Balitang-Balita. Contract was for
period of 3 months. It was renewed 4x. in addition, Murillos services
were engaged for the program Live on Five.
30 Sep 99: after 4 yrs of repeated renewals, Murillos talent contract
expired. Two weeks after the expiration of last contract, Murillo sent
letter to Mr. Javier, VP for News & Public Affairs of ABC, informing the
latter that she was still interested in renewing her contract subject to
salary increase. Thereafter, she stopped reporting for work.
5 Nov: Murillo wrote Mr. Javier another letter, reiterating request of
terms & conditions for her renewal & said that if she should not receive
any formal response, she will deem it as constructive dismissal.
Month later, Murillo sent demand letter to ABC
demanding
reinstatement to her former position, payment of unpaid wages for
services rendered, payment of 13th month pay, vacation/sick/service
incentive leaves & other monetary benefits due to a regular employee.
ABC replied that a check covering her talent fees for Sep 16-Oct 20
had been processed but her other claims had no basis in fact or law.
20 Dec: Murillo filed a complaint.

Program employees, or project employees, are different from

independent contractors because in the case of the latter, no
employer- employee relationship exists. In this case, there is an
employer-employee relationship.

LA dismissed. NLRC reversed, holding that there was an employeremployee relationship.

First. In the selection and engagement of respondents, no peculiar or

unique skill, talent or celebrity status was required from them because
they were merely hired through ABS-CBNs personnel department just
like any ordinary employee.

Affirmative. Murillo was a regular employee under contemplation of

law. The practice of having fixed-term contracts in the industry does
not automatically make all talent contracts valid and compliant with
labor law. The assertion that a talent contract exists does not
necessarily prevent a regular employment status.

Second. The so-called "talent fees" of respondents correspond to

wages given as a result of an employer-employee relationship.
Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.
Third. ABS-CBN could always discharge respondents should it find
their work unsatisfactory, and respondents are highly dependent on the
ABS- CBN for continued work.

Note that Sonza case is not applicable here. ABC had control over the
performance of Murillos work. Noteworthy too, is the comparatively
low P28k monthly pay of Murillo vis the P300k a month salary of
Sonza, that all the more bolsters the conclusion that Murillo was not
in the same situation as Sonza.
The contract of employment of Murillo with ABC stipulated her duties &
responsibilities render services as newscaster, be involved in newsgathering operations, participate in live remote coverages, be available
for any other news assignment, attend production meetings, among

others. Also stipulated that Murillo agrees that she will promptly comply
with the rules & regulations of ABC, KBP, etc.
The duties of Murillo as enumerated in her employment contract
indicate that ABC had control over her work. Aside from control, ABC
also dictated the work assignments and payment of her wages. ABC
also had power to dismiss her. All these being present, clearly, there
existed an employment relationship between Murillo and ABC.
Also mentioned the two kinds of employees.
Requisites for regularity of employment have been met. Murillos work
was necessary or desirable in the usual business or trade of the
employer which includes, as a pre-condition for its enfranchisement, its
participation in the governments news and public information
dissemination. In addition, her work was continuous for a period of
four years. This repeated engagement under contract of hire is
indicative of the necessity and desirability of the petitioners work in
private respondent ABCs business.
As to contention that contract was characterized by a valid fixedperiod employment: negative. For such contract to be valid, it should
be shown that the fixed period was knowingly and voluntarily agreed
upon by the parties. There should be no force, duress or improper
pressure brought to bear upon the employee. It should satisfactorily
appear that the employer and the employee dealt with each other on
more or less equal terms with no moral dominance being exercised by
the employer over the employee. Moreover, fixed-term employment will
not be considered valid where, from the circumstances, it is apparent
that periods have been imposed to preclude acquisition of tenurial
security by the employee.
It does not appear that employer & employee dealt with each other on
equal terms. Murillo could not object to the terms of her employment
contract because she did not want to lose the job that she loved and
the workplace that she had grown accustomed to which is exactly what
happened when she finally manifested her intention to negotiate. She
was left with no choice but to affix her signature of conformity on each
renewal of her contract as already prepared by ABC. Otherwise, SBC
would have simply refused to renew her contract.
ABCs practice of repeatedly extending Murillos 3-mo contract for 4
years is a circumvention of the acquisition of regular status. Hence, no
valid fixed-term employment. Murillo is entitled to security of tenure.
Hence, there was illegal dismissal.
EXCLUDED EMPLOYEES
National Sugar vs. NBSR (1993)
ISSUE: WON the supervisory employees are considered as officers or
members of the managerial staff who are exempt from covering of Art.
82
National Sugar Refineries Corp operates 3 sugar refineries located in
Bukidnon, Iloilo & Batangas. The Batangas refinery was privatized on
11 Apr 92 pursuant to Proc. No. 50. NBSR Supervisory Union
represents the former supervisors of NASUREFCO Batangas Sugar
Refinery.
1 Jun 88: NASUREFCO implemented a Job Evaluation Program
affecting all employees, from rank-and-file to department heads. Jobs
were ranked according to effort, responsibility, training and working
conditions and relative worth of the job. As a result, all positions were
re-evaluated & all employees including the members of NBSR were
granted salary adjustments & increases in benefits commensurate to
their actual duties.

About 10 yrs prior to the JE Program, members of NBSR were treated

in the same manner as rank-and-file employees. As such, they used to
be paid overtime, rest day & holiday pay. But with the implementation
of the Program, adjustments were made: 1) members of NBSR were
re-classified under levels S-5 to S-8 which are considered managerial
staff for purposes of compensation & benefits, 2) increase in basic pay,
3) longevity pay was increased, 4) entitled to increased company
COLA, 5) P100 allowance.
20 Jun 90: members of NBSR fied a complaint with LA for
payment of overtime, rest day & holiday pay.

non-

NASUREFCOs contentions: while the members of respondent union,

as supervisors, may not be occupying managerial positions, they are
clearly officers or members of the managerial staff because they meet
all the conditions prescribed by law. For purposes of forming unions,
certification elections, collective bargaining, and so forth, the union
members are supervisory employees. In terms of working conditions
and rest periods and entitlement to the questioned benefits, however,
they are officers or members of the managerial staff, hence they are
not entitled thereto.
Affirmative. While the Constitution is committed to the policy of social
justice and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided in
favor of labor. Management also has its own rights. In determining
whether an employee
the work performed, rather than the title of the employee's position.
Cursory perusal of the Job Value Contribution Statements of the union
members will show that these supervisory employees are under the
direct supervision of their respective department superintendents and
that generally they assist the latter in planning, organizing, staffing,
directing, controlling communicating and in making decisions in
attaining the company's set goals and objectives. They are responsible
for the effective and efficient operation of their respective departments.
Hence, they discharge duties and responsibilities which ineluctably
qualify them as officers or members of the managerial staff.
Sec. 2, Rule I, Bk III, IRR: (1) their primary duty consists of the
performance of work directly related to management policies of their
employer; (2) they customarily and regularly exercise discretion and
independent judgment; (3) they regularly and directly assist the
managerial employee whose primary duty consist of the management
of a department of the establishment in which they are employed (4)
they execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; (5)
they execute, under general supervision, special assignments and
tasks; and (6) they do not devote more than 20% of their hours worked
in a work-week to activities which are not directly and clearly related to
the performance of their work hereinbefore described.
Therefore, they are exempt from the coverage of Art. 82 & not entitled
to overtime, rest day & holiday pay.
As to alleged voluntary employer practice: the members of NBSR were
paid the questioned benefits for the reason that, at that time, they were
rightfully entitled thereto. Prior to the JE Program, they could not be
categorically classified as members/officers of the managerial staff
considering that they were then treated on the same level as rank-andfile. Hence, there is no voluntary employer practice. To be considered
as such, it should have been practiced over a long period of time, and
must be shown to have been consistent and deliberate.
With their promotion, they are no longer entitled to the benefits. if the
union members really wanted to continue receiving the benefits which
attach to their former positions, there was nothing to prevent them from

refusing to accept their promotions and their corresponding benefits.

Also, there is no showing that the JE Program was intended to
circumvent the law & deprive the members of NBSR of the benefits
they used to receive.
Union of Filipino vs. Vivar (1992)
ISSUE: WON the sales personnel are entitled to holiday pay

8 Nov 85: Filipro, Inc. (now Nestle) filed with NLRC a petition for
declaratory relief seeking a ruling on its rights & obligations respecting
claims of its monthly paid employees for holiday pay.

purpose of this schedule is merely to ensure that the sales personnel

are out of the office not later than 8am and are back in the office not
earlier than 4pm. Court fails to see how the company can monitor the
number of actual hours spent in field work by an employee through the
imposition of sanctions on absenteeism contained in the company
circular.
As to contention that the fact that they are given incentive bonus every
quarter based on performance is proof that their actual hours of work
can be determined: sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of
field work. These employees are evaluated by the result of their work
and not by the actual hours of field work which are hardly susceptible
to determination.

2 Jan 80: Abitrator Vivar rendered a decision, ordering Filipro to pay its
monthly paid employees holiday pay pursuant to Art. 94 LC, subject to
exclusions specified in Art. 82.

San Miguel vs. Democratic (1963) ISSUE:

Filipro filed motion for clarification seeking, among others, the

exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (sales personnel) from
award of the holiday pay.

company to go on their respective sales routes at 7am for soft drink

trucks or 8am for beer trucks. They do not have a daily time record.

Union of Filipro Employees contention: their sales personnel are not

field personnel & are therefore, entitled to holiday pay.
Filipros contentions: they are field employees. The period between
8am to 4/4:30pm comprises the sales personnels working hours which
can be determined with reasonable certainty.
Affirmative. The controversy centers on the interpretation of the clause
"whose actual hours of work in the field cannot be determined with
reasonable certainty." Undisputed that these sales personnel start their
field work at 8am after having reported to the office and come back to
the office at 4pm or 4:30pm if they are Makati-based.
The requirement for the salesmen and other similarly situated
employees to report for work at the office at 8am and return at
4/4:30pm is not within the realm of work in the field as defined in the
Code but an exercise of purely management prerogative of providing
administrative control over such personnel. This does not in any
manner provide a reasonable level of determination on the actual field
work of the employees which can be reasonably ascertained. Actual
field work begins after 8am, when the sales personnel follow their field
itinerary, and ends immediately before 4/4:30pm when they report back
to their office. The period between these hours comprises their hours
of work in the field, the extent or scope and result of which are subject
to their individual capacity and industry and which "cannot be
determined with reasonable certainty."

After morning roll call, employees of SMB leave the plant of the

Their sales routes are so planner that they can be completed within 8
hrs at most, or that the employees could make their sales on their
routes within such number of hours. The moment these outside or field
employees leave the plant and while in their sales routes they are on
their own, and often times when the sales are completed, or when
making short trip deliveries only, they go back to the plant, load again,
and make another round of sales. The amount of compensation they
receive is uncertain depending upon their individual efforts or industry.
Besides monthly salary, they are paid sales commission.
27 Jan 55: Democratic Labor Assoc. filed complaint against San
Miguel Brewery, Inc. embodying 12 demands for the betterment of the
conditions of employment of its members.
SMBs contentions: since employees are paid a commission on the
sales they make outside the requires 8 hrs beside their fixed salary,
they do not need to be paid overtime compensation for the reason that
the commission they are paid already takes the place of overtime pay.

field cannot be determined with reasonable certainty" must be read in

Tenable. Eight-Hour Labor Law only has application where an

employee or laborer is paid on a monthly or daily basis, or is paid a
monthly or daily compensation, in which case, if he is made to work
beyond the requisite period of 8 hours, he should be paid the additional
compensation prescribed by law. This law has no application when the
employee or laborer is paid on a piece-work, "pakiao", or commission
basis, regardless of the time employed. The philosophy behind this
exemption is that his earnings in the form of commission based on
the gross receipts of the day. His participation depends upon his
industry so that the more hours he employs in the work the greater
are his gross returns and the higher his commission.

conjunction with Rule IV, Book III, IRR (field personnel and other
employees whose time and performance is unsupervised by the
employer).

Insofar as the extra work they perform are concerned, they can be
considered as employees paid on piece work, "pakiao", or commission
basis. Hence, they are not entitled to overtime compensation.

As to contention that companys sales personnel are supervised shown

SMBs contentions: watchmen & security guards are not entitled to

extra pay for work done during these days because they are paid on a
monthly basis and are given one day off which may take the place of
the work they may perform either on Sunday or any holiday.

by the Supervisor of the Day schedule & company circular: The clause
"whose time and performance is unsupervised by the employer" did
not amplify but merely interpreted and expounded the clause "whose
actual hours of work in the field cannot be determined with reasonable
certainty." Hence, query must be made as to whether or not such
employee's time and performance is constantly supervised by the
employer.
The SOD schedule adverted to by Filipro does not in the least signify
that these sales personnel's time and performance are supervised. The

Untenable. Section 4 of CA 444 expressly provides that no person, firm

or corporation may compel an employee or laborer to work during
Sundays and legal holidays unless he is paid an additional sum of 25%
of his regular compensation. This proviso is mandatory, regardless of
the nature of compensation. The only exception is with regard to
public utilities who perform some public service.

Cadiz vs. Phil Sinter (1979)

Los contentions: Dela Cruz was a managerial employee hence, not

entitled to his money claims.

House personnel hired by a ranking company official, a foreigner, but

Rosales vs. Tan (1979)

Negative. A managerial employee is therefore excluded from the

coverage of the law as regards conditions of employment which
include hours of work, weekly rest periods, holidays, service incentive
leaves and service charges. As chief patron, albeit an unlicensed one,
Dela Cruz was tasked to take complete charge & command of the
vessel and perform the responsibilities and duties of a ship captain.
Hence, he is exempted from payment of overtime pay, premium pay for
holidays & rest days & service incentive leave pay.

(cited in Azucena)

HOURS OF WORK

Waiters of a hotel do not fall under the term domestic servants and
persons in the personal service of another nor under the terms farm
laborers, laborers who prefer to be paid on piece work basis and
members of the family of the employer working for him. Therefore,
they do not fall within any of the exceptions provided for in Sec. 2, CA
44 and their work is within the scope of the Eight-Hour Labor Law.

Hours Worked

Dela Cruz vs. NLRC (1998)

At the Natl Devt Co, there were 4 shifts of work 8am-4pm, 6am-2pm,

ISSUE: WON Dela Cruz, as chief patron, is entitled to his money

claims

2pm-10pm, 10pm-6am. In each shift, there was a one-hr mealtime

period. Records disclose that although there was a 1-hr mealtime,
NDC nevertheless credited the workers with 8 hrs of work for each shift
and paid them for the same number of hours. However, since 53,
whenever workers in one shift were required to continue working until
the next shift, NDC instead of crediting them with 8 hrs of overtime
work, has been paying them for 6 hrs only.

paid for by the company itself, to maintain a staff house provided for
the official, are not the latters domestic helpers but regular employees
of the company.

Rolando Dela Cruzs allegations: he started working with Emmanuel Lo

in Jun 88 as ordinary crew & received wages in cash from the share of
the catch of the fishing boat. On Jan 89, he was promoted to light boat
operator & his wages were increased. On Mar 89, he was again
promoted to second patron until Nov 89, when he became a fullpledged patron (captain) of Los fishing boat known as M/DCA Sheenly
Joy. As captain, he received a monthly salary of P450 and 10 shares of
the fish catch plus P2/fish box commission. But on 2 Dec 90,
Emmanuel Lo dismissed Dela Cruz without notice & separation pay.
He alleged that Lo was the one who hired him, the one who made all
the job promotions, paid the salaries & dismissed him. He also alleged
that Lo directed personally the fishing operation, where to send the
light boat, where to fish and when to go ashore. In other words, he had
complete control of his fishing boat, the officers and crew.
Los contentions: he had no participation whatsoever in so far as the
decision when to go out is concerned; that his only obligation is to
provide for fuel and oil and the equipment needed by the crew; that
Dela Cruz was not paid any salary and his compensation consist only
of his share in the catch of the fishing vessel every time it goes out
fishing; that the fishing vessel does not go out everyday nor the whole
year round. Basically, that they had no employer-employee
relationship. Rather, their undertaking is one of joint venture with him
as boat owner, supplying the boat and its equipment and Dela Cruz
and the crew members contributing necessary labor and the parties
getting specific shares for their contributions.
As to existence of employer-employee relationship: Lo gave orders to
set sail & the patron and crew would merely obey. Lo had been in the
fishing business for years. He first had only one boat. He infused
hundreds of thousands, if not millions, as capital in the business and
caused the acquisition of 2 more boats. This simply means that he is
knowledgeable about the deep sea fishing business. Indeed, it is
foolhardy for a businessman to invest this kind of money in a fishing
boat and let somebody operate it without him exercising at the least
the right to control the manner its going to be used in the work to be
done although not actually exercising such right. Hence, there is
control.
As to illegal dismissal, unfair labor practice & other money claims:
dismissal was not justified hence, there is illegal dismissal.

NDC vs. CIR (1962)

ISSUE: WON the mealtime breaks of the Union members should be
considered working time

CIR Judge Martinez held that mealtime should be counted in the

determination of overtime work & ordered NDC to pay P101,407.96 by
way of overtime compensation.
NDCs contentions: the 2 hrs corresponding to the mealtime periods
should not be included in computing compensation. Also alleged that
CIR lost jurisdiction over the claims for overtime pay upon the
enactment of the Industrial Peace Act (RA 875).
National Textile Workers Union: should be counted & asked for CIR to
order payment of additional overtime pay corresponding to mealtime
periods.
Affirmative. Sec. 1, CA 444: The legal working day for any person
employed by another shall be of not more than eight hours daily.
When the work is not continuous, the time during which the laborer is
not working and
can leave his working place and can rest
completely shall not be counted.
Under the law, the idle time that an employee may spend for resting
and during which he may leave the spot or place of work though not
the premises of his employer, is not counted as working time only
where the work is broken or is not continuous. However, no general
rule can be laid down as to what constitutes compensable work, rather
the question is one of fact depending upon particular circumstances, to
be determined by the controverted in cases.
In the case at bar, the work in NDC was continuous and did not permit
employees & laborers to rest completely. Their time cards show that
the work was continuous & without interruption. Employees cannot
freely leave their workplace nor rest completely. Furthermore, the
computation of the work was on a 24-hr basis & is divided into shifts.
Hence, mealtime breaks should be counted as working time for
purposes of overtime compensation.
As to issue on jurisdiction: For such jurisdiction of CIR to come into
play, the following requisites must be complied with: a) there must exist
between the parties an employer-employee relationship or the claimant

must seek his reinstatement; and b) the controversy must relate to a

case certified by the President to the CIR as one involving national
interest, or must arise either under the Eight-Hour Labor Law, or under
the Minimum Wage Law. In default of any, the claim becomes a mere
money claim that comes under the jurisdiction of the regular courts.
NDC does not deny the existence of an employer-employee
relationship between it & the members of the union. Therefore, CIR
has jurisdiction.
Pan American vs. Pan American Employees (1961)
ISSUE: WON the 1-hr meal period should be counted as overtime
work Pan American Employees Assoc. filed a complaint against Pan
American
World Airways System. CIR ordered the company to permanently
adopt the straight 8-hr shift inclusive of meal period which is mutually
beneficial to the parties.
Pan Americans contentions: the 1-hr meal period should not
considered as overtime work (after deducting 15 minutes) because the
evidence showed that the employees could rest completely & were not
in any manner under the control of the company during that period.
Affirmative. It was found that during the so called meal period, the
mechanics were required to stand by for emergency work; that if they
happened not to be available when called, they were reprimanded by
the leadman; that as in fact it happened on many occasions, the
mechanics had been called from their meals or told to hurry
Employees Association up eating to perform work during this period.
The Industrial Court's order for permanent adoption of a straight 8-hour
shift including the meal period was but a consequence of its finding
that
the meal hour was not one of complete rest, but was actually a
work hour, since for its duration, the laborers had to be on ready call.
Of course, if the Company practices in this regard should be modified
to afford the mechanics a real rest during that hour (ex., by
installing an entirely different emergency crew, or any similar
arrangement), then the modification of this part of the decision may
be sought from the Court.
As to issue on jurisdiction: CIR may properly take cognizanceof cases
if, at the time of the petition, the complainants were still in the service
of the employer, or, having been separated from such service, should
ask for reinstatement; otherwise, such claims should be brought before
the regular courts.
In the case at bar, there is no question that the employees claiming
overtime compensation were still in the service of the company when
the case was filed. Hence, CIR has jurisdiction.
Lectures, Meetings, Training Programs
PRISCO vs. CIR (1960)
ISSUE: WON the additional 1-hr for briefing of the security guards
should be counted as hours worked, hence entitled to overtime pay
The security guards of PRISCO have been employed & required to
observe a 24-hr guard duty divided into 3 shifts of 8 hrs each.
15 Apr 53: the Assistant Chief Security Officer of PRISCO, acting for
the Chief Security Officer, issued a Memorandum, directing the
security guards to report for duty 2 hrs in advance of the usual time (1hr for briefing, according to Azucena) for guard work.

Pursuant thereto, the security guards had been rendering such

overtime work until 13 Jan 54 when the order was revoked after a
change of management.
15 Feb 55: PRISCO Workers Union filed with CIR a petition, praying
that PRISCO be ordered to pay its present employees their basic pay
& at least 25% additional compensation for 1 hr overtime work they
had previously rendered as security guards of PRISCO from 17 Apr 53
to 13 Jan 54, and the additional compensation of at least 25% for the
work they have been rendering on Sundays & legal holidays from 7
Mar 54.
PRISCOs Answer: it denied the claim for payment of 1-hr overtime
work, asserting that such overtime, if rendered, was not authorized.
That although some of claimants had rendered work on Sundays &
legal holidays, they had already been paid.
27 Dec 57: CIR issued an order requiring PRISCO to pay the
claimants. PRISCOs contentions: CIR had no jurisdiction. The
Memorandum ordering the claimants to render extra work was void for
being issued
without authority. Hence, it is not bound to pay for the alleged overtime.
Affirmative. Shortly after the enforcement of the memorandum, the
security guards protested to the management of PRISCO. However,
instead of revoking said memorandum on the ground that it was
unauthorized by the management, General Manager De la Cruz told
the security guards that the reason why it was being enforced, was to
discipline them and that their work was only light and that 1 hour was
of no importance. This is viewed as tacit ratification of the
memorandum, on the part of the officials who had the power to validly
act for it.
The services rendered outside of the regular working hours partake the
nature of overtime work. In this case, the security guards were directed
to report for duty one hour in advance of the usual time for guard work
for briefing purposes. (cited by Azucena)
No question that a contract of employment exists between PRISCO &
the security guards, and that pursuant to the terms of the
memorandum, the latter are to render 8 hrs labor. When PRISCO's
official required them to render an additional hour work, and the
security guards had to comply (as non-compliance was punishable and
actually
punished
with
disciplinary action), a supplemental
contractual obligation was created.
As to jurisdiction: where the employer-employee relationship is still
existing or is sought to be reestablished because of its wrongful
severance (as where the employee seeks reinstatement), the Court of
Industrial Relations has jurisdiction over all claims arising out of, or in
connection with employment, such as those related to the Minimum
Wage Law and the Eight-Hour Labor Law. After the termination of the
relationship and no reinstatement is sought, such claims becomes
mere money claims, and come within the jurisdiction of the regular
courts.
Hence, CIR has jurisdiction in this case.
Semestral Break
Sibal vs. Notre Dame (1990)
ISSUE: WON Sibal is entitled to compensation for during semestral
break Delia Sibal was employed as school nurse by Notre Dame of
Greater

Manila starting Jan 73. Prior to SY 76-77, she was compensated on a

12-mo basis, although she worked only during the 10-mo period of
classes. She was not required to report for work for the entire
Christmas & summer vacations.
10 Mar 76: Notre Dame director Fr. Enrique Gonzales requested her
to shorten her summer vacation, from 2 weeks after the last day of
classes to 2 weeks before the first day of classes. Sibal acceded.
Sometime Apr 80: Fr. Gonzales required her to report during that
summer to help in the library. In a letter, Sibal contested the order,
stating that it will necessitate a change in the terms & conditions of her
employment & that library work is alien to her profession as nurse.
Nov 80: Fr. Gonzales was replaced by Fr. Pablo Garcia, an American,
as new director. He required Sibal to report for work during the summer
but Sibal informed him that her contract does not require her to report
for work during summer vacation. SIbal, then, filed leaves of absences
but failed to receive her vacation pay.
During SY 81-82, Sibal was assigned to teach health subjects to 900
students spread out in 19 sections of the entire HS Dept. however, she
was not given compensation for teaching, notwithstanding the fact that
other teachers were duly compensated for extra work done.
Dec 81: Sibal received her 13th month pay which was computed on
the basis of a 10mo period only.
5 Apr 82: Fr. Garcia again required Sibal to work during the summer to
update all the clinical records of the students but she objected,
reiterating the contract. She also reminded Fr. Garcia that she had not
received any compensation for teaching health subjects the past
school year. Fr. Garcia replied in a letter, stating that she was not
entitled to extra compensation for teaching because teaching was
allegedly part of her regular working program as school nurse.
Again, Sibal called the attention of Fr. Garcia to the schools failure to
pay her salary for the summer of 81 & of the deficiency in her 13th
month pay. However, Fr. Garcia refused to consider Sibals demands &
threatened to take drastic measures against her.
10 May 82: failing to receive compensation demanded, Sibal filed a
complaint for non-payment of vacation pay for 4 summer months,
compensation for teaching health subjects, deficiency in 13th month
pay.
When Sibal reported for work, Notre Dame served her letter of
termination effective immediately & it also submitted a copy of the
termination paper to the Ministry of Labor & Employment.
The following day, Sibal amended her complaint,
dismissal and unfair labor practice charges.

adding

illegal

8 Sep 83: Fr. Garcia was eventually replaced, in view of the charges
against him by more than 20 teachers & personnel, as well as Faculty.
Notre Dames contentions: Sibal is not entitled to compensation for
teaching health subjects allegedly because she taught during her
regular working hours & that subject Health was allied to her
profession as nurse.

Affirmative. Semestral breaks may be considered as "hours worked"

under the IRR of Labor Code and that regular professors and teachers
are entitled to ECOLA during the semestral breaks, their "absence"
from work not being of their own will.

Sibal is entitled to compensation for teaching health subjects. Although

the subject taught is Health and allied to her profession, and is taught
during regular working hours, Sibal's teaching the subject in the
classroom and her administering to the health needs of students in the
clinic involve two different and distinct jobs. Hence, should be paid
compensation.
Sibal has established that in several precedents, non-teaching
personnel of respondent school who were made to handle teaching
jobs were actually paid actual compensation. Extra pay for extra work
should be applied.
As to illegal dismissal: LA found that the termination of Sibal was not
supported by any just cause or reason. Hence, there is illegal
dismissal. One's employment, profession, trade or calling is a "property
right", and the wrongful interference therewith is an actionable wrong.
While it is true that it is the sole prerogative of the management to
dismiss or lay-off an employee, the exercise of such a prerogative,
however, must be made without abuse of discretion, for what is at
stake is not only Sibals but also her means of livelihood.
As to moral damages: Sibal had been the subject of discrimination for
over a year before she was ultimately dismissed. When she justifiably
refused to obey the order to report for work for two summers, she was
not
and dentist who worked in the same clinic, were not required to report
during summer and were given their respective vacation pay. Again,
Sibal, unlike the teachers who accepted extra load, was not given extra
compensation when she taught health subjects to 900 students for one
year. By withholding such compensation, Notre Dame stood to gain at
the expense of Sibal, the amount of salary which it could have paid to
2 teachers.
Wherefore, Notre Dame is ordered to reinstate Sibal to her former
position without loss of seniority rights & with backwages for 3 yrs from
the time of her illegal dismissal, to pay her regular extra compensation
relative to teaching health subjects & to pay moral damages.
Work Hours of Seamen Soriano vs. Phil. Rock (1956)
(cited in Azucena)
The fact that the tugboat was navigated 4 hours beyond 5pm does not
necessarily mean that during those days the appellee performed
service beyond 8 hrs. his presence on board more than 8 hours a day
might have been required by the nature of his service, but there is no
specific evidence that he had been working all that time. It was not
absolutely necessary for him to be continuously attending to the motor
of the tugboat. He could leave the motor during part of said time and
get rested completely. He had an assistant who could watch it and
inform him of whatever disorder may develop therein. The fact that he
was subject to call in case some disorder may develop in the motor
does not necessarily mean he was working.
Luzon Stevedoring vs. Luzon Marine (1957)
ISSUE: WON the 20 min break after mealtime given to the laborers
should be counted as working hours
21 Jun 48: Luzon Marine Dept Union filed a petition with CIR
containing several demands against Luzon Stevedoring, among
which were the petition for full recognition of the right of collective
bargaining, close shop & check off.
18 Jul 48: while case was still pending, said union declared a strike
which was ruled down as illegal by the Court.

Union filed another petition, praying that the remaining unresolved

demands of the Union presented in original petition be granted.
Trial Court findings: Luzon Stevedoring gave its employees 3 free
meals every day & about 20 minutes of rest after each mealtime. They
worked from 6am to 6pm every day including Sundays & holidays. For
work performed in excess of 8 hrs, the officers, patrons & radio
operators were given overtime pay in the amount of P4 each & P2
each for the rest of the crew up to Mar 47. After said date, these
payments were increased to P5 & P2.50 until the time of their
separation or the strike of 19 Jul 48. When the tugboats underwent
repairs, their personnel worked only 8 hrs a day excluding Sundays &
holidays. Although there was an effort on the part of the claimants to
show that some had worked beyond 6pm, evidence was uncertain &
indefinite. Also, the company, by nature of its business is considered a
public service operator & therefore, exempt from paying additional
remuneration or compensation for work performed on Sundays and
legal holidays, pursuant to Sec. 4, CA 444.
Luzon Marines contentions: members of the union who had rendered
services from 6am-6pm were entitle to 4 hrs overtime pay & that the
time allotted to the taking of their meals should not be deducted from
the 4 hrs of overtime rendered by said employees. Also that the 20
minutes rest given to them after mealtime should not be deducted.
Luzon Stevedorings contentions: although the seamen concerned
stayed in it's tugboats, or merely within its compound, for 12 hours, yet
their work was not continuous but interrupted or broken. While it is true
that the workers herein were required to report for work at 6am and
were made to stay up to 6pm, their work was not continuous and they
could have left the premises of their working place were it not for the
inherent physical impossibility peculiar to the nature of their duty which
prevented them from leaving the tugboats.
by another shall be of not more than eight hours daily. When the work
is not
continuous, the time during which the laborer is not working AND CAN
LEAVE HIS WORKING PLACE and can rest completely, shall not be
counted.
We do not need to set for seamen a criterion different from that applied
to laborers on land, for the only thing to be done is to determine the
meaning and scope of the term "working place" used therein. A laborer
need not leave the premises of the factory, shop or boat in order that
his period of rest shall not be counted, it being enough that he "cease
to work", may rest completely and leave or may leave at his will the
spot where he actually stays while working, to go somewhere else,
whether within or outside the premises of said factory, shop or boat.
Affirmative. There is no need to look into the nature of the work of
claimant mariners to ascertain the truth of Luzon Stevedorings
allegation that this kind of seamen have had enough "free time. It was
found that the company gave the laborers 3 free meals a day with a
recess of 20 minutes after each meal. However, this decision was
specifically amended by the Court en banc, wherein it held that the
claimants herein rendered services to the Company from 6am-6pm
including Sundays and holidays, which implies either that said laborers
were not given any recess at all, or that they were not allowed to leave
the spot of their working place, or that they could not rest completely.
As to issue on WON the manifest acquiescence of the union members
over a period of almost 2 yrs with reference to the sufficiency of their
wages & not having made protest is equivalent to estoppel: The
principles of estoppel and laches cannot be invoked against
employees or laborers in an action for the recovery of compensation
for past overtime work. In the first place, it would be contrary to the

spirit of the Eight-Hour Labor Law, under which. as already seen, the
laborers cannot waive their right to extra compensation. In the second
place, the law principally obligates the employer to observe it, so much
so that it punishes the employer for its violation and leaves the
employee free and blameless. In the third place, the employee or
laborer is in such a disadvantageous position as to be naturally
reluctant or even apprehensive in asserting a claim which may cause
the employer to devise a way for exercising his right to terminate the
employment.
The right of the laborers to overtime pay cannot be waived. The
complaining laborers have declared that long before the filing of this
case, they had informed Mr. Martinez, a sort of overseer of the
petitioner, that they had been working overtime and claiming the
corresponding compensation therefor, and there is nothing on record to
show that the claimants, at least the majority of them, had received
wages in excess of the minimum wage later provided by RA 602,
approved April 6, 1951. On the contrary, it appears that 34 out of 58
claimants received salaries less than the minimum wage authorized
under Minimum Wage Law.
As to when should payment in arrears be based: It is of common
occurrence that a workingman has already rendered services in
excess of the statutory period of 8 hours for some time before he can
be led or he can muster enough courage to confront his employer with
a demand for payment thereof. Fear of possible unemployment
sometimes is a very strong factor that gags the man from asserting his
right under the law and it may take him months or years before he
could be made to present a claim against his employer. To allow the
workingman to be compensated only from the date of the filing of the
petition with the court would be to penalize him for his acquiescence or
silence.
As to reasonableness of the law providing for the grant of overtime
wages: courts cannot go outside of the field of interpretation so as to
inquire into the motive or motives of Congress in enacting a particular
piece of legislation. It may be alleged, however, that the delay in
asserting the right to back overtime compensation may cause an
unreasonable or irreparable injury to the employer, because the
accumulation of such back overtime wages may become so great that
their payment might cause the bankruptcy or the closing of the
business of the employer who might not be in a position to defray the
same.
National vs. CIR (1961)
ISSUE: WON Malondras is entitled to overtime compensation for the
16 hrs that he was required to be on board
NASSCO is the owner of several barges & tugboats used in the
transportation of cargoes & personnel in connection with its business
of shipbuilding and repair.
In order that its bargemen could immediately be called to duty
whenever their services are needed, they are required to stay in their
respective barges. They were given living quarters therein as well as
subsistence allowance of P1.50/day during the time they are on board.
leave their barges when said barges are idle.
15 Apr 57: 39 crew members of NASSCOs tugboat service, including
Dominador Malondras, filed with CIR a complaint for the payment of
overtime compensation.
NASSCO admitted that to meet the exigencies of the service,
complainants have to work when so required in excess of 8 hrs a day
and/or during Sundays & legal holidays. They are paid their regular

salaries & subsistence allowance but without additional compensation

for overtime work.
22 Nov: CIR issued an order directing the court examiner to compute
the overtime compensation due to the claimants. CE submitted his
report

Dominador Malondras rendered an average overtime service

of 5 hrs each day for the period of 1 Jan 31 Dec 57. Hence, the
Court approved the report and ordered NASSCO to pay their overtime
compensation.
30 Apr 58: CE submitted his 2nd partial report covering period 1 Jan
54 to 31 Dec 56, giving each crewman an average of 5 overtime hrs
per day. Malondras, however, was not included sine his daily time
sheets were not available then. The crewmen concerned were paid.
18 Sep 59: because of his exclusion from the 2nd report, Malondras
filed petition, asking for the payment of his overtime compensation for
periods 1 Jan 54 to 31 Dec 56 and from Jan-Apr 57.
15 Jan 60: CE submitted a report crediting Malondra with 4,349
overtime hours, average of 5 overtime hrs a day. Court ordered CE to
make re-examination. CE submitted amended report, giving Malondras
an average of 16 hrs overtime per day.
NASSCOs contentions: the mere fact that Malondras was required to
be on board his barge all day so that he could immediately be called to
duty when his services were needed does not imply that he should be
paid overtime for 16 hours a day, but that he should receive
compensation only for the actual service in excess of 8 hours that he
can prove.
Negative. Malondras should not be paid overtime compensation for
every hour in excess of the regular working hours that he was on board
his vessel or barge each day, irrespective of whether or not he actually
put in work during those hours.
Seamen are required to stay on board their vessels by the very nature
of their duties, and it is for this reason that, in addition to their regular
compensation, they are given free living quarters and subsistence
allowances when required to be on board. It could not have been the
purpose of our law to require their employers to pay them overtime
even when they are not actually working; otherwise, every sailor on
board a vessel would be entitled to overtime for sixteen hours each
day, even if he had spent all those hours resting or sleeping in his
bunk, after his regular tour of duty. The correct criterion in determining
whether or not sailors are entitled to overtime pay is not, therefore,
whether they were on board and can not leave ship beyond the regular
eight working hours a day, but whether they actually rendered service
in excess of said number of hours.
While Malondras' daily time sheets do not show his actual working
hours, nevertheless, NASSCO has already admitted that Malondras
and his co-claimants did render service beyond 8 hours a day when so
required by the exigencies of the service; and in fact, Malondras was
credited and already paid for 5 hours daily overtime work during the
period from May 1 to December 31, 1957, under the examiner's first
report. Since Malondras has been at the same job since 1954, it can
be reasonably inferred that the overtime service he put in whenever
he was required to be aboard his barge all day from 1954 to 1957
would be more or less consistent.
As to WON the subsistence allowance received by Malondras for the
periods covered should be deducted from his overtime compensation:
negative. This allowance is independent of and has nothing to do with
whatever additional compensation for overtime work was due to
NASSCO's bargemen. According to NASSCO itself, the reason why

their bargemen are given living quarters in their barges and

subsistence allowance at the rate of P1.50/day was because they were
required to stay in their respective barges in order that they could be
immediately called to duty when their services were needed.
Stolt-Nielsen vs. NLRC (1996)
ISSUE: WON Hernandez is entitled to overtime pay
Meynardo Hernandez was hired by Stolt-Nielsen as radio officer on
board M/T Stolt Condor for a period of 10mos. He boarded the vessel
on 20 Jan 90.
26 Apr: Ship Captain ordered Hernandez to carry the baggage of crew
member Lito Loveria who was being repatriated. He refused to obey
the order out of fear in vie of the utterance of said crew
member,task as one of his duties as radio officer.
30 Apr: Hernandez was ordered to disembark & was repatriated. He
was paid his salaries & wages only up to 16 May 90.
21 Jun: Hernandez filed a complaint for illegal dismissal.
Stolt-Nielsens contentions: Hernandez dismissal was with just cause
because he refused to comply with the captains order to assist the
crew member who was being repatriated.
Untenable. Willful disobedience of the employers lawful orders are a
just cause for the dismissal of an employee, provided the 2 requisites
concur: 1) the employee's assailed conduct must have been wilful or
intentional, the wilfulness characterized by a "wrongful and perverse
attitude"; and 2) the order violated must be reasonable, lawful, made
known to the employee and must pertain to the duties which he had
been engaged to discharged. However, not every case of
insubordination or wilful disobedience by an employee of a lawful workconnected order of the employer or its representative is reasonably
penalized with dismissal.
Hernandez was indeed bound to obey the lawful commands of the
captain but only as long as these pertain to his duties. The order to
carry the luggage of a crew member, while being lawful, is not part of
the duties of a radio officer. Assuming it is, his so-called act of
disobedience does not warrant the supreme penalty of dismissal. It
was found that his actuation was the first & only act of disobedience
during his service with Stolt. Circumstance shows that the utterance of
the crew member instilled fear in Hernandez that he was deterred from
carrying out the order.
Stolts contention: it adopted the view that the "guaranteed or fixed
overtime pay of 30% of the basic salary per month" embodied in their
employment contract should be awarded to them as part of a "package
benefit." They have theorized that even without sufficient evidence of
actual rendition of overtime work they would automatically be entitled
to overtime pay. The contract provision means that the fixed overtime
pay of 30% would be a basis for computing the overtime pay if and
when overtime work would be rendered. Simply stated, the rendition of
overtime work and the submission of sufficient proof that the said work
was actually performed are conditions to be satisfied before a seaman
could be entitled to overtime pay which would be computed on the
basis of 30% of the basic monthly salary. In short, the contract
provision guarantees the right to overtime pay but the entitlement to
such benefit must first be established. Realistically speaking, a
seaman, by the very nature of his job, stays on board a ship or vessel
beyond the regular eight-hour work schedule. For the employer to give
him overtime pay for the extra hours when he might be sleeping or
attending to his personal chores or even just lulling away his time
would be extremely unfair and unreasonable.

Tenable. close scrutiny of the computation of the monetary award

shows that the award for overtime was for the remaining 6 months and
3 days of Hernandezs contract at which time he was no longer
rendering services as he had already been repatriated. Hence, he is
not entitled to any overtime pay.
Meal Periods
NDC vs. CIR (supra.)
Sime Darby vs. NLRC (1998)
ISSUE: WON the act of management in revising the work schedule of
its employees & discarding their paid lunch break constitutive of unfair
labor practice
Sime Darby Pilipinas, Inc. is engaged in the manufacture of automotive
tires, tubes & other rubber products. On the other hand, Sime Darby
Salaried Employees Assoc. is an association of monthly salaried
employees of Sime Darby at its Marikina factory.
All company factory workers in Marikina worked from 7:45am to
3:45pm with a 30-min paid on call lunch break.
14 Aug 92: Sime Darby issued a memorandum to all factory-based
employee advising all its monthly salaried employees a change in work
schedule 7:45am to 4:45pm on M-F, 7:45am to 11:45am on S; coffee
break will be 10 mins only; lunch break will be for 1 hour.
SDSEA felt affected adversely by the change in the work schedule &
discontinuance of 30-min paid on call lunch break. It filed a complaint
with LA for unfair labor practice, discrimination & evasion of liability.
LA Decision: dismissed. The change in the work schedule &
elimination of the 30-min paid lunch break constituted a valid exercise
of management prerogative. The factory workers would be unjustly
enriched
were no longer "on call" or required to work during the break.
Negative. The right to fix the work schedules of the employees rests
principally on their employer. Sime Darby, as the employer, cites as
reason for the adjustment the efficient conduct of its business
operations and its improved production. It rationalizes that while the old

work schedule included a 30-min paid lunch break, the employees

could be called upon to do jobs during that period as they were "on
call." Even if denominated as lunch break, this period could very well
be considered as working time because the factory employees were
required to work if necessary and were paid accordingly for working.
With the new work schedule, the employees are now given a one-hour
lunch break without any interruption from their employer. For a full
one-hour undisturbed lunch break, the employees can freely and
effectively use this hour not only for eating but also for their rest and
comfort which are conducive to more efficiency and better performance
in their work.
Since the employees are no longer required to work during this onehour lunch break, there is no more need for them to be compensated
for this period. The new work schedule fully complies with the daily
work period of 8 hours without violating the Labor Code. Besides, the
new schedule applies to all employees in the factory similarly situated
whether they are union members or not. As such, it cannot be said that
the new scheme adopted prejudices the right of SDSEA to selforganization.
Every business enterprise endeavors to increase its profits. In the
process, it may devise means to attain that goal. Even as the law is
solicitous of the welfare of the employees, it must also protect the right
of an employer to exercise what are clearly management prerogatives.
Thus, management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers. So long as such prerogative
is exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights
of the employees under special laws or under valid agreements, it
should be upheld.
While the Constitution is committed to the policy of social justice and
the protection of the working class, it should not be supposed that
every dispute will be automatically decided in favor of labor.
Management also has rights which, as such, are entitled to respect
and enforcement in the interest of simple fair play.