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Transcript of Labor 04 (Sept 14) Dy Keh Beng - Alelin
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DY KEH BENG vs. INTERNATIONAL LABOR and MARINE UNION OF
THE PHILIPPINES, ET AL.
G.R. No. L-32245 May 25, 1979
FACTS:
Petitioner, Dy Keh Beng, proprietor of basket factory, was charged with ULP
for discriminatory acts defined under Sec 4(a), subparagraph (1 & 4), R.A.
No. 875 by dismissing on September 28-29, 1960, respectively, Carlos N.Solano and Ricardo Tudla for their union activities.
After PI was conducted, a case was filed in the CIR for in behalf of the
ILMUP and two of its members, Solano and Tudla. Dy Keh Beng contended
that he did not know Tudla and that Solano was not his employee because
the latter came to the establishment only when there was work which he did
on pakiaw basis. According to Dy Keh Beng, Solano was not his employee
for the following reasons:
(1) Solano never stayed long enough at Dy’s establishment;
(2) Solano had to leave as soon as he was through with the order given
him by Dy;
(3) When there were no orders needing his services there was nothing forhim to do;
(4) When orders came to the shop that his regular workers could not fill it
was then that Dy went to his address in Caloocan and fetched him for
these orders; and
(5) Solano's work with Dy's establishment was not continuous.
(6)
According to petitioner, these facts show that respondents Solano and Tudla
are only piece workers, not employees under Republic Act 875, where an
employee is referred to as shall include any employee and shall not be
limited to the employee of a particular employer unless the act explicitlystates 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 ulp and who has not obtained any other substantially equivalent and
regular employment. While an 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 anyone acting
in the capacity of officer or agent of such labor organization.
Petitioner also contends that the private respondents "did not meet the
control test in the fight of the ... definition of the terms employer and
employee, because there was no evidence to show that petitioner had the
right to direct the manner and method of respondent's work. He points to the
case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-
13130, October 31, 1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is
whether there is an understanding between the parties that one is to
render personal services to or for the benefit of the other and recognition
by them of the right of one to order and control the other in the
performance of the work and to direct the manner and method of itsperformance.
The CIR found that there existed an employee-employer relationship
between Dy Keh Beng and complainants Tudla and Solano, although Solano
was admitted to have worked on piece basis.
Hence, this petition for certiorari.
ISSUE: Whether or not an employee employer relation existed between
petitioner Dy Keh Beng and the respondents Solano and Tudla.
HELD:
The SC also noted the decision of Justice Paras in the case of “Sunrise
Coconut Products Co. Vs. CIR (83 Phil 518, 523) that “judicial notice of the
fact that the so-called "pakyaw" system mentioned in this case as generally
practiced in our country, is, in fact, a labor contract -between employers and
employees, between capitalists and laborers.”
With regard to the control test the SC said that “It should be borne in mind
that the control test calls merely for the existence of the right to control the
manner of doing the work, not the ac tual exercise of the right.” Consideringthe finding by the Hearing Examiner that the establishment of Dy Keh Beng
is "engaged in the manufacture of baskets known as kaing, it is natural to
expect that those working under Dy would have to observe, among others,
Dy's requirements of size and quality of the kaing. Some control would
necessarily be exercised by Dy as the making of the kaing would be subject
to Dy's specifications. Parenthetically, since the work on the baskets is done
at Dy's establishments, it can be inferred that the proprietor Dy could easily
exercise control on the men he employed.
The petition was dismissed. The Court affirmed the decision of the CIR.
light
I. Piece work - just a method of compensation
II. Control test - not only the end but the means to be used
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ALEJANDRO MARAGUINOT, JR. AND PAUILINO ENERO v. NLRC, VIC
DEL ROSARIO, VIVA FILMS
GR No. 120969 (1998)
Facts:
Maraguinot and Enero were separately hired by Vic Del Rosario under Viva
Films as part of the filming crew. Sometime in May 1992, sought the
assistance of their supervisor to facilitate their request that their salary beadjusted in accordance with the minimum wage law.
On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del
Rosario would agree to their request only if they sign a blank employment
contract. Petitioners refused to sign such document. After which, the Mr.
Enero was forced to go on leave on the same month and refused to take him
back when he reported for work. Mr. Maraguinot on the other hand was
dropped from the payroll but was returned days after. He was again asked to
sign a blank employment contract but when he refused, he was terminated.
Consequently, the petitioners sued for illegal dismissal before the Labor Arbiter. The private respondents claim the following: (a) that VIVA FILMS is
the trade name of VIVA PRODUCTIONS, INC. and that it was primarily
engaged in the distribution & exhibition of movies- but not then making of
movies; (b) That they hire contractors called “producers” who act as
independent contractors as that of Vic Del Rosario; and (c) As such, there is
no employee-employer relation between petitioners and private respondents.
The Labor Arbiter held that the complainants are employees of the private
respondents. That the producers are not independent contractor but should
be considered as labor-only contractors and as such act as mere agent ofthe real employer. Thus, the said employees are illegally dismissed.
The private respondents appealed to the NLRC which reversed the decision
of the Labor Arbiter declaring that the complainants were project employees
due to the ff. reasons: (a) Complainants were hired for specific movie
projects and their employment was co-terminus with each movie project;
(b)The work is dependent on the availability of projects. As a result, the total
working hours logged extremely varied; (c) The extremely irregular working
days and hours of complainants work explains the lump sum payment for
their service; and (d) The respondents alleged that the complainants are not
prohibited from working with other movie companies whenever they are not
working for the independent movie producers engaged by the respondents.
A motion for reconsideration was filed by the complainants but was denied by
NLRC. In effect, they filed an instant petition claiming that NLRC committed a
grave abuse of discretion in: (a) Finding that petitioners were project
employees; (b) Ruling that petitioners were not illegally dismissed; and (c)
Reversing the decision of the Labor Arbiter.
In the instant case, the petitioners allege that the NLRC acted in total
disregard of evidence material or decisive of the controversy.
Issues:
(a) W/N there exist an employee- employer relationship between the
petitioners and the private respondents.
(b) W/N the private respondents are engaged in the business of making
movies.
(c) W/N the producer is a job contractor.
Held:
There exist an employee- employer relationship between the petitioners and
the private respondents because of the ff. reasons that nowhere in the
appointment slip does it appear that it was the producer who hired the crew
members. Moreover, it was VIVA’s corporate name appearing on heading of
the slip. It can likewise be said that it was VIVA who paid for the petitioners’
salaries.
Respondents also admit that the petitioners were part of a work pool wherein
they attained the status of regular employees because of the ff. requisites:(a) There is a continuous rehiring of project employees even after cessation
of a project; (b) The tasks performed by the alleged “project employees” are
vital, necessary and indispensable to the usual business or trade of the
employer; and (c) However, the length of time which the employees are
continually re-hired is not controlling but merely serves as a badge of regular
employment.
Since the producer and the crew members are employees of VIVA and that
these employees’ works deal with the making of movies. It can be said that
VIVA is engaged of making movies and not on the mere distribut ion of such.
Maraguinot - electrician; Enero - shooting crew
Includes loading/unloading, fix lighting system, cameraman/direk’s orders
1991 - P593 weekly
1992 - P118 to P135
Viva: Not their EEs; Project hires of assoc. producer who act as independent contractor
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The producer is not a job contractor because of the ff. reasons: (Sec. Rule
VII, Book III of the Omnibus Rules Implementing the Labor Code.)
a. A contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
work except as to the results thereof. The said producer has a fix time frameand budget to make the movies.
b. The contractor should have substantial capital and materials necessary to
conduct his business. The said producer, Del Rosario, does not have his own
tools, equipment, machinery, work premises and other materials to make
motion pictures. Such materials were provided by VIVA.
It can be said that the producers are labor-only contractors. Under Article 106
of the Labor Code (reworded) where the contractor does not have the
requisites as that of the job contractors.
1. AP/Producers are not independent contractor/labor-only contractor.- not engaged in business of movie making
- no capital and investment
AND - not engaged in recruiting or placing EEs for VIVA
2. Assoc. Producers are agents of VIVA.
Thus, Maraguinot and Enero are EEs of Viva.
Control test:- acceptable quality films
- within budget - with Supervising Producer (eyes and ears of Viva)
Selection and Engagement - appointment slip bears the name of VIVA, not AP or Prod.
3. Project hires became regular EEs - continuous rehiring (2 years and 18 projects)
AND - necessary and indispensable
HOWEVER
- not tantamount to labor coddling as they are subject to no-work-no-pay principle - to prevent circumvention of laws on security of tenure
4. EEs illegally dismissed - reinstatement plus full backwages
- except for such period where there were no movie projects
can’tbe
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Insular Life vs NLRC (March 12, 1998)
G.R. No. 119930. March 12, 1998.
FACTS:
Petitioner entered into an agency contract with respondent delos Reyes
authorizing the latter to solicit for life insurance and he would be paid
compensation in the form of commissions. It contained the stipulation that no
ER-EE relationship shall be created. However, delos Reyes was prohibitedby petitioner from working for any other life insurance company and violation
of this company was a ground of termination.
Petitioner and private respondent entered into another contract where the
latter was appointed as Acting Unit Manager under its office. One of the
duties of delos Reyes is to supervise and coordinate the underwriters. It was
similarly provided in the management contract that the relation of the acting
unit manager and/or the agents of his unit to the company shall be that of
independent contractor.
Private respondent worked concurrently as agent and Acting Unit Manageruntil he was notified by petitioner that his services were terminated. So, he
filed a complaint on the ground of illegal dismissal and for not paying him
salaries and separation pay.
ISSUE: W/N ER-EE relationship exists between Insular Life and delos Reyes
HELD: Yes.
Both petitioner and respondent NLRC treated the agency contract and the
management contract entered into between petitioner and de los Reyes as
contracts of agency. There exist major distinctions between the twoarrangements. While the first has the earmarks of an agency contract, the
second is far removed from the concepts of agency in that provided therein
are conditionality that indicates an employer-employee relationship.
Private respondent was appointed as Acting Unit Manager only upon
recommendation of the District Manager. This indicates that private
respondent was hired by petitioner because of the favorable endorsement of
its duly authorized officer. Then, the very designation of the appointment of
private respondent as “acting” unit manager obviously implies a temporary
employment status which may be made permanent only upon compliance
with company standards.
On the matter of payment of wages, petitioner points out that respondent was
compensated strictly on commission basis, the amount of which was totally
dependent on his total output. But, the manager’s contract, speaks
differently. Under the contract, delos Reyes must meet with the manpower
and production requirements as Act ing Unit Manager.
As to the matter involving the power of dismissal and control by the
employer, respondent’s duty to collect the company’s premiums usingcompany receipts is further evidence of petitioner’s control over respondent.
Thus, exclusi vity of service, control of assignments and removal of agents
under private respondent’s unit, collection of premiums, furnishing of
company facilities and materials as well as capital described are but
hallmarks of the management system in which herein private respondent
worked. Private respondent delos Reyes was an employee of herein
petitioner.
Wherefore, petition of Insular Li fe is denied.
1. Agency Contract - solicit life insurance business
2. Management Contract - supervise underwriters
If terminated, reverted to agent status.
1. Delos Reyes was an EE as far as the Management Contract is concerned
Test of Selection and Engagement - upon favorable endorsement of District Manager
- probationary status leading to permanent employment
Payment of Wages
- paid UDF monthly (P300 and 1,200) independent of quarterly performance review - wage may be on commission basis, Art. 97
Power of Dismissal - upon contracting with gov’t or another life insurance company
Power of Control - maintain manpower and production quotas
- assignment and removal of agents - duty to issue receipt for premium payments
Necessary and Beneficial - administrative functions
- furnishing of facilities and materials
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ROGELIO NOGALES vs. CAPITOL MEDICAL CENTER et al.
G.R. No. 142625, December 19, 2006
Facts:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then
37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada
("Dr. Estrada") beginning on her fourth month of pregnancy or as early as
December 1975. Around midnight of 25 May 1976, Corazon started toexperience mild labor pains prompting Corazon and Rogelio Nogales
("Spouses Nogales") to see Dr. Estrada at his home. After examining
Corazon, Dr. Estrada advised her immediate admission to the Capitol
Medical Center ("CMC"). t 6:13 a.m., Corazon started to experience
convulsionsAt 6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low
forceps to extract Corazon's baby. In the process, a 1.0 x 2.5 cm. piece of
cervical tissue was allegedly torn.At 6:27 a.m., Corazon began to manifest
moderate vaginal bleeding which rapidly became profuse. Corazon died at
9:15 a.m. The cause of death was "hemorrhage, post partum.
Issue:Whether or not CMC is vicariously liable for the negligence of Dr. Estrada.
Ruling:
Private hospitals, hire, fire and exercise real control over their attending and
visiting "consultant" staff. The basis for holding an employer solidarily
responsible for the negligence of its employee is found in Article 2180 of the
Civil Code which considers a person accountable not only for his own acts
but also for those of others based on the former's responsibility under a
relationship of patria potestas.
In general, a hospital is not liable for the negligence of an independent
contractor-physician. There is, however, an exception to this principle. The
hospital may be liable if the physician is the "ostensible" agent of the
hospital. This exception is also known as the "doctrine of apparent authority”.
For a hospital to be liable under the doctrine of apparent authority, a plaintiff
must show that: (1) the hospital, or its agent, acted in a manner that would
lead a reasonable person to conclude that the individual who was alleged to
be negligent was an employee or agent of the hospital; (2) where the acts of
the agent create the appearance of authority, the plaintiff must also prove
that the hospital had knowledge of and acquiesced in them; and (3) the
plaintiff acted in reliance upon the conduct of the hospital or its agent,
consistent with ordinary care and prudence. In the instant case, CMC
impliedly held out Dr. Estrada as a member of its medical staff. Through
CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby
leading the Spouses Nogales to believe that Dr. Estrada was an employee or
agent of CMC.
forceps, a handheld hinged instrument hysterectomy, removal of womb or portion thereofs
RTC:1. Dr. Estrada solely liable
- exclusively under his pre-natal care;
- failure to treat pre-eclamptic condition (high blood, high protein) - misapplied forceps
2. No evidence adduced as to the liability of the other doctors and CMC
CA: Affirmed - Estrada is an independent contractor - no control in OR
- Estrada is a visiting physician
- CMC is not liable as it only permitted physician to practice medicine and use its facilities
SC: 1. Dr. Estrada is in fact an independent contractor
- that he enjoyed staff privileges did not make him an employee of CMC
2. GR: Hospital not liable for negligence of IC
Exception: Physician is ostensible agent, under doctrine of apparent authority a. led patient to believe that physician was an employee or agent
- extended medical facilities
- consent on admission form, consent to operation form - involvement of head of OB Gyne dept
b. patient’s reliance upon the conduct of CMC/agent
- accepting services of Dr. Estrada because he is connected with CMC as a reputable hospital
2:30
AM
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Calamba Medical Center, Inc. vs National Labor Relations Commission
G.R. No. 176484. November 25, 2008
FACTS:
Ronaldo Lanzanas and Merceditha Lanzanas are doctors employed
by Calamba Medical Center, Inc. They are given a retainer’s fee by
the hospital as well as shares from fees obtained from patients.
One time, Ronaldo was overheard by Dr. Trinidad talking to anotherdoctor about how low the admission rate to the hospital is. That
conversation was reported to Dr. Desipeda who was then the
Medical Director of the hospital.
Eventually Ronaldo was suspended. Ronaldo filed a case for Illegal
Suspension in March 1998. In the same month, the rank and file
employees organized a strike against the hospital for unfair labor
practices. Desipeda eventually fired Ronaldo for his alleged
participation in the strike, which is not allowed under the Labor Code
for he is a managerial employee. Desipeda also fired Merceditha on
the ground that she is the wife of Ronaldo who naturally sympathizes
with him.
The Labor Arbiter ruled that there was no Illegal Suspension for
there was no employer-employee relationship because the hospital
has no control over Ronaldo as he is a doctor who even gets shares
from the hospitals earnings.
The National Labor Relations Commission as well as the Court of
Appeals reversed the LA.
ISSUE: Whether or not there is an employer-employee relationship?
HELD: Yes. Under the control test, an employment relationship existsbetween a physician and a hospital if the hospital controls both the means
and the details of the process by which the physician is to accomplish his
task. There is control in this case because of the fact that Desipeda
schedules the hours of work for Ronaldo and his wife.
The doctors are also registered by the hospital under the SSS which is
premised on an employer-employee relat ionship.
There is Illegal Dismissal committed against Rolando for there was no notice
and hearing held. It was never shown that Rolando joined the strike. But
even if he did, he has the right to do so for he is not a part of the managerial
or supervisory employees. As a doctor, their decisions are still subject to
revocation or revision by Desipeda.
There is Illegal Dismissal committed against Merceditha for the ground
therefor was not mentioned in Article 282 of the Labor Code.
When is Control (One of the Four Tests of Employer-Employee Relationship)
Absent?
Where a person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work, and is
compensated according to the result of his efforts and not the amount
thereof, the element of control is absent.
1) Tests Wages
- monthly retainer’s fee
- percentage of patient fees
Control
- work schedule (twice weekly, 24-hour shifts) - monitored by nursing supervisor, change nurses, orderlies
- overruled/reviewed as to admission of patients, characterising cases, treatment
2) Badges of Management Structure
- SSS, premised on ER and EE relationship - Employee ID
3) IRR of Labor Code Book III, Rule X, Sec 15 - ER-EE relationship between resident physician and training hospitals unless there is
a training agreement
4) Illegally dismissed
- position is neither managerial or supervisory
- does not recommend managerial/administrative functions- not barred from union
- no proof that he joined strike and refused thereafter to return to work - no notice and hearing
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Professional Services, Inc. vs CA
2010, J. Corona
Facts:
2nd Motion For Reconsideration
Quick recap: To recall the salient facts, PSI, together with Dr. Miguel
Ampil (Dr. Ampil) and Dr. Juan Fuentes (Dr. Fuentes), was impleaded by
Enrique Agana and Natividad Agana (later substituted by her heirs), in acomplaint for damages filed in the Regional Trial Court (RTC) of Quezon
City, Branch 96, for the injuries suffered by Natividad when Dr. Ampil
and Dr. Fuentes neglected to remove from her body two gauzes which
were used in the surgery they performed on her on April 11, 1984 at the
Medical City General Hospital. PSI was impleaded as owner, operator
and manager of the hospital.
RTC held PSI solidarily liable with Dr. Ampil and Dr. Fuentes for
damages. On appeal, the Court of Appeals, absolved Dr. Fuentes but
affirmed the liability of Dr. Ampil and PSI, subject to the right of PSI to
claim reimbursement from Dr. Ampil
2007 SC decision, affirmed the CA decision. PSI filed a motion for
reconsideration but the Court denied it in a resolution dated February 11,
2008.
Held:
PSI is liable to the Aganas, not under the principle of respondeat
superior for lack of evidence of an employment relationship with Dr.
Ampil but under the principle o f ostensible agency for the negligence of
Dr. Ampil and, pro hac vice, under the principle of corporate negligence
for its failure to perform its duties as a hospital
Control test is still applied in the determination E-E relationship. If thehospital controls both the means and the details of the process by which
the physic ian is to accomplish his task, there is E-E relationship. For
control test to apply, it is not essential for the employer to actually
supervise the performance of duties of the employee, it being enough
that it has the right to wield the power
SC maintains the ruling that PSI is vicariously liable for the negligence of
Dr. Ampil as its ostensible agent
The hospital had the power to review or cause the review of what may
have irregularly transpired within its walls strictly for the purpose of
determining whether some form of negligence may have attended any
Captain of the ship rule applied
PSI defined the standards of its corporate conduct under the
circumstances of this case, specifically: (a) that it had a corporate duty
to Natividad even after her operation to ensure her safety as a patient;
(b) that its corporate duty was not limited to having its nursing staff note
or record the two missing gauzes and (c) that its corporate duty extended
to determining Dr. Ampil's role in it, bringing the matter to his attention,
and correcting his negligence
Indications of negligence of PSI:! There were missing gauzes but Dr. Ampil assured them that he
would personally notify the patient about it. PSI claimed that
there was no reason for it to act on the report on the two missing
gauzes because Natividad Agana showed no signs of
complications. She did not even inform the hospital about her
discomfort
! SI had the duty to take notice of medical records prepared by its
own staff and submitted to its custody, especially when these
bear earmarks of a surgery gone awry
! PSI took no heed of the record of operation and consequently
did not initiate a review of what transpired during Natividad’s
operation
SC: PSI is liable.
1. Ostensible Agency
a) implied manifestation that doctor was its agent b) patient’s reliance upon such manifestation
- Mr. Agana though Dr. Ampil was a staff of Medical City, a prominent hospital
- Consent for hospital care - as advised by Dr. Ampil
2. Corporate Negligence - power to review or cause the review of irregular operations
- judicial admission of duty to act on Agana’s discomfort had she informed them
a) duty of care to Mrs. Agana
b) not limited to have its nurse record 2 missing gauzes c) correcting Dr. Ampil’s negligence
Facts: 1. Agana was taken to Medical City for difficulty of bowel movement
and bloody anal discharge; diagnosed with cancer of the sigmoid colon.
2. Performed hysterectomy since malignancy spread to her left ovary 3. Went to US for further treatment
4. Upon return, daughter found a piece of gauze (1.5 in) protruding from her vagina 5. Recto-vaginal fistula was formed forcing stool to secrete through her vagina.
6. Natividad died.
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JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION
G.R. No. 138051 June 10, 2004
FACTS: In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by
Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to provide
Sonza’s ser vices exclusively to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for the first
year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN's President, Eugenio Lopez
III, where he irrevocably resigned in view of the recent events concerning his
program and career. The acts of the station are violative of the Agreement
and said letter will serve as notice of rescission of said contract . The letter
also contained the waiver and renunciation for recovery of the remaining
amount stipulated but reserves the right to seek recovery of the other
benefits under said Agreement.
After the said letter, Sonza filed with the Department of Labor and
Employment a complaint alleging that ABS-CBN did not pay his salaries,
separation pay, service incentive pay,13th month pay, signing bonus, travel
allowance and amounts under the Employees Stock Option Plan (ESOP).
ABS-CBN contended that no employee-employer relationship existed
between the parties. However, ABS-CBN continued to remit Sonza’s monthly
talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no
employee-employer relationship. The LA ruled that he is not an employee by
reason of his peculiar skill and talent as a TV host and a radio broadcaster.
Unlike an ordinary employee, he was free to perform his services in
accordance with his own style. NLRC and CA affirmed the LA. Should there
be any complaint, it does not arise from an employer-employee relationship
but from a breach of contract.
ISSUE: W/N there was employer-employee relationship between the parties.
HELD: There is no employer-employee relationship between Sonza and
ABS-CBN. Petition denied. Judgment decision affirmed.
Case law has consistently held that the elements of an employee-employer
relationship are selection and engagement of the employee, the payment of
wages, the power of dismissal and the employer’s power to control the
employee on the means and methods by which the work is accomplished.
The last element, the so-called "control test", is the most important element.
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and radio
programs because of SONZA’s peculiar skills, talent and celebrity status.
SONZA contends that the “discretion used by respondent in specifically
selecting and hiring complainant over other broadcasters of possibly similar
experience and qualification as complainant belies respondent’s clai m of
independent contractorship.”
However, independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary employees.
The specific selection and hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by ordinary employees, is acircumstance 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.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his
fees going to MJMDC. SONZA asserts that this mode of fee payment shows
that he was an employee of ABS-CBN. SONZA also points out that ABS-
CBN granted him benefits and privileges “which he would not have enjoyed if
he were truly the subject of a valid job contract.”
All the talent fees and benefits paid to SONZA were the result of negotiations
that led to the Agreement. If SONZA were ABS-CBN’s employee, there
would be no need for the parties to stipulate on benefits such as “SSS,
Medicare, x x x and 13th month pay” which the law automat ically
incorporates into every employer-employee contract. Whatever benefits
SONZA enjoyed arose from contract and not because of an employer-
employee relationship. In addition, SONZA’s talent fees are so huge and out
of the ordinary that they indicate more an independent contractualIC - individuals with special skills , expertise or talent enjoy freedom to offer services Action contractual in nature. NLRC no jurisdiction. Labor Code does not apply.
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relationship rather than an employer-employee relationship. ABS-CBN
agreed to pay SONZA such huge talent fees precisely because of SONZA’s
unique skills, talent and celebrity status not possessed by ordinary
employees.
C. Power of Dismissal
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 SONZA’s 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 SONZA’s talent fees during the life of the
Agreement. This circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN. SONZA admits that even after
ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him histalent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement
to continue paying SONZA’s talent fees during the remaining life of the
Agreement even if ABS-CBN cancelled SONZA’s programs through no fault
of SONZA.
D. Power of Control
First, SONZA contends that ABS-CBN exercised control over the means and
methods of his work. SONZA’s argument is misplaced. ABS -CBN engaged
SONZA’s 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-CBN’s 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 post-production staff meetings. ABS-CBN could not dictate the
contents of SONZA’s 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.
Second, SONZA urges us to rule that he was ABS-CBN’s employee because
ABS-CBN subjected him to its rules and standards of performance. SONZA
claims that this indicates ABS-CBN’s control “not only [over] his manner of
work but also the quality of his work." 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 imposed on SONZA under the Agreement refers to the
“Television and Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as
its Code of Ethics.” 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.
In any event, not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. In this case, SONZA
failed to show that these rules controlled his performance. We find that thesegeneral 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.
Lastly, SONZA insists that the “exclusivity clause” in the Agreement is the
most extreme form of control which ABS-CBN exercised over him. This
argument is futile. Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control.
The hiring of 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. The broadcast station normally spends substantial
amounts of money, time and effort “in building up its talents as well as the
programs they appear in and thus expects that said talents remain exclusi ve
with the station for a commensurate period of time.” Normally, a much higher
fee is paid to talents who agree to work exclusively for a particular radio or
television station. In short, the huge talent fees partially compensates for
exclusivity, as in the present case.
MJMDC is not labor-only contractor/agent of ABSCBN.It is an agent of Sonza, being owned by Sonza and Tiangco.
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ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO et
al. G.R. No. 164156, September 26, 2006
Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the
broadcasting business and owns a network of television and radio stations,
whose operations revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise utilizes the
airtime it generates from its radio and television operations. It has a franchise
as a broadcasting company, and was likewise issued a license and authority
to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan
as production assistants (PAs) on different dates. They were assigned at the
news and public affairs, for various radio programs in the Cebu Broadcasting
Station. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File
Employees executed a Collective Bargaining Agreement (CBA) to be
effective during the period from December 11, 1996 to December 11, 1999.
However, since petitioner refused to recognize PAs as part of the bargaini ngunit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition of
Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay,
Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay
with Damages against the petitioner before the NLRC. The Labor Arbiter
rendered judgment in favor of the respondents, and declared that they were
regular employees of petitioner as such, they were awarded monetary
benefits. NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a
motion for reconsideration but CA dismissed it.
Issue: W/N respondents were considered regular employees of ABS-CBN.
Ruling:
The respondents are regular employees of ABS-CBN. It was held that where
a person has rendered at least one year of service, regardless of the nature
of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason
being that a customary appointment is not indispensable before one may be
formally declared as having at tained regular status.
In Universal Robina Corporation v. Catapang, the Court states that the
primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test
is whether the former is usually necessary or desirable in the usual business
or trade of the employer. The connection can be determined by considering
the nature of work performed and its relation to the scheme of the particular
business or trade in its entirety. Also, if the employee has been performing
the job for at least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment is considered regular,
but only with respect to such activity and while such activity exists.
Additionally, respondents cannot be considered as project or program
employees because no evidence was presented to show that the duration
and scope of the project were determined or specified at the time of their
engagement. In the case at bar, however, the employer-employee
relationship between petitioner and respondents has been proven. In theselection and engagement of respondents, no peculiar or unique skill, talent
or celebrity status was required from them because they were merely hired
through petitioner’s personnel department just like any ordinary employee.
Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship. Respondents
are highly dependent on the petitioner for continued work. The degree of
control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent
contractors.
The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer,
does not furnish an independent business or professional service, such work
is a regular employment of such employee and not an independent
contractor. As regular employees, respondents are entitled to the benefits
granted to all other regular employees of petitioner under the CBA . Besides,
only talent-artists were excluded from the CBA and not production assistants
who are regular employees of the respondents. Moreover, under Article 1702
of the New Civil Code: “In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living of the
laborer.”
1. Regular Employee - at least one year; necessary or dispensable
2. Not a fixed-term contract; not an indenpendnt contractor
Presumption that one is EE: integral to businsess + no ind. biz or prof service
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Thelma Dumpit-Murillo vs Court of Appeals
G.R. No. 164652. June 8, 2007
FACTS:
Thelma Dumpit-Murillo was hired by ABC as a newscaster in 1995. Her
contract with the TV station was repeatedly renewed until 1999. She then
wrote Jose Javier (VP for News and Public Affairs of ABC) advising him of
her intention to renew the contract.
Javier did not respond.
Dumpit then demanded reinstatement as well as her backwages, service
incentive leave pays and other monetary benefits.
ABC said they could only pay her backwages but her other claims had no
basis as she was not entitled thereto because she is considered as a talent
and not a regular employee.
Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National
Labor Relations Commission reversed the LA. The Court of Appeals
reversed the NLRC and ruled that as per the contract between ABC and
Dumpit, Dumpit is a fixed term employee.
ISSUE:
Whether or not Dumpit is a regular employee.
HELD:
Yes. Dumpit 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.
The duties of Dumpit as enumerated in her employment contract indicate that
ABC had control over the work of Dumpit. Aside from control, ABC also
dictated the work assignments and payment of petitioner’s wages. ABC also
had power to dismiss her. All these being present, clearly, there existed an
employment relationship between Dumpit and ABC.
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 Dumpit’s work in ABC’s business.
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FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU
G.R. NO. 204944-45, DECEMBER 3, 2014, J. Leonen
FACTS:
Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc.
(Fuji) as a news correspondent/producer tasked to report Philippine news to
Fuji through its Manila Bureau field office. The employment contract was
initially for one year, but was successively renewed on a yearly basis with
salary adjustments upon every renewal.
In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji
about her condition, and the Chief of News Agency of Fuji, Yoshiki Aoki,
informed the former that the company had a problem with renewing her
contract considering her condition. Arlene insisted she was still fit to work as
certified by her attending physician.
After a series of verbal and written communications, Arlene and Fuji signed a
non-renewal contract. In consideration thereof, Arlene acknowledged the
receipt of the total amount of her salary from March-May 2009, year-endbonus, mid-year bonus and separation pay. However, Arlene executed the
non-renewal contract under protest .
Arlene filed a complaint for illegal dismissal with the NCR Arbitration Br anch
of the NLRC, alleging that she was forced to sign the non-renewal contract
after Fuji came to know of her illness. She also alleged that Fuji withheld her
salaries and other benefits when she refused to sign, and that she was left
with no other recourse but to sign the non-renewal contract to get her
salaries.
ISSUES:
1. Was Arlene an independent contractor? No
2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed?
4. Did the Court of Appeals correctly awarded reinstatement, damages
and attorney’s fees?
LAWS:
Art. 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph; Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exist.
Art. 279. Security of tenure. In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause of
when authorized by this Title. 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 hisother benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
Thus, on the right to security of tenure, no employee shall be dismissed,
unless there are just or authorized causes and only after compliance with
procedural and substantive due process is conducted.
Art. 284. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month
salary or to one-half (1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1)
whole year.
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor
Code. Disease as a ground for dismissal. – Where the employee suffers from
a disease and his continued employment is prohibited by law or prejudicial to
his health or to the health of his co-employees, the employer shall not
Fuji TV based in Tokyo, Japan
In 200
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terminate his employment unless there is a certification by a competent
public health authority that the disease is of such nature or at such a stage
that it cannot be cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured within the period,
the employer shall not terminate the employee but shall ask the employee to
take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
CASE HISTORY:
Labor Arbiter dismissed the complaint and held that Arlene was not a
regular employee but an independent contractor. The NLRC reversed the
Labor Arbiter’s decision and ruled that Arlene was a regular employee since
she continuously rendered services that were necessary and desirable to
Fuji’s business.
The Court of Appeals affirmed that NLRC ruling with modification that Fuji
immediately reinstate Arlene to her position without loss of seniority rights
and that she be paid her backwages and other emoluments withheld from
her. The Court of Appeals agreed with the NLRC that Arlene was a regularemployee, engaged to perform work that was necessary or desirable in the
business of Fuji, and the successive renewals of her fixed-term contract
resulted in regular employment. The case of Sonza does not apply in the
case because Arlene was not contracted on account of a special talent or
skill. Arlene was illegally dismissed because Fuji failed to comply with the
requirements of substantive and procedural due process. Arlene, in fact,
signed the non-renewal contract under protest as she was left without a
choice.
Fuji filed a petition for review on certiorari under Rule 45 before the Supreme
Court, alleging that Arlene was hired as an independent contractor; that Fuji
had no control over her work; that the employment contracts were renewed
upon Arlene’s insistence; that there was no illegal dismissal because she
freely agreed not to renew her fixed-term contract as evidenced by her email
correspondences. Arlene filed a manifestation stating that the SC could not
take jurisdiction over the case since Fuji failed to authorize Corazon Acerden,
the assigned attorney-in-fact for Fuji, to sign the verification.
RULING:
1. Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza
case. She was hired because of her skills. Her salary was higher than the
normal rate. She had the power to bargain with her employer. Her contract
was for a fixed term. It also stated that Arlene was not forced to sign the non-
renewal agreement, considering that she sent an email with another version
of her non-renewal agreement.
Arlene argued (1) that she was a regular employee because Fuji had cont rol
and supervision over her work; (2) that she based her work on instructions
from Fuji; (3) that the successive renewal of her contracts for four years
indicated that her work was necessary and desirable; (4) that the payment of
separation pay indicated that she was a regular employee; (5) that the Sonza
case is not applicable because she was a plain reporter for Fuji; (6) that her
illness was not a ground for her dismissal; (7) that she signed the non-
renewal agreement because she was not in a position to reject the same.
Distinctions among fixed-term employees, independent contractors, and
regular employees
Fixed Term Employment
1) The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.These indications, which must be read together, make the Brent doctrine
applicable only in a few special cases wherein the employer and employee
are on more or less in equal footing in entering into the contract. The reason
for this is evident: when a prospective employee, on account of special skills
or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the
ordinary worker. Lesser limitations on the parties’ freedom of contract are
thus required for the protect ion of the employee.155 (Citations omit ted)
Brent School v. Zamora
Fuji: Stringer (freelance journalist/photographer)
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For as long as the guidelines laid down in Brent are satisfied, this court will
recognize the validity of the fixed-term contract. (GMA Network, Inc. vs.
Pabriga)
Independent Contractor
One who carries on a distinct and independent business and undertakes to
perform the job, work, or service on its own account and under one’s own
responsibility according to one’s own manner and method, f ree from thecontrol and direction of the principal in all matters connected with the
performance of the work except as to the results thereof.
No employer-employee relationship exists between the independent
contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the former’s work, the
employees of the contractor and of the latter’s subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
XXX
The Secretary of Labor and Employment may, by appropriate regulations,
restrict or prohibit the contracting-out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting
as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for
purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is “labor -only” contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
Department Order No. 18-A, Series of 2011, Section 3
(c) . . . an arrangement whereby a principal agrees to put out or farm out with
a contractor the performance or completion of a specific job, work or service
within a definite or predetermined period, regardless of whether such job,
work or service is to be performed or completed within or outside the
premises of the principal.
This department order also states that there is a trilateral relationship in
legitimate job contracting and subcontracting arrangements among the
principal, contractor, and employees of the contractor. There is no employer-
employee relationship between the contractor and principal who engages the
contractor’s services, but there is an employer -employee relationship
between the contractor and workers hired to accomplish the work for the
principal.162chanRoblesvirtualLawlibrary
Jurisprudence has recognized another kind of independent contractor:
individuals with unique skills and talents that set them apart from ordinary
employees. There is no trilateral relationship in this case because the
independent contractor himself or herself performs the work for the principal.
In other words, the relationship is bilateral.
XXX
There are different kinds of independent contractors: those engaged in
legitimate job contracting and those who have unique skills and talents that
set them apart from ordinary employees.
Since no employer-employee relationship exists between independent
contractors and their principals, their contracts are governed by the Civil
Code provisions on contracts and other applicable laws.
Regular Employees
Contracts of employment are different and have a higher level of regulation
because they are impressed with public interest. Article 13, Section 3 of the
1987 Consti tution provides full protection to labor.
Apart from the Constitutional guarantee, Articl e 1700 of the Civil Code states
that : The relations between capital and labor are not merely contractual.
They are so impressed with public interest that labor contracts must yield to
the common good. Therefore, such contracts are subject to the special laws
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on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.
In contracts of employment, the employer and the employee are not on equal
footing. Thus, it is subject to regulatory review by the labor tribunals and
courts of law. The law serves to equalize the unequal. The labor force is a
special class that is constitutionally protected because of the inequality
between capital and labor. This presupposes that the labor force is weak.
The level of protection to labor should vary from case to caese. When a
prospective employee, on account of special skills or market forces, is in a
position to make demands upon the prospective employer, such prospective
employee needs less protection than the ordinary worker.
The level of protection to labor must be determined on the basis of the nature
of the work, qualifications of the employee, and other relevant circumstances
such as but not limited to educational attainment and other special
qualifications.
Fuji’s argument that Arlene was an independent contractor under a fixed -
term contract is contradictory. Employees under fixed-term contracts cannot
be independent contractors because in fixed-term contracts, an employer-
employee relationship exists. The test in this kind of contract is not the
necessity and desirability of the employee’s activities, “but the day certain
agreed upon by the parties for the commencement and termination of the
employment relationship.” For regular employees , the necessity and
desirability of their work in the usual course of the employer’s business are
the determining factors. On the other hand, independent contractors do not
have employer-employee relationships with their principals.
To determine the status of employment, the existence of employer-employee
relationship must first be settled with the use of the four-fold test, especially
the qualifications for the power to control.
The distinction is in this guise:
Rules that merely serve as guidelines towards the achievement of a mutually
desired result without dictating the means or methods to be employed
creates no employer-employee relationship; whereas those that control or fix
the methodology and bind or restrict the party hired to the use of such mea ns
creates the relationship.
In appliacation, Arlene was hired by Fuji as a news producer, but there was
no evidence that she was hired for her unique skills that would distinguish
her from ordinary employees. Her monthly salary appeared to be a
substantial sum. Fuji had the power to dismiss Arlene, as provided for in her
employment contract. The contract also indicated that Fuji had control over
her work as she was rquired to report for 8 hours from Monday to Friday. Fuji
gave her instructions on what to report and even her mode of transportation
in carrying out her functions was controlled.
Therefore, Arlene could not be an independent contractor.
2. Arlene was a regular employee with a fixed-term contract.
In determining whether an employment should be considered regular or non-
regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual business
or trade of the employer. The standard, supplied by the law itself, is whether
the work undertaken is necessary or desirable in the usual business or tradeof the employer, a fact that can be assessed by looking into the nature of the
services rendered and its relation to the general scheme under which the
business or trade is pursued in the usual course. It is distinguished from a
specific undertaking that is divorced from the normal activities required in
carrying on the particular business or trade.
However, there may be a situation where an employee’s work is necessary
but is not always desirable in the usual course of business of the employer.
In this situation, there is no regular employment.
Fuji’s Manila Bureau Office is a small unit213 and has a few employees.
Arlene had to do all activities related to news gathering.
A news producer “plans and supervises newscast [and] works with reporters
in the field planning and gathering information, including monitoring and
getting news stories, rporting interviewing subjects in front of a video camera,
submission of news and current events reports pertaining to the Philippines,
and traveling to the regional office in Thailand.” She also had to report for
work in Fuji’s office in Manila from Mondays to Fridays, eight per day. She
had no equipment and had to use the facilities of Fuji to accomplish her
tasks.
1. test of control and supervision - YES
2. test of reasonable connection bet work and business - YES
4 tests: (a) selection/engagement; (b) payment of wages; (c) dismissal; (d) control
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The successive renewals of her contract indicated the necessity and
desirability of her work in the usual course of Fuji’s business. Because of
this, Arlene had become a regular employee with the right to security of
tenure.
Ar lene’s contract indicating a fixed term did not automatically mean that she
could never be a regular employee. For as long as it was the employee who
requested, or bargained, that the contract have a “definite date of
termination,” or that the fixed-term contract be freely entered into by the
employer and the employee, then the validity of the fixed-term contract will
be upheld.
3. Arlene was illegally dismissed.
As a regular employee, Arlene was entitled to security of tenure under Artic le
279 of the Labor Code and could be dismissed only for just or authorized
causaes and after observance of due process.
The expiration of the contract does not negate the finding of illegal dismissal.
The manner by which Fuji informed Arlene of non-renewal through email a
month after she informed Fuji of her illness is tantamount to constructive
dismissal. Further, Arlene was asked to sign a letter of resignation prepared
by Fuji. The existence of a fixed-term contract should not mean that there
can be no illegal dismissal. Due process must still be observed.
Moreoever, disease as a ground for termination under Article 284 of the
Labor Code and Book VI, Rule 1, Section 8 of the Omnibus Rules
Implementing the Labor Code require two requirements to be complied with:
(1) the employee’s disease cannot be cured within six months and his
continued employment is prohibited by law or prejudicial to his health as well
as to the health of his co-employees; and (2) certification issued by a
competent public health authority that even with proper medical treatment,
the disease cannot be cured within six months. The burden of proving
compliance with these requisites is on the employer. Non-compliance leads
to illegal dismissal. blesvirtualLawlibrary
Arlene was not accorded due process. After informing her employer of her
lung cancer, she was not given the chance to present medical certificates.
Fuji immediately concluded that Arlene could no longer perform her duties
because of chemotherapy. Neither did it suggest for her to take a leave. It did
not present any certificate from a competent public health authority.
Therefore, Arlene was illegally dismissed.
4. The Court of Appeals correctly awarded reinstatement, damages and
attorney’s fees.
The Court of Appeals awarded moral and exemplary damages and attorney’s
fees. It also ordered reinstatement, as the grounds when separation pay was
awarded in lieu of reinstatement were not proven.
The Labor Code provides in Article 279 that illegally dismissed employees
are entitled to reinstatement, backwages including allowances, and all other
benefits.
Separation pay in lieu of reinstatement is allowed only (1) when the employer
has ceased operations; (2) when the employee’s position is no longer
available; (3) strained relations; and (4) a substantial period has lapsed fromdate of filing to date of finality.
The doctrine of strained relations should be strictly applied to avoid
deprivation of the right to reinstatement. In the case at bar, no evidence was
presented by Fuji to prove that reinstatement was no longer feasible. Fuji did
not allege that it ceased operations or that Arlene’s position was no longer
feasible. Nothing showed that the reinstatement would cause an atmosphere
of antagonism in the workplace.
Moral damages are awarded “when the dismissal is attended by bad faith or
fraud or constitutes an act oppressive to labor, or is done in a manner
contrary to good morals, good customs or public policy.” On the other hand,
exemplary damages may be awarded when the dismissal was effected “in a
wanton, oppressive or malevolent manner.
After Arl ene had informed Fuji of her cancer, she was informed that there
would be problems in renewing her contract on account of her condition. This
information caused Arlene mental anguish, serious anxiety, and wounded
feelings. The manner of her dismissal was effected in an oppressive
approach with her salary and other benefits being withheld until May 5, 2009,
when she had no other choice but to sign the non-renewal contract.
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With regard to the award of attorney’s fees, Article 111 of the Labor Code
states that “[i]n cases of unlawful withholding of wages, the culpable party
may be assessed attorney’s fees equivalent to ten percent of the amount of
wages recovered.” In actions for recovery of wages or where an employee
was forced to litigate and, thus, incur expenses to protect his rights and
interest, the award of attorney’s fees is legally and morally justifiablen.” Due
to her illegal dismissal, Arlene was forced to litigate.
Therefore, the awards for reinstatement, damages and attorney’s fees were
proper.
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LEGEND HOTEL (MANILA), OLWNED BY TITANIUM CORPORATION
AND/OR, NELSON NAPUD, IN HIS CAPACITY AS THE PRESIDENT OF
PETITIONER CORPORATION, VS. HERNANI S. REALUYO, ALSO
KNOWN AS JOEY ROA
G.R. No. 153511, July 18, 2012
FACTS:
This labor case for illegal dismissal involves a pianist employed to
perform in the restaurant of a hotel.
August 9, 1999: Realuyo, whose stage name was Joey R. Roa, filed a
complaint for alleged unfair labor practice, constructive illegal dismissal,
and the underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13th month pay. He
prayed for attorney’s fees, moral damages of P100,000.00 and
exemplary damages for P100,000.00
Roa averred that he had worked as a pianist at the Legend Hotel’s
Tanglaw Restaurant from September 1992 with an initial rate of
P400.00/night; and that it had increased to P750.00/night. During his
employment, he could not choose the time of performance, which hadbeen fixed from 7:00PM to 10:00pm for three to six times a week.
July 9, 1999: the management had notified him that as a cost-cutting
measure, his services as a pianist would no longer be required effecti ve
July 30, 1999.
In its defense, petitioner denied the existence of an employer-employee
relationship with Roa, insisting that he had been only a talent engaged to
provide live music at Legend Hotel’s Madison Coffee Shop for three
hours/day on two days each week; and stated that the economic crisis
that had hit the country constrained management to dispense with his
services. December 29,1999: the Labor Arbiter (LA) dismissed the complaint for
lack of merit upon finding that the parties had no employer-employee
relationship, because Roa was receiving talent fee and not salary, which
was reinforced by the fact that Roa received his talent fee nightly, unlike
the regular employees of the hotel who are paid monthly.
NLRC affirmed the LA’s decision on May 31, 2001.
CA set aside the decision of the NLRC, saying CA failed to take into
consideration that in Roa’s line of work, he was supervised and
controlled by the hotel’s restaurant manager who at certain times would
require him to perform only tagalong songs or music, or wear barong
tagalong to conform with the Filipinana motif of the place and the time of
his performance is fixed. As to the status of Roa, he is considered a
regular employee of the hotel since his job was in furtherance of the
restaurant business of the hotel. Granting that Roa was initially a
contractual employee, by the sheer length of service he had rendered for
the company, he had been converted into a regular employee.
CA held that the dismissal was due to retrenchment in order to avoid or
minimize business losses, which is recognized by law under Art. 283 of
the Labor Code.
ISSUES:
WON there was employer- employee relationship between the two,
and if so,
WON Roa was validly terminated
RULING:
YES. Employer-employee relationship existed between the parties.
! Roa was undeniably employed as a pianist of the restaurant. The
hotel wielded the power of selection at the time it entered into the
service contract dated Sept. 1, 1992 with Roa. The hotel could notseek refuge behind the service contract entered into with Roa. It is
the law that defines and governs an employment relationship, whose
terms are not restricted to those fixed in the written contract, for other
factors, like the nature of the work the employee has been called
upon to perform, are also considered.
! The law affords protection to an employee, and does not
countenance any attempt to subvert its spirit and intent. Any
stipulation in writing can be ignored when the employer utilizes the
stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relationshipgenerally tips the scales in favor of the employer, such that the
employee is often scarcely provided real and better options.
! The argument that Roa was receiving talent fee and not salary is
baseless. There is no denying that the remuneration denominated as
talent fees was fixed on the basis of his talent, skill, and the quality of
music he played during the hours of his performance. Roa’s
remuneration, albeit denominated as talent fees, was still considered
as included in the term wage in the sense and context of the Labor
Code, regardless of how petitioner chose to designate the
remuneration, as per Article 97(f) of the Labor Code.
A. Bonifacio St, Makati Cit
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! The power of the employer to control the work of the employee is
considered the most significant determinant of the existence of an
employer-employee relationship. This is the so-called control test,
and is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and
the manner and means used to achieve that end.
! Lastly, petitioner claims that it had no power to dismiss respondent
due to his not being even subject to its Code of Discipline, and that
the power to terminate the working relationship was mutually vested
in the parties, in that either party might terminate at will, with or
without cause. This claim is contrary to the records. Indeed, the
memorandum informing respondent of the discountinuance of his
service because of the financial condition of petitioner showed the
latter had the power to dismiss him from employment.
NO. Roa was not validly terminated.
! The conclusion that Roa’s termination was by reason of
retrenchment due to an authorized cause under the labor Code is
inevitable.! Retrenchment is one of the authorized causes for the dismissal of
employees recognized by the Labor Code. It is a management
prerogative resorted to by employers to avoid ro to minimize
business losses. On this matter, Article 283 of the Labor Code
states:
Article 283. Closure of establishment and reduction of personnel.
– The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertakingunless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. xxx. In case of retrenchment to
prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
! Justifications for retrenchment:
a. The expected losses should be substantial and not m erely de
minimis in extent;
b. The substantial losses apprehended must be reasonably
imminent;
c. The retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses; and
d. The alleged losses, if already incurred, and the expected
imminent losses sought to be forestalled must be proved by
sufficient and convincing evidence.
! In termination cases, the burden of proving that the dismissal was for
a valid or authorized cause rests upon the employer. Here, petitioner
did not submit evidence of the losses to its business operations and
the economic havoc it would thereby imminently sustain. It only
claimed that Roa’s termination was due to its “present
business/financial condition.” This bare statement fell short of the
norm to show a valid retrenchment. Hence, there was no valid cause
for the retrenchment of respondent. Since the lapse of time since the
retrenchment might have rendered Roa’s reinstatement to his former job no longer feasible, Legend Hotel should pay him separation pay
at the rate of one month pay for every year of service computed from
September 1992 until the finality of this decision, and full backwages
from the time his compensation was withheld until the finality of this
decision.
Petition denied.
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WPP MARKETING COMMUNICATIONS, INC., vs. JOCELYN M. GALERA
ALIEN EMPLOYMENT PERMIT
2nd DIVISION G.R. No. 169207 March 25, 2010
The Ruling of the Court
1. Whether Galera is an Employee or a Corporate Officer: Corporate officers
are such by virtue of either the Corporation Code or the corporation’s by -laws.
a. Galera’s appointment as Vice-President with the operational title of
Managing Director of Mindshare was an appointment to a non-existent
corporate office.
b. The four-fold test will show that Galera was an employee
(1) employment contract states where and how often she is to perform her
work; WPP completely controls the compensation she receives; and she is
subject to the regular disciplinary procedures of WPP.
(2) contract states that she is a permanent employee.(3) contract states that the rights to any invention, discovery, improvement in
procedure, trademark, or copyright created or discovered by GALERA during
her employment shall automatically belong to WPP. The Intellectual Property
Code states that this occurs if the creator is an employee of the one entitled
to the patent or copyright.
(4) the Employment Contract, states that her right of redress (in cases of
disciplinary matters) is through Mindshare’s Chief Executive Officer for the
Asia-Pacific.
c. GALERA signed the DOLE Alien Employment Permit and the application
for a 9(g) BID visa as WPP’ Vice President. These should not be considered
against her. Assuming that her appointment as Vice-President was a valid
act, these appointments occurred after she was hired as a regular employee,
with no appreciable change in her duties.
2. Labor Arbiter and the NLRC have jurisdiction.
3. Whether WPP illegally dismissed Galera
a. WPP failed to prove any just or authorized cause, belied further by Galer’s
documentary evidence which contents are contrary to the reasons in the
termination letter.
b. The law requires that the employer to issue the worker two written notices:
(1) notice which apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the subsequent notice which informs
the employee of the employer’s decision to dismiss him. WPP’s did not
comply with the two-notice rule.
3. Whether Galera is entitled to the monetary award: Galera worked in the
Philippines without a proper work permit. The Labor Code and its
Implementing Rules and Regulations state that the employment permit must
be acquired prior to employment. To grant Galera’s prayer is to sanction
violation of the Philippine labor laws requiring aliens to secure work permits
before their employment .
The status quo must prevail; however, Galera may seek relief from other
jurisdictions.
FACTS:
1. Jocelyn Galera, a US citizen, was hired as Managing Director ofMindshare PH effective Sept 1, 1999.2. After 4 months, WPP designated her as VP in her application for workingvisa.3. On Dec. 14, 2000, she was verbally dismissed by the CEO on account ofher incompetence.
LA: WPP liable for illegal dismissal
NLRC: Galera was VP and therefore a corporate officer when she wasdismissed. Thus, it had no jurisdiction to hear and decide on intra- corporate disputes. It was with the SEC. now transferred to the RTC.
CA: Appointment was ultra vires as it was against By-laws, which allowedfor only 1 VP and a maximum of 5 directors.
SC: Illegally dismissed but not entitled to monetary award - did not acquire permit PRIOR to employment, which is a violation of theIRR of Labor Code, Book 1, Rule 14, Section 4
Galera is not a corporate officer.
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Marticio Semblante and Dubrick Pilar v CA, Gallera de
Mandaue/Spouses Loot | 2011 | Velasco, Jr.
G.R. No. 196426. August 15, 2011
Facts:1993: Semblante and Pilar were hired by Spouses Loot (owners of
Gallera de Mandaue cockpit) as masiador and sentenciador, respectively.
As masiador, Semblante calls and takes the bets from the gamecock owners
and other bettors and orders the start of the cockfight. He also distributes the
winnings after deducting the arriba, or the commission for the cockpit.
Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks’ physical condition and capabilities to
continue the cockfight, and eventually declares the result of the cockfight.
Semblante receives 2k per week or 8k per month while Pilar gets 3.5k per
week or 14k per month. They work Tuesday, Wednesday, Saturday and
Sunday every week excluding monthly derbies and cockfights on special
holidays. Their work is at 1pm until 12 midnight or until the early hours of the
morning. Petitioners were issued employee IDs that they wear every time
they report for duty. They alleged never incurring violations of the cockpit
rules and regulations.Nov. 14, 2003, petitioners were denied entry per instructions of respondents
and were informed of termination of their services. Petitioners then filed for
illegal dismissal.
Respondents, in answer, said petitioner were not employees and alleged
they were associates of respondents’ independent contractor, Vega.
Respondent have no regular working time and are free to decide whether to
report or not. In times when there are a few cockfights in their cockpit,
petitioners would go to other cockpits in the vicinity. Lastly, petitioners were
given IDs to indicate they were free from the entrance fee and to differentiate
them from the public.
The LA found petitioners to be regular employees since what they performed
was necessary and indispensible to the usual trade or business of the
respondents for a number of years. There was illegal dismissal so
respondents ordered to pay backwages and separation pay.
Respondents filed the appeal within the 10 day appeal period but failed to
post a cash or surety bond on equivalent to the monetary award granted by
the LA within the same time. Hence, NLRC denied the appeal.
Subsequently, however, NLRC reversed itself saying that the appeal was
meritorious and the belated filing of the bond is a substantial compliance with
the rules. NLRC then found no employer-employee relationship saying that
respondents had no part in the selection and engagement of petitioner, and
that no separate individual contract with respondents was ever executed by
petitioners.
CA agreed with NLRC. It said that that referees and bet-takers in a cockfight
need to have the kind of expertise that is characteristic of the game to
interpret messages conveyed by mere gestures. Hence, petitioners are akin
to independent contractors who possess unique skills, expertise, and talent
to distinguish them from ordinary employees. Further, respondents did not
supply petitioners with the tools and instrumentalities they needed to perform
work. Petitioners only needed their unique skills and talents to perform their
job asmasiador and sentenciador.
Issue:
W/N NLRC and CA correct in allowing the MFR although the appeal bond
was belatedly posted. YES.
- Time and again, however, this Court, considering the substantial
merits of the case, has relaxed the rule on, and excused the late posting of,
the appeal bond when there are strong and compelling reasons for the
liberality;- After all, technical rules cannot prevent courts from exercising their
duties to determine and settle, equitably and completely, the rights and
obligations of the parties;
- This is one case where the exception to the general rule lies.
W/N there was employer-employee relationship. No.
Relationship between the parties fails to pass muster the four-fold test of
employment:
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, which is the most
important element.
At case:
- Both NLRC and CA found that:
o Respondents had no part in petitioners’ selection and management;
o Petitioners’ compensation was paid out of the arriba (which is a
percentage deducted from the total bets), not by petitioners; and
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o Petitioners performed their functions as masiador and sentenciador
free from the direction and control of respondents.
- In the conduct of their work, petitioners relied mainly on their
expertise that is characteristic of the cockfight gambling, and were never
given by respondents any tool needed for the performance of their work;
- No illegal dismissal since petitioners were not employees;
- The rule on the posting of an appeal bond cannot defeat the
substantive rights of respondents to be free from an unwarranted burden of
answering for an illegal dismissal for which they were never responsible.
CA AFFIRMED.
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CESAR C. LIRIO, doing business under the name and style of CELKOR
AD SONICMIX v. WILMER D. GENOVIA
G.R. No. 169757: November 23, 2011, PERALTA, J.
FACTS:
Genovia was allegedly hired on August 15, 2001 as studio manager by
petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor). A
few days after he started working as a studio manager, Lirio approached him
and told him about his project to produce an album for his 15-year-old
daughter. Lirio asked respondent to compose and arrange songs for Celine
and promised that he (Lirio) would draft a contract to assure respondent of
his compensation for such services. As agreed upon, the additional services
that respondent would render included composing and arranging musical
scores only, while the technical aspect in producing the album, such as
digital editing, mixing and sound engineering would be performed by
respondent in his capacity as studio manager for which he was paid on a
monthly basis.
Respondent reminded petitioner about his compensation as composer andarranger of the album. Petitioner verbally assured him that he would be duly
compensated. By mid-November 2001, respondent finally finished the
compositions and musical arrangements of the songs to be included in the
album.
Thereafter, Genovia was tasked by petitioner to prepare official
correspondence, establish contacts and negotiate with various radio stations,
malls, publishers, record companies and manufacturers, record bars and
other outlets in preparation for the promotion of the said album. By early
February 2002, the album was in its manufacturing stage.
On February 26, 2002, respondent again reminded petitioner about the
contract on his compensation as composer and arranger of the album.
Petitioner told respondent that since he was practically a nobody and had
proven nothing yet in the music industry, respondent did not deserve a high
compensation, and he should be thankful that he was given a job to feed his
family. Petitioner informed respondent that he was entitled only to 20% of the
net profit, and not of the gross sales of the album, and that the salaries he
received and would continue to receive as studio manager of Celkor would
be deducted from the said 20% net profit share. Respondent objected and
insisted that he be properly compensated. On March 14, 2002, petitioner
verbally terminated respondent's services, and he was instructed not to
report for work. On July 9, 2002, respondent Wilmer D. Genovia filed a
complaint against petitioner for illegal dismissal, non-payment of commission
and award of moral and exemplary damages.
Petitioner asserted that from the aforesaid terms and conditions, his
relationship with respondent is one of an informal partnership under Article
1767 of the New Civil Code, since they agreed to contribute money, property
or industry to a common fund with the intention of dividing the profits among
themselves. Petitioner had no control over the time and manner by which
respondent composed or arranged the songs, except on the result thereof.
ISSUE:
Whether or not an employer-employee relationship existed between
petitioner and respondent
HELD:
The elements to determine the existence of an employment relationship are:
(a) the selection and engagement of the employee;(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee's conduct.
The most important element is the employer's control of the employee's
conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it.
It is settled that no particular form of evidence is required to prove the
existence of an employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted.
In this case, the documentary evidence presented by respondent to pro ve
that he was an employee of petitioner are as follows: (a) a document
denominated as "payroll" certified correct by petitioner, which showed that
respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of
the month and another P3,500.00 every 30th of the month) with the
corresponding deductions due to absences incurred by respondent; and (2)
copies of petty cash vouchers, showing the amounts he received and signed
for in the payrolls.
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The said documents showed that petitioner hired respondent as an employee
and he was paid monthly wages of P7,000.00. Petitioner wielded the power
to dismiss as respondent stated that he was verbally dismissed by petitioner,
and respondent, thereafter, filed an action for illegal dismissal against
petitioner. The power of control refers merely to the existence of the power. It
is not essential for the employer to actually supervise the performance of
duties of the employee, as it is sufficient that the former has a right to wield
the power. Nevertheless, petitioner stated in his Position Paper that it was
agreed that he would help and teach respondent how to use the studio
equipment. In such case, petitioner certainly had the power to check on the
progress and work of respondent.
On the other hand, petitioner failed to prove that his relationship with
respondent was one of partnership. Such claim was not supported by any
written agreement. It is a well-settled doctrine, that if doubts exist between
the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter.
Based on the foregoing, it is clear that an employer-employee relationshipexisted between petitioner and respondent.
LA: ER-EE relationship existed based on positive assertion anddocumentary evidence.
NLRC: reversed - failed to prove selection, power to dismiss and power of control
CA: reversed - Lirio failed to establish by substantial evidence the existence of a
partnership; burden of proof with the ER
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Wilhelmina Orozco vs Court of Appeals
G.R. No. 155207. August 13, 2008.
562 SCRA 36 – Labor Law – Labor Standards – Employer-employee
Relationship in a Publication – Four Fold Test – Control Test
FACTS
In March 1990, Wilhelmina Orozco was hired as a writer by the Philippine
Daily Inquirer (PDI). She was the columnist of “Feminist Reflections” under
the Lifestyle section of the publication. She writes on a weekly basis and on a
per article basis (P250-300/article).
In 1991, Leticia Magsanoc as the editor-in-chief sought to improve the
Lifestyle section of the paper. She said there were too many Lifestyle writers
and that it was time to reduce the number of writers. Orozco’s column was
eventually dropped.
Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc.
Orozco won in the Labor Arbiter where the arbiter ruled that there exists anemployer-employee relat ionship between PDI and Orozco.
The case eventually reached the Court of Appeals where the CA ruled that
there is no such relationship.
Orozco insists that by applying the four-fold test, it can be seen that she is an
employee of PDI; Orozco insists that PDI had been exercising the power of
control over her because:
a) PDI provides the guidelines as to what her article content should be;
b) PDI sets deadlines as to when Orozco must submit her article/s;
c) PDI controls the number of articles to be submitted by Orozco;
d) PDI requires a certain discipline from their writers so as to maintain their
readership.
ISSUE: Whether or not a newspaper columnist is an employee of the
newspaper which publishes the column.
HELD: No. The type of control being argued by Orozco is not the type of
control contemplated under the four fold test principle in labor law. The
Supreme Court emphasized: The main determinant to test control is whether
the rules set by the employer are meant to control not just the results of the
work but also the means and method to be used by the hired party in order to
achieve such results.
In this case, the “control” exercised by PDI over Orozco, as mentioned
earlier, is not that “control” contemplated under the four fold test. In fact, such
standards set by PDI is merely incidental or inherent in the newspaper
business and is not an exercise of control over Orozco.
Orozco has not shown that PDI, acting through its editors, dictated how she
was to write or produce her articles each week. There were no restraints on
her creativity; Orozco was free to write her column in the manner and style
she was accustomed to and to use whatever research method she deemed
suitable for her purpose. The apparent limitation that she had to write only on
subjects that befitted the Lifestyle section did not translate to control, but was
simply a logical consequence of the fact that her column appeared in thatsection and therefore had to cater to the preference of the readers of that
section.
Orozco:
1) PDI had control over her work - Contents: must be a “lifestyle” article, prerogative to reject
- Space: length, 2-3 pages
- Time/Discipline: produce an article weekly 2) regular employee
- article published weekly for 3 years now
SC: No ER-EE relationship
1) Control Test - general guidelines in order to achieve mutually desired results are not indicative
of control
- control is merely on the desired result and not on the means - no restraints on creativity
2) Economic Reality Test - EE’s economic dependence on ER - primary occupation: women’s rights advocate
- contributes to other publications
- thus, independent contractor - unique skills, talent and celebrity statusnot possessed by ordinary employees
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Bitoy Javier (Danilo Javier) v. Fly Ace Corporation and Flordelyn
Castillo G.R. No. 192558. February 15, 2012.
Facts:
1. Since 2007, Danilo ‘Bitoy’ Javier was an employee of Fly Ace
Performed various tasks, such as cleaning and arranging the
canned items before their delivery, except in instances when he
would be ordered to accompany the company's delivery
vehicles, as pahinante
Reported for work M to S from 7AM to 5PM
He wasn’t issued an ID and payslips
2. May 6, 2008: He was no longer allowed to enter the premises, upon
instruction of Mr. Ong, his superior
As he was begging the security guard to let him enter, he saw
Mr. Ong, whom he approached and asked why he was being
barred from entering
“Tanungin mo anak mo” – Mr. Ong
Bitoy discovered that Mr. Ong had been courting his daughter
Annalyn; that Annalyn tried to talk to Mr. Ong and convince himto spare Bitoy from trouble, but he refused; that Mr. Ong then
fired Bitoy
3. May 23, 2008: Bitoy filed a complaint with the NLRC for
underpayment of salaries and other labor standard benefits
His evidence: affidavit of Bengie Valenzuela, who alleged that
Bitoy was a stevedore or pahinante of Fly Ace from Sept. 2007
to Jan. 2008
Fly Ace said it was in the business of importation and sales of
groceries
That Bitoy was cont racted by Mr. Ong as extra helper on
a pakyaw basis for 5-6 times a month, whenever the
vehicle of its contracted hauler, Milmar Hauling Services,
was unavailable;
Rate was P300 (increased to P325)
That on April 30, they no longer needed his services
That Bitoy was not their employee, and there was no
illegal dismissal
Evidence: Agreement with Milmar Hauling Services (the
contracted hauler) and copies of acknowledgment
receipts evidencing payment to Javier – “daily manpower
(pakyaw/piece rate pay)”
4. LA: Dismissed, Bitoy failed to present proof he was a regular
employee of Fly Ace
He has no ID nor any document showing he received benefits
accorded to regular employees
Bitoy was contracted on “pakiao” basis because Fly Ace has a
regular hauler to deliver its products
Claim for underpayment of salaries unfounded; payroll presented
had Bitoy’s signature, which, despite not being uniform,
appeared to be his true signature
5. NLRC: Favored Bitoy
LA wrong because it immediately concluded Bitoy as not a
regular employee simply because he failed to present proof
That a pakyaw-basis arrangement did not preclude the existence
of employer-employee relationship because payment is a
method of compensation, it does not define the essence of therelation – “It is a mere method of computing compensation, not a
basis for determining the existence or absence of an employer-
employee relationship.”
Just because the work done was not directly related to the trade
or business or the work was considered as “extra,” it does not
follow that Bitoy is a job contractor, rather than an employee
There was sufficient basis on the existence of an ER-EE
relationship
There was a reasonable connection between the activity
performed (as pahinante) in relation to the business or trade
of the employer (importation, sales , delivery of groceries)
Not an independent contractor because he could not
exercise judgment in the delivery of products, he was only a
“helper”
Bitoy is entitled to security of tenure; Fly Ace did not present
proof for a valid cause of termination, so it is liable for illegal
dismissal, backwages, and separation pay
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6. CA: Annulled the NLRC, reinstated the LA
In an illegal dismissal case, the onus probandi rests on the
employer; however, before an illegal dismissal case can prosper,
an ER-EE relationship must first be established
Incumbent upon Bitoy to prove he is an employee, but he failed
to discharge this burden
Bitoy’s failure to present salary vouchers, playslips or other
pieces of evidence to bolster his contention
The facts alleged by Bitoy did NOT pass the “control test”
He contracted work outside the premises
He was not required to observe definite hours
He was not required to report daily
He was free to accept work elsewhere
7. Appeal to the SC
Issues:
1. WON Bitoy is a regular employee
2. WON he is entitled to his monetary claims
Held:
1. NO, he is not a regular employee; affirmed CA
- Bitoy: Fly Ace has nothing to substantiate that he was engaged on a
pakyaw basis; and assuming he was hird on pakyaw basis, it does
not preclude his regular employment; acknowledgement receipts
with his signature do not show true nature of employment (relied on
Chavez v. NLRC)
o His tasks as pahinante are related to Fly Air’s business
o He was subject to the control and supervision of the company
(reported M to S, 7AM to 5PM)
o List of deliverable goods prepared by Fly Ace – Bitoy was subject to
compliance with company rules
o He was illegally dismissed by Fly Ace
- Fly Ace: Bitoy had no substantial evidence to prove ER-EE
relationship
o Despite having Milmar Hauling under service contract, they
contracted Bitoy as an extra helper or pahinante, on a mere “per trip
basis”
o Bitoy and the company driver would have the vehicle and products in
their custody, and when they left company premises, they use their
own means, method, best judgment and discretion (i.e., no control by
Fly Ace)
o Claims of employment by Bitoy are BASELESS, and nothing was
presented to substantiate this
o Lopez v. Bodega City: In an illegal dismissal case, the burden of
proof is upon the complainant w ho claims to be an employee. It is
essential that an employer-employee relationship be proved by
substantial evidence
o Bitoy merely offers factual assertions, unsupported by proof
o Bitoy was not subject to Fly Ace’s control, he performed his work
outside the premises, he was not made to report at regular work
hours, he was free to leave any time
- SC: Evoked equity jurisdiction to examine the factual issues
- The LA and CA found that Bito y’s claim of employment is wanting
and deficient; the Court is constrained to agree
- Bitoy needs to show by substantial evidence (Sec. 10, Rule VII, New
Rules of Procedure of the NLRC) that he was indeed an employee
against which he claims illegal dismissal
- In sum, the rule of thumb remains: the onus probandi falls onpetitioner to establish or substantiate such claim by the requisite
quantum of evidence.32 "Whoever claims entitlement to the benefits
provided by law should establish his or her right thereto . . . ." – Bitoy
failed to adduce substantial evidence as basis for the grant of relief
- All Bitoy presented were self-serving statements showing his
activities as employee, but failed to pass the substantiality
requirement (as concluded also by the LA and the CA), from which
the SC sees no reason to depart
o Affidavit of Bengie Valenzuela that Bitoy presented was insufficient
because all it provided was that he would frequently see Bitoy at the
workplace where he (Bengie) was a stevedore
o SC: Mere presence falls short of proving employment
- SC: The burden is on Bitoy to pass the control test
o Bitoy was not able to persuade the Court that the elements exist (no
competent proof that he was a regular employee, that Fly Ace paid
wages as an employee, that Fly Ace could dictate what his conduct
wuld be while at work)
- SC: Fly Ace does not dispute having contracted Javier and paid him
on a "per trip" rate as a stevedore, albeit on a pakyaw basis.
o They presented documentary proof – acknowledgment receipts
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2. Moot. No need to resolve the second issue.
Obiter: "payment by the piece is just a method of compensation and does not
define the essence of the relation."
Payment on a piece-rate basis does not negate regular employment.
The term 'wage' is broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or
commission basis
Payment by the piece is just a method of compensation and does not
define the essence of the relations
Disposition: Petit ion is DENIED.
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JARL CONSTRUCTION and ARMANDO K. TEJADA vs. SIMEON A.
ATENCIO
G.R. No. 175969.August 1, 2012.
Burden of proof and presumptions in administrative cases
In dismissing an employee from service, the employer has the burden of
proving its observance of the two-notice requirement and its accordance to
the employee of a real opportunity to be heard.
Facts:
JARL, through Tejada, hired Atencio as its chief operating manager, primary
function was to direct and manage construction projects in accordance with
its company policies and contracts. Atencio’s employment contract states
that, when the execution of a project requires a contract modification, the
chief operating manager has the duty to report the needed changes to the
company President, for the latter’s approval. Further, as chief operating
manager, he is the recommending authority with respect to the award of
subcontracts and purchase orders.
During Atencio’s tenure as chief operating manager, his employer JARL had
an existing contract with Caltex. The contract prohibited JARL from
subcontracting the project.
According to Atencio, he discovered during his employment that JARL did
not have the proper facilities, personnel, and equipment to undertake the
Caltex project; hence he and Tejada discussed the need for hiring
subcontractors. It was during these meetings that Tejada agreed to hire
Atencio’s construction company, Safemark Construction and Development
Corporation (Safemark), to perform works for the Caltex project.
Further, Tejada allegedly gave Atencio full authority as JARL’s chief
operating manager to hire other subcontractors if necessary. Pursuant to his
blanket authority, Atencio hired DDK Steel Construction and Building Multi-
Technology (DDK Steel) for the electrical installations of the Caltex project.
Tejada informed Atencio and Safemark that JARL was terminating Atencio’s
management and supervision works for the Caltex project. JARL assured
Atencio and Safemark that it will pay for the rendered services.
Atencio construed such as a termination of the subcontract between his
company and JARL. Thus, he threatened JARL and Tejada that he will report
their unethical conduct with the Philippine Accreditation Board for possible
sanctions.
Believing, however, that his employment as JARL’s chief operating manager
was separate from their subcontracting agreement, Atencio allegedly
continued reporting for work to the Caltex project site until, sometime in June
1999, he was barred from entering the said premises.
Atencio filed a complaint for illegal dismissal, nonpayment of salaries, and
13th month pay with the NLRC against JARL and Tejada.
He maintained that JARL did not inform him of the charges leveled against
him and of his termination from employment. He claimed learning of his
termination only through the letter that JARL sent to Caltex Philippines. He
also maintained that JARL never paid him his monthly salary and 13th month
pay as chief operating manager.
JARL and Tejada asserted that that the termination of the services of Atencio
was done for just causes and with substantial compliance with the procedural
requirements. They allegedly lost confidence in Atencio after the latter
entered into a Subcontract Agreement with DDK Steel in the Caltex project,
without the consent of the top management of JARL and in violation of
JARL’s contract with Caltex. He even sent letters to Caltex that jeopardized
JARL’s relationship with its client. Further, he instigated JARL’s proj ect
engineer to fabricate the project accomplishment report and he habitually
defied company policies and procedures. Lastly, they maintained that they
have adequately compensated Atencio for his services as evidenced by
Safemark’s two official receipts.
Atencio maintained that the amounts that JARL paid to Safemark were
payments for the company’s services as subcontractor, not payment of
Atencio’s salaries as chief operating manager.
The Labor Arbiter found just cause for Atencio’s Removal but found the
dismissal ineffectual because of petitioners’ failure to observe the twin
requirements of due process .
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The NLRC reversed the Labor Arbiter’s Decision. The NLRC gave emphasis
to two letters adduced in evidence. The first is Atencio ’s letter to JARL
wherein Atencio acknowledges his mistakes and apologizes for them and
JARL’s earlier letter which clearly informed Atencio of its decision to
terminate his employment as its chief operating manager.
The CA held that Atencio’s dismissal was ineffectual for the employer’s
failure to observe the procedural requirements for a proper termination of
employment. CA also reversed the NLRC with respect to the issue of the
unpaid salaries and 13th month pay. It held that the employer should have
presented the pertinent personnel files, payrolls, records, remittances, and
other similar documents, which are in its custody and control. JARL did not
present any of these relevant documents in support of its contention that it
has duly paid Atencio for his services as chief operating manager. JARL’s
failure to produce said evidence gives the impression that Atencio had not
been paid.
Issues:
1. Whether petitioners were able to prove their substantial compliancewith the procedural due process requirements (NO!)
2. Whether the receipts issued by Safemark evidencing JARL’s
payment for "Professional Services" suffice as proof of payment of
salaries and 13th month pay (NO!)
Held:
The Court agrees with the shared conclusions of the Labor Arbiter and the
appellate court that petitioners’ evidence fails to prove their contention that
they afforded Atencio with due process. The letter, which allegedly proves
Atencio’s knowledge of the charges against him, and which allegedly
constitutes Atencio’s explanation, clearly discusses an entirely different topic
– which is the removal of his construction company from the Caltex project.
In the letter, Atencio states that he was wrong for assuming that there was a
subcontracting agreement between his firm and JARL. He took responsibility
for the misunderstanding between them and apologized. Nowhere in the said
letter does Atencio refer to the charges, which JARL mentioned before the
Labor Arbiter as the causes for his dismissal. Logically, he did not also
explain himself as regards the said charges.
As for the letter which allegedly constitutes the notice of termination of
Atencio’s employment as JARL’s chief operating manager, the Court agrees
with the CA’s appreciation that the said letter involves the termination of the
subcontracting agreement between JARL and Atencio’s company, and not
the termination of Atencio’s employment.
With respect to the issue of unpaid salaries and 13th month pay, the Court
agrees with the appellate court that petitioners’ evidence does not support
their contention of payment.
Since JARL admits that the said company actually rendered services for
JARL on its Caltex project, the payment can only be assumed as covering for
the said services. There is nothing on the face of the receipts to support the
conclusion that Atencio (and not his company) received it as payment for his
service as a JARL employee.
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Sarona vs NLRC 2012
G.R. No. 185280. January 18, 2012
Facts:
Petitioner, a security guard in Sceptre since April 1976, was asked by
Sceptre’s operations manager on June 2003, to submit a resignation
letter as a requirement for an application in Royale and to fill up an
employment application form for the said company. He was then
assigned at Highlight Metal Craft Inc. from July 29 to August 8, 2003 and
was later transferred to Wide Wide World Express Inc. On September
2003, he was informed that his assignment at WWWE Inc. was
withdrawn because Royale has been allegedly replaced by another
security agency which he later discovered to be untrue. Nevertheless, he
was once again assigned at Highlight Metal sometime in September
2003 and when he reported at Royale’s office on October 1, 2003, he
was informed that he would no longer be given any assignment as
instructed by Sceptre’s general manager.
He thus filed acomplaint for illegal dismissal. The LA ruled in petitioner’sfavor as he found him illegally dismissed and was not convinced by the
respondent’s claim on petitioner’s abandonment.
Respondents were ordered to pay back wages computed from the day
he was dismissed up to the promulgation of his decision on May 11,
2005.The LA also ordered for the payment of separation pay but refused
to pierce Royale’s corporate veil.
Respondents appealed to the NLRC claiming that the LA acted with
grave abuse of discretion upon ruling on the illegal dismissal of
petitioner. NLRC partially affirmed the LA’s decision with regard to
petitioner’s illegal dismissal and separation pay but modified the amount
of backwages and limited it to only 3 months of his last month salary
reducing P95, 600 to P15, 600 since he worked for Royale for only 1
month and 3 days.
Petitioner did not appeal to LA but raised the validity of LA’s findings on
piercing Royale’s corporate personality and computation of his
separation pay and such petition was dismissed by the NLRC. Petitioner
elevated NLRC’s decision to the CA on a petition for certiorari, and the
CA disagreed with the NLRC’s decision of not proceeding to review the
evidence for determining if Royale is Sceptre’s alt er ego that would
warrant the piercing of its corporate veil.
Issue:
Whether or not Royale’s corporate fiction should be pierced for the
purpose of compelling it to recognize the petitioner’s length of service
with Sceptre and for holding it liable for the benefits that have accrued to
him arising from his employment with Sceptre.
Whether or not petitioner’s back wages should be limited to his salary for
3 months
Ruling:
The doctrine of piercing the corporate veil is applicable on alter ego
cases, where a corporation is merely a farce since it is a mere alter ego
or business conduit of a person, or where the corporation is so organized
and controlled and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.
The respondents’ scheme reeks of bad faith and fraud and
compassionate justice dictates that Royale and Sceptre be merged as a
single entity, compelling Royale to credit and recognize the petitioner’s
length of service with Sceptre. The respondents cannot use the legal
fiction of a separate corporate personality for ends subversive of the
policy and purpose behind its creation or which could not have been
intended by law to which it owed its being.
Also, Sceptre and Royale have the same principal place of business. As
early as October 14, 1994, Aida and Wilfredo became the owners of the
property used by Sceptre as its principal place of business by virtue of a
Deed of Absolute Sale they executed with Roso. Royale, shortly after its
incorporation, started to hold office in the same property. These, the
respondents failed to dispute.
Royale also claimed a right to the cash bond which the petitioner posted
when he was still with Sceptre. If Sceptre and Royale are indeed
separate entities, Sceptre should have released the petitioner’s cash
bond when he resigned and Royale would have required the petitioner to
post a new cash bond in its favor.
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The way on how petitioner was made to resign from Sceptre then later
on made an employee of Royale, reflects the use of the legal fiction of
the separate corporate personality and is an implication of continued
employment. Royale is a continuation or successor or Sceptre since the
employees of Sceptre and of Royale are the same and said companies
have the same principal place of business .
Because petitioner’s rights were violated and his employer has not
changed, he is entitled to separation pay which must be computed from
the time he was hired until the finality of this decision. Royale is also
ordered to pay him backwages from his dismissal on October 1, 2003
until the finality of this decision.
However, the amount already received by petitioner from the
respondents shall be deducted. He is also awarded moral and exemplary
damages amounting to P 25, 000.00 each for his dismissal which was
tainted with bad faith and fraud. Petition is granted. CA’s decision is
reversed and set aside.
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De Leon et al. v. NLRC
G.R. No. 112661. May 30, 2001.
Facts:
Petitioners are security guards assigned in the premises of Fortune Tobacco
Services, Inc. (FTC) pursuant to a contract for security services with Fortune
Integrated Services Inc. (FISI). Sometime after, FISI stockholders executed a
“Deed of Sale of Shares of Stock” in favor of a group of new stockholders, it
also amended its Articles of Incorporation changing its name to Magnum
Integrated Services, Inc. (MISI). FTC terminated the contract with FISI which
resulted in the displacement of some 582 security guards assigned to FTC,
including petitioners herein.
FTC Labor Union which is an affiliate of NAFLU, sent a Notice of Strike which
resulted in the picketing of the premises of FTC, however, RTC of Pasig,
issued a writ of injunction to enjoin the picket. Petitioners then filed the
instant case to the Arbitration branch of the NLRC.
Petitioners that they were regular employees of FTC which was also usingthe corporate names FISI and MISI, averring that they work under the control
and supervision of FTC’s security supervisors, and that, they were dismissed
without just cause and due process. They also claimed that their dismissal
was the design of their employer to bust their newly organized union.
Respondent FTC, on the other hand, maintained that there was no EE-ER
relationship, that petitioners were employee of MISI a separate and distinct
corporation from FTC.
LA ruled for respondents . NLRC reversed.
Issue: WON respondents are guilty of ULP.
Held: Yes, respondents are guilty of ULP.
Ratio: Respondents were guilty of interfering with the right of
petitioners to self-organization which const itutes unfair labor practice
under Article 248 of the Labor Code. Petitioners have been employed with
FISI since the 1980s and have since been posted at the premises of FTC
(main factory plant, tobacco re-drying plant and warehouse). FISI, while
having its own corporate identity, was a mere instrumentality of FTC,
tasked to provide protection and security in the company premises. The
2 corporations had identical stockholders and the same business address.
FISI also had no other clients except FTC and other companies belonging to
the Lucio Tan group of companies. Moreover, the early payslips of
petitioners show that their salaries were initially paid by FTC. To enforce their
rightful benefits under the laws on Labor Standards, petitioners formed a
union which was later certified as bargaining agent o f all the security
guards. On February 1, 1991, the stockholders of FISI sold all their
participations in the corporation to a new set of stockholders which
renamed the corporation Magnum Integrated Services, Inc. On October 15,
1991, FTC, without any reason, pre-terminated its contract of security
services with MISI and contracted 2 other agencies to provide security
services for its premises. This resulted in the displacement of petitioners. As
MISI had no other cl ients, it failed to give new assignments to
petitioners. Petitioners have remained unemployed since then. All these
facts indicate a concerted effort on the part of respondents to remove
petitioners from the company and thus abate the growth of the union
and block its actions to enforce their demands in accordance with the
Labor Standards laws.
The test of whether an employer has interfered with and coerced
employees within the meaning of section (a) (1) is whether the
employer has engaged in conduct which it may reasonably be said
tends to interfere with the free exercise of employees’ rights under
section 3 of the Act, and it is not necessary that there be direct evidence that
any employee was in fact intimidated or coerced by statements of threats of
the employer if there is a reasonable inference that anti-union conduct
of the employer does have an adverse effect on self-organization and
collective bargaining.”
A corporation is an entity separate and distinct from its stockholders
and from other corporations to which it is connected. However, when the
concept of separate legal entity is used to defeat public convenience, justify
wrong, protect fraud or defend crime, the law will regard the corporation as
an association of persons, or in case of two corporations, merge them into
one. The separate juridical personality of a corporation may also be
disregarded when such corporation is a mere alter ego or business
conduit of another person. FISI was a mere adjunct of FTC. FISI, by virtue
of a contract for security services, provided FTC with security guards to
safeguard its premises. However, records show t hat FISI and FTC have
the same owners and business address, and FISI provided security
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services only to FTC and other companies belonging to the Lucio Tan group
of companies. The purported sale of the shares of the former stockholders
to a new set of stockholders who changed the name of the corporation to
Magnum Integrated Services, Inc. appears to be part of a scheme to
terminate the services of FISI’s security guards posted at the premises
of FTC and bust their newly-organized union which was then beginning to
become active in demanding the company’s compliance with Labor
Standards laws. Under these circumstances, the Court cannot allow
FTC to use its separate corporate personality to shield itself from liability
for illegal acts committed against its employees.
IN VIEW WHEREOF, petition is GRANTED. The assailed resolutions of the
NLRC are SET ASIDE. Respondents are hereby ordered to pay petitioners
their full backwages, and to reinstate them to their former position without
loss of seniority rights and privileges, or to award them separation pay in
case reinstatement is no longer possible.
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PHILIPPINE BANK OF COMMUNICATIONS vs. NLRC
G.R. No. L-66598 December 19, 1986
FACTS:
Petitioner Philippine Bank of Communications and the Corporate Executive
Search Inc. (CESI) entered into a letter agreement dated January 1976
under which CES) undertook to provide "Tempo[rary] Services" to petitioner
Consisting of the "temporary services" of eleven (11) messengers. The
contract period is described as being "from January 1976—." Attached to the
letter agreement was a "List of Messengers assigned at Philippine Bank of
Communications" which list included, as item No. 5 thereof, the name of
private respondent Ricardo Orpiada.
Ricardo Orpiada was thus assigned to work with the petitioner bank. As
such, he rendered services to the bank, within the premises of the bank and
alongside other people also rendering services to the bank. There was some
question as to when Ricardo Orpiada commenced rendering services to the
bank. As noted above, the letter agreement was dated January 1976.
However, the position paper submitted by CESI to the National LaborRelations Commission (NLRC) stated that CES) hired Ricardo Orpiada on 25
June 1975 as a Tempo Service employee, and assigned him to work with the
petitioner bank "as evidenced by the appointment memo issued to him on 25
June 1975.” Be that as it may, on or about October 1976, the petitioner
requested CESI to withdraw Orpiada's assignment because, in the allegation
of the bank, Orpiada's services "were no longer needed."
On 29 October 1976, Orpiada instituted a complaint in the Department of
Labor (now Ministry of Labor and Employment) against the petitioner for
illegal dismissal and failure to pay the 13th month pay provided for in
Presidential Decree No. 851. After investigation, the Office of the Regional
Director, Regional Office No. IV of the Department of Labor, issued an order
dismissing Orpiada's complaint for failure of Mr. Orpiada to show the
existence of an employer-employee relationship between the bank and
himself.
Despite the foregoing order, Orpiada succeeded in having his complaint
certified for compulsory arbitration. During the compulsory arbitration
proceedings, CESI was brought into the picture as an additional respondent
by the bank. Both the bank and CESI stoutly maintained that CESI (and not
the bank) was the employer of Orpiada.
On 12 September 1977, respondent Labor Arbiter Dogelio rendered a
decision reinstating complainant to the same or equivalent position with full
back wages and to pay the latter's 13th month pay for the year 1976.
On 26 October 1977, the bank appealed the decision of the Labor Arbiter to
the respondent NLRC. More than six years later —the NLRC promulgated its
decision affirming the award of the Labor Arbiter except for the modification
reducing the complainant's back wages to two (2) years without qualification.
Accordingly, on 2 April 1984, the bank filed the present petition for certiorari
with this Court seeking to annul and set aside the decision of respondent
Labor Arbiter Dogelio and the decision of the NLRC.
ISSUE: WON an employer-employee relationship existed between the
petitioner Phil. Bank of Communications and private respondent Ricardo
Orpiada.
HELD:
Yes, because CESI is a “labor -only” contractor.
It is in necessary in this case to confront the task of determining the
appropriate characterization of the relationship between the bank and CESI
was that relationship one of employer and job (independent) contractor or
one of employer and "labor-only" contractor to resolve the issue.
Under the general rule set out in the 1st and 2nd paragraphs of Article 106,
an employer who enters into a contract with a contractor for the performance
of work for the employer, does not thereby create an employer-employee
relationship between himself and the employees of the contractor. Thus, the
employees of the contractor remain the contractor's employees and his
alone. Nonetheless when a contractor fails to pay the wages of his
employees in accordance with the Labor Code, the employer who contracted
out the job to the contractor becomes jointly and severally liable with his
contractor to the employees of the latter "to the extent of the work performed
under the contract" as such employer were the employer of the contractor's
employees. The law itself, in other words, establishes an employer-employee
relationship between the employer and the job contractor's employees for a
limited purpose, i.e., in order to ensure that the latter get paid the wages due
to them.
TEODORICO DOGELIO RICARDO ORPIADA
DOLE: DISMISSED. NO ER-EE RELATIONSHI
LA: REINSTATEMEN
NLRC: REDUCING WAGES TO 2 YEARS
1. Subcontracting: ER-EE exists for limited purpose of paying wages
2 L b l ER EE i t t t i ti f l b d
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A similar situation obtains where th ere is "labor only" contracting. The "l abor-
only" contractor-i.e "the person or intermediary" is considered "merely as an
agent of the employer. " The employer is made by the statute responsible to
the employees of the "labor only" contractor as if such employees had been
directly employed by the employer. Thus, where "labor only" contracting
exists in a given case, the statute itself implies or establishes an employer-
employee relationship between the employer (the owner of the project) and
the employees of the "labor only" contractor, this time for a comprehensive
purpose: "employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code. " The law in effect holds both the
employer and the "labor-only" contractor responsible to the latter's
employees for the more effective safeguarding of the employees' rights
under the Labor Code.
The bank and CESI urge that CESI is NOT properly regarded as a "labor-
only" contractor upon the ground that CESI is possessed of substantial
capital or investment in the form of office equipment, tools and trained
service personnel.
We are unable to agree with the bank and CES) on this score. The definition
of "labor-only" contracting in Section 9 of Rule VIII of Book III entitled
"Conditions of Employment," of the Omnibus Rules Implementing the Labor
Code must be read in conjunction with the definition of job contracting given
in Section 8 of the same Rules. The undertaking given by CESI in favor of
the bank was not the performance of a specific job for instance, the carriage
and delivery of documents and parcels to the addresses thereof. In the
present case, the undertaking of CESI was to provide its client-the bank-with
a certain number of persons able to carry out the work of messengers.
Orpiada utilized the premises and office equipment of the bank and not those
of CESI’s. Succinctly put, CESI is not a parcel delivery company: as its name
indicates, it is a recruitment and placement corporation placing bodies, as it
were, in different c lient companies for longer or shorter periods of time.
2. Labor-only: ER-EE exists to prevent circumvention of labor code
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San Miguel Corporation vs. NLRC
G.R. Nos. 146121-22, April 16, 2008
Facts:
Ibias (respondent) was employed by petitioner SMC on 24 December 1978
initially as a CRO operator in its Metal Closure and Lithography Plant.
Respondent continuously worked therein until he advanced as Zamatic
operator. He was also an active and militant member of a labor organization
called Ilaw Buklod Manggagawa (IBM)-SMC Chapter.
According to SMC’s Policy on Employee Conduct, absences without
permission or AWOPs, which are absences not covered either by a
certification of the plant doctor that the employee was absent due to sickness
or by a duly approved application for leave of absence filed at least 6 days
prior to the intended leave, are subject to disciplinary action characterized by
progressively increasing weight. The same Policy on Employee Conduct also
punishes falsification of company records or documents with discharge or
termination for the first offense if the offender himself or somebody else
benefits from falsification or would have benefited if falsification is not foundon time.
It appears that per company records, respondent was AWOP on the
following dates in 1997: 2, 4 and 11 January; 26, 28 and 29 April; and 5, 7, 8,
13, 21, 22, 28 and 29 May. For his absences on 2, 4 and 11 January and 28
and 29 April, he was given a written warning dated 9 May 1997 that he had
already incurred five (5) AWOPs and that further absences would be subject
to disciplinary action. For his absences on 28 and 29 April and 7 and 8 May,
respondent was alleged to have falsified his medical consultation card by
stating therein that he was granted sick leave by the plant clinic on said dates
when in truth he was not.
After the completion of the investigation, SMC concluded that respondent
committed the offenses of excessive AWOPs and falsification of company
records or documents, and accordingly dismissed him.
On 30 March 1998, respondent filed a complaint for illegal dismissal against
SMC. The labor arbiter believed that respondent had committed the
absences pointed out by SMC but found the imposition of termination of
employment based on his AWOPs to be disproportionate since SMC failed to
show by clear and convincing evidence that it had strictly implemented its
company policy on absences. It also noted that termination based on the
alleged falsification of company records was unwarranted in view of SMC’s
failure to establish respondent’s guilt.
The appellate court also held that respondent’s AWOPs did not warrant his
dismissal in view of SMC’s inconsistent implementation of its company
policies. It could not understand why respondent was given a mere warning
for his absences on 28 and 29 April which constituted his 5th and 6th
AWOPs, respectively, when these should have merited suspension under
SMC’s policy. According to the appellate court, since respondent was merely
warned, logically said absences were deemed committed for the first time;
thus, it follows that the subject AWOPs did not justify his dismissal because
under SMC’s policy, the 4th to 9th AWOPs are meted the corresponding
penalty only when committed for the second time.
Issue: WON the Court of Appeals erred in sustaining the findings of the labor
arbiter and the NLRC and in dismissing SMC’s claims that respondent was
terminated from service with just cause.
Held:
Proof beyond reasonable doubt is not required as a basis for judgment on
the legality of an employer’s dismissal of an employee, nor even
preponderance of evidence for that matter, substantial evidence being
sufficient. In the instant case, while there may be no denying that
respondent’s medical card had falsified entr ies in it, SMC was unable to
prove, by substantial evidence, that it was respondent who made the
unauthorized entries. Besides, SMC’s (Your) Guide on Employee Conduct
punishes the act of falsification of company records or documents; it does not
punish mere possession of a falsified document.
Respondent cannot feign surprise nor ignorance of the earlier AWOPs he
had incurred. He was given a warning for his 2, 4, and 11 January and 26,
28, and 29 April 1997 AWOPs. In the same warning, he was informed that he
already had six AWOPs for 1997. He admitted that he was absent on 7 and 8
May 1997. He was also given notices to explain his AWOPs for the period 26
May to 2 June 1997, which he received but refused to acknowledge. It does
not take a genius to figure out that as early as June 1997, he had more than
nine AWOPs.
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In any case, when SMC imposed the penalty of dismissal for the 12th and
13th AWOPs, it was acting well within its rights as an employer. An employer
has the prerogative to prescribe reasonable rules and regulations necessary
for the proper conduct of its business, to provide certain disciplinary
measures in order to implement said rules and to assure that the same would
be complied with. An employer enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on work-related activities of
the employees.
It is axiomatic that appropriate disciplinary sanction is within the purview of
management imposition. Thus, in the implementation of its rules and policies,
the employer has the choice to do so strictly or not, since this is inherent in
its right to control and manage its business effectively. Consequently,
management has the prerogative to impose sanctions lighter than those
specifically prescribed by its rules, or to condone completely the violations of
its erring employees. Of course, this prerogative must be exercised free of
grave abuse of discretion, bearing in mind the requirements of justice and fair
play.
All told, we find that SMC acted well within its rights when it dismissed
respondent for his numerous absences. Respondent was afforded due
process and was validly dismissed for cause.
Petition granted
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Aliviado v. Procter & Gamble Philippines, Inc.
G.R. No. 160506, 614 SCRA 563, March 9, 2010
FACTS:
Petitioners worked as merchandisers of respondent Procter & Gamble
Philippines, Inc. (hereafter, P&G) from various dates, allegedly starting
as early as 1982 or as late as June 1991, to either May 5, 1992 or March
11, 1993.
Petitioners signed employment contracts with respondent Promm-Gem,
Inc. (Promm-Gem) and Sales and Promotions Services (SAPS). They
were employed for five months at time, assigned to different stations in
supermarkets.
SAPS and Promm-Gem paid petitioners’ wages and imposed disciplinary
measures on petitioners when warranted.
P&G entered into contracts with SAPS and Promm-Gem for the
promotion of its products. It appears that petitioners were assigned topromote P&G’s products.
In December 1991, petitioners filed a complaint for regularization and
other money claims against P&G. The complaint was later amended to
include charges of illegal dismissal.
Labor Arbiter: Dismissed the complaint; there was no employer -
employee relationship (EER) between petitioners and P&G, as the
former were employed by Promm-Gem and SAPS.
! Applied the four-fold test for EER:
Select ion and engagement;
Payment of wages;
Power of dismissal;
Power of control.
! Declared Promm-Gem and SAPS legitimate job contractors.
Petit ioners appealed to the NLRC.
NLRC: Dismissed the appeal, affirmed the Labor Arbiter’s Decision.
Motion for reconsiderat ion denied.
Petitioners sought recourse with the Court of Appeals via a petition for
certiorari under Rule 65 of the Rules of Court.
CA: Denied the petition and affirmed the NLRC’s Decision with
modification.
! P&G ordered to pay service incent ive leave pay to peti tioners.
! Petit ioners’ motion for reconsiderat ion was denied.
• Hence, this petition for review by certiorari under Rule 45 of the Rules of
Court.
ISSUES + RATIO:
Whether or not contracting out of a company’s core activities is allowed
under the Labor Code and its Implementing Rules. YES.
To be sure, the Labor Code and its Implementing Rules do not prohibit
job contracting. The law allows contracting arrangements for the
performance of speci fic jobs, works or services.
Indeed, it is management prerogati ve to farm out any of its activities,regardless of whether such activity is peripheral or core in nature.
However, in order for such outsourcing to be valid, it must be made to an
independent contractor because the current labor rules expressly prohibit
labor-only contracting.
Labor-only contracting exists where the “contractor” merely recruits,
supplies or places workers to perform a job, work or service for a
principal. Moreover, any of the following elements must concur:
• The contractor or subcontractor does not have substantial capital or
investment which relates to the job, work or service to be performed
and the employees recruited, supplied or placed by such contractor
or subcontractor are performing activities which are directly related to
the main business of the principal; or
• The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
Whether or not Promm-Gem is engaged in labor-only contracting. NO; it is a
legitimate job contractor.
It has substantial capital, as shown by its financial statements.
• Authorized capital stock – P1 million.
• Paid-in capital – P500,000.
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It has substantial investments in the form of warehouses, office spaces,
and vehicles.
Promm-Gem has other clients aside from P&G.
Promm-Gem provided its workers with uniforms and materials. The latter
were considered regular employees.
Whether or not SAPS is engaged in labor-only contracting. YES.
It does not have substant ial capital—its paid-in capital is only P31,250.
• Monthly payroll already totaled P44,561. Its contracts with P&G were
for six-month periods. Its capital is not even sufficient for one
month’s payroll.
• SAPS failed to show that its paid-in capital of P31,250.00 is sufficient
for the period required for it to generate its needed revenue to
sustain its operations independently.
Neither is there a showing of substantial investment in tools, equipment
or other assets.
Furthermore, petitioners’ activities which consisted of merchandising and
promotion of P&G products are directly related to the manufacturing
business. Considering that SAPS has no substantial capital or investment and the
workers it recruited are performing activities which are directly related to
the principal business of P&G, the Court found that SAPS is engaged in
“labor -only contracting.”
Whether or not an employer-employee relationship exists between P&G and
petitioners. YES.
Where labor-only contracting exits, the law establishes an EER between
the employer and the employees of the “contractor.”
Rationale: to prevent circumvention of labor laws. The petitioners recruited by SAPS are considered P&G employees. The
petitioners who worked under Promm-Gem are not, since the latter is a
legitimate job contractor.
Whether or not petitioners (Promm-Gem employees) were illegally
dismissed. YES.
Promm-Gem dismissed petitioners for “grave misconduct and breach of
trust” after they sought regularization from P&G. Promm-Gem claimed
that this “assailed the integrity of the company as a legitimate and
independent promotion firm.”
To be a just cause for dismissal, misconduct (a) must be serious; (b)
must relate to the performance of the employee’s duties; and (c) must
show that the employee has become unfit to continue working for the
employer.
• In the instant case, petitioners-employees of Promm-Gem may have
committed an error of judgment in claiming to be employees of P&G,
but it cannot be said that they were motivated by any wrongful intent
in doing so.
• Thus, petitioners are guilty only of simple misconduct.
Meanwhile, loss of trust and confidence, as a ground for dismissal, must
be based on the willful breach of the trust reposed in the employee by his
employer.
• The erring employee must hold a position of responsibility or of trust
and confidence. And, in order to constitute a just cause for dismissal,
the act complained of must be work -related and must show that the
employee is unfit to continue to work for the employer.
• Here, the petitioners-employees of Promm-Gem have not been
shown to be occupying positions of responsibility or of trust and
confidence. Neither is there any evidence to show that they are unfitto continue to work as merchandisers for Promm-Gem.
Whether or not petitioners (SAPS-P&G employees) were illegally dismissed.
YES.
They were not afforded procedural due process (two notice rule). They
were merely verbally informed of the termination of their services.
Petitioners were dismissed upon the initiation of P&G. When the latter
did not renew its contract with SAPS, petitioners’ services were
automatically terminated evidently because SAPS had no other clients.
Whether or not petitioners are entitled to the payment of damages, costs,
and attorney’s fees. YES.
With regard to the employees of Promm-Gem, their dismissals were not
attended with bad faith so as to warrant the award of moral and
exemplary damages.
As for P&G, the records show that it dismissed its employees through
SAPS in a manner oppressive to labor. The sudden and peremptory
barring of the concerned petitioners from work, and from admission to
the work place, after just a one-day verbal notice, and for no valid cause
bellows oppression and utter disregard of the right to due process of the
concerned petitioners. Hence, an award of moral damages is called for.
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P&G is also liable for attorney’s fees.
Finally, all petitioners having been illegally dismissed, they are entitled to
reinstatement with backwages.
DISPOSITION: Petition granted. Case remanded to Labor Arbiter for
computation of backwages and other benefits.
Aliviado v. Procter & Gamble Philippines, Inc.
(Motion to refer the case to the Supreme Court en banc)
G.R. No. 160506, 650 SCRA 400, June 6, 2011
ISSUE + RATIO:
Whether or not the Court erred in ruling that SAPS is a labor-only contracto r.
NO.
P&G claims that the Court should have applied the four-fold test,
specifically the “control test,” in determining whether SAPS is a legitimate
job contractor or a labor-only contractor.
This is incorrect. The “control test” is only one of the ways to determinethe existence of labor-only contracting.
Pertinently, Department Order No. 18-02 provides:
Section 5. Prohibition against labor-only contracting. — Labor only
contracting is hereby declared prohibited. For this purpose, labor-
only contracting shall refer to an arrangement where the contractor
or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal, and ANY of the
following elements are present:
(i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal; OR
(ii) [T]he contractor does not exercise the right to control over
the performance of the work of the contractual employee. (Emphasis
supplied)
In the case at bar, the Court already concluded that (1) SAPS merely
recruited workers for P&G, (2) it did not have substantial capital or
investment, and (3) the workers performed activities directly related to
the business of the principal.
Hence, SAPS may be considered a labor-only contractor under D.O. 18-
02, Sec. 5 (i).
In Coca-Cola Bott lers Phils. , Inc. v. Agito, the Court ruled:
“The law clearly establishes an employer -employee relationship
between the principal employer and the contractor’s employee upon
a finding that the contractor is engaged in ‘labor -only’ contracting.
Article 106 of the Labor Code categorically states: ‘There is labor -
only contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the
workers recruited and placed by such persons are performing
activities which are directly related to the principal business of such
employer.’ Thus, performing activities directly related to the principal
business of the employer is only one of the two indicators that labor-only contracting exists; the other is lack of substantial capital or
investment. The Court finds that both indicators exist in the case at
bar.” (Emphasis supplied)
DISPOSITION: Judgment affirmed.
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EPARWA SECURITY AND JANITORIAL SERVICES VS LICEO DE
CAGAYAN UNIVERSITY
G.R. No. 150402. November 28, 2006.
CARPIO, J.:
FACTS:
On 1 December 1997, Eparwa and LDCU, through their representatives,
entered into a Contract for Security Services which states that LCDU
undertakes to pay P5,000 per guard, in consideration of their services.
On 21 December 1998, 11 security guards whom Eparwa assigned to
LDCU filed a complaint before the NLRC against both Eparwa and LDCU
for underpayment of salary, legal holiday pay, 13th month pay, rest day,
service incentive leave, night shift differential, overtime pay, and
payment for attorney’s fees.
LDCU made a cross-claim and prayed that Eparwa should reimburse
LDCU for any payment to the security guards.
LA found that the security guards are entitled to wage differentials and
premium for holiday and rest day work. The Labor Arbiter also held
Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor
Code.
The NLRC held Eparwa and LDCU solidarily liable for the wage
differentials and premium for holiday and rest day work but did not
require Eparwa to reimburse LDCU for its payments to the security
guards. Upon an MR, the NLRC declared that although Eparwa and
LDCU are solidarily liable to the security guards for the monetary award,
LDCU alone is ultimately liable.
The CA reinstated the Labor Arbiter’s decision. The appellate court also
allowed LDCU to claim reimbursement from Eparwa.
ISSUE:
Is LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay? - YES
HELD:
This Court’s ruling in Eagle Security Agency, Inc. v. NLRC squarely applies
to the present case. In Eagle, we ruled that:
This joint and several liability of the contractor and the principal is mandated
by the Labor Code to assure compliance of the provisions therein including
the statutory minimum wage. The contractor is made liable by virtue of his
status as direct employer. The principal, on the other hand, is made the
indirect employer of the contractor’s employees for purposes of paying the
employees their wages should the contractor be unable to pay them.
In the case at bar, it is beyond dispute that the security guards are the
employees of EAGLE. That they were assigned to guard the premises of
PTSI pursuant to the latter’s contract with EAGLE and that neither of
these two entities paid their wage and allowance increases under the
subject wage orders are also admitted.
The solidary liability of PTSI and EAGLE, however, does not preclude
the right of reimbursement from his co-debtor by the one who paid. It is
with respect to this right of reimbursement that petitioners can findsupport in the aforecited contractual stipulation and Wage Order
provision.
The Wage Orders are explicit that payment of the increases are “to be
borne” by the principal or client. “To be borne”, however, does not mean
that the principal, PTSI in this case, would directly pay the security
guards the wage and allowance increases because there is no privity of
contract between them. The security guards’ contractual relationship is
with their immediate employer, EAGLE. As an employer, EAGLE is
tasked, among others, with the payment of their wages.
On the other hand, there existed a contractual agreement between PTSI
and EAGLE wherein the former availed of the security services provided
by the latter. In return, the security agency collects from its client
payment for its security services. This payment covers the wages for the
security guards and also expenses for their supervision and training, the
guards’ bonds, firearms with ammunitions, uniforms and other
equipments, accessories, tools, materials and supplies necessary for the
maintenance of a security force.
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Premises considered, the security guards’ immediate recourse for the
payment of the increases is with their direct employer, EAGLE. However,
in order for the security agency to comply with the new wage and
allowance rates it has to pay the security guards, the Wage Orders made
specific provision to amend existing contracts for security services by
allowing the adjustment of the consideration paid by the principal to the
security agency concerned. What the Wage Orders require, therefore, is
the amendment of the contract as to the consideration to cover the
service contractor’s payment of the increases mandated. In the end,
therefore, ultimate liability for the payment of the increases rests with the
principal.
In view of the foregoing, the security guards should claim the amount of
the increases from EAGLE. Under the Labor Code, in case the agency
fails to pay them the amounts claimed, PTSI should be held solidarily
liable with EAGLE. Should EAGLE pay, it can claim an adjustment from
PTSI for an increase in consideration to cover the increases payable to
the security guards.
However, in the instant case, the contract for security services had
already expired without being amended consonant with the Wage
Orders. It is also apparent from a reading of a record that EAGLE does
not now demand from PTSI any adjustment in the contract price and its
main concern is freeing itself from liability. Given these peculiar
circumstances, if PTSI pays the security guards, it cannot claim
reimbursement from EAGLE. But in case it is EAGLE that pays them, the
latter can claim reimbursement from PTSI in lieu of an adjustment,
considering that the contract had expired and had not been renewed.
For the security guards, the actual source of the payment of their wage
differentials and premium for holiday and rest day work does not matter
as long as they are paid. This is the import of Eparwa and LDCU’s
solidary liability. Creditors, such as the security guards, may collect from
anyone of the solidary debtors. Solidary liability does not mean that, as
between themselves, two solidary debtors are liable for only half of the
payment.
LDCU’s ultimate liability comes into play because of the expiration of t he
Contract for Security Services. There is no privity of contract between
the security guards and LDCU, but LDCU’s liability to the security guards
remains because of Articles 106, 107 and 109 of the Labor Code.
Eparwa is already precluded from asking LDCU for an adjustment in the
contract price because of the expiration of the contract, but Eparwa’s
liability to the security guards remains because of their employer-
employee relationship. In lieu of an adjustment in the contract price,
Eparwa may claim reimbursement from LDCU for any payment it may
make to the security guards. However, LDCU cannot claim any
reimbursement from Eparwa for any payment it may make to the security
guards.
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GOYA, INC. v. GOYA, INC. EMPLOYEES UNION-FFW
PERALTA, J., G.R. No. 170054 : January 21, 2013
FACTS:
Petitioner Goya Inc. (Goya) hired contractual employees from PESO
Resources Development Corporation (PESO). This prompted Goya, Inc.
Employees Union-FFW (Union) to request for a grievance conference on the
ground that the contractual workers do not belong to the categories of
employees stipulated in their CBA. The Union also argued that hiringcontractual employees is contrary to the union security clause embodied in
the CBA. When the matter remained unresolved, the grievance was referred
to the NCMB for voluntary arbitration. The Union argued that Goya is guilty of
ULP for gross violation of the CBA. The voluntary arbitrator dismissed the
Unions charge of ULP but Goya was directed to observe and comply with the
CBA. While the Union moved for partial consideration of the VA decision,
Goya immediately filed a petition for review before the Court of Appeals to
set aside the VAs directive to observe and comply with the CBA commitment
pertaining to the hiring of casual employees. Goya argued that hiring
contractual employees is a valid management prerogative. The Court of
Appeals dismissed the petition
ISSUE:
Whether the act of hiring contractual employees is a valid exercise of
management prerogative?
HELD:
The petition must fail. LABOR LAW: management prerogative; ULP;
collective bargaining agreement The CA did not commit serious error when it
sustained the ruling that the hiring of contractual employees from PESO was
not in keeping with the intent and spirit of the CBA. In this case, a completeand final adjudication of the dispute between the parties necessarily called
for the resolution of the related and incidental issue of whether the Company
still violated the CBA but without being guilty of ULP as, needless to state,
ULP is committed only if there is gross violation of the agreement. Goya kept
on harping that both the VA and the CA conceded that its engagement of
contractual workers from PESO was a valid exercise of management
prerogative. It is confused. To emphasize, declaring that a particular act falls
within the concept of management prerogative is significantly different from
acknowledging that such act is a valid exercise thereof. What the VA and the
CA correctly ruled was that the Companys act of contracting out/outsourcing
is within the purview of management prerogative. Both did not say, however,
that such act is a valid exercise thereof. Obviously, this is due to the
recognition that the CBA provisions agreed upon by Goya and the Union
delimit the free exercise of management prerogative pertaining to the hiring
of contractual employees. A collective bargaining agreement is the law
between the parties. A collective bargaining agreement or CBA refers to the
negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA mayestablish such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and unambiguous,
it becomes the law between the parties and compliance therewith is
mandated by the express policy of the law. As repeatedly held, the exercise
of management prerogative is not unlimited; it is subject to the limitations
found in law, collective bargaining agreement or the general principles of fair
play and just ice. Petition is DENIED.
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AVELINO S. ALILIN, TEODORO CALESA, CHARLIE HINDANG,
EUTIQUIO GINDANG, ALLAN SUNGAHID, MAXIMO LEE, JOSE G. MORA
TO, REX GABILAN, AND EUGEMA L. LAURENTE v. PETRON
CORPORATION
A contractor is presumed to be a labor -only contractor, unless it proves that it
has the substantial capital, investment, tools and the like. However, where
the principal is the one claiming that the contractor is a legitimate contractor,
the burden of proving the supposed status of the contractor rests on theprincipal.
FACTS:
In 1968, Romualdo D. Gindang Contractor, started recruiting laborers for
fielding to Petron’s Mandaue Bulk Plant. When Romualdo died in1989, his
son Romeo D. Gindang (Romeo), through Romeo D. Gindang Services
(RDG), took over the business and continued to provide manpower services
to Petron. Petitioners were among those recruited by Romualdo D. Gindang
Contractor and RDG to work in the premises of the said bulk plant.
On June 1, 2000, Petron and RDG entered into a Contract for Services9 for
the period from June 1, 2000 to May 31, 2002, whereby RDG undertook to
provide Petron with janitorial, maintenance, tanker receiving, packaging and
other utility services in its Mandaue Bulk Plant. This contract was extended
on July 31, 2002 and further extended until September 30, 2002. Upon
expiration thereof, no further renewal of the service contract was done.
Proceedings before the Labor Arbiter
Alleging that they were barred from continuing their services on October 16,
2002, petitioners filed a Complaint for illegal dismissal, unde rpayment of
wages, damages and attorney’s fees against Petron and RDG on November12, 2002.
Petitioners did not deny that RDG hired them and paid their salaries. They
claimed that the latter is a labor-only contractor, which merely acted as an
agent of Petron, their true employer. They asseverated that their jobs, which
are directly related to Petron’s business, entailed them to work inside the
premises using the required equipment and tools furnished by it and that they
were subject to Petron’s supervision. Claiming to be regular employees, they
asserted that their dismissal allegedly in view of the expiration of the service
contract between Petron and RDG is illegal.
RDG corroborated petitioners’ claim that they are regular employees of
Petron. It alleged that Petron directly supervised their activities; they
performed jobs necessary and desirable to Petron’s business; Petron
provided petitioners with supplies, tools and equipment used in their jobs;
and that petitioners’ workplace since the start of their employment was at
Petron’s bulk plant in Mandaue City. RDG denied liability over petitioners’
claim of illegal dismissal and further argued that Petron cannot capitalize on
the service contract to escape liability.
Petron, on the other hand, maintained that RDG is an independent contractor
and the real employer of the petitioners. It was RDG which hired and
selected petitioners, paid their salaries and wages, and directly supervised
their work. Attesting to these were two former employees of RDG and
Petron’s Mandaue Terminal Superintendent whose affidavits were submitted
by Petron, Petron presented the following documents: (1) RDG’s Certificate
of Registration issued by DOLE (2) RDG’s Certificate of Registration of
Business Name issued by DTI (3) Contractor’s Pre -Qualification
Statement;16 (4) Conflict of Interest Statement signed by Romeo Gindang as
manager of RDG; (5) RDG’s Audited Financial Statements (6) RDG’s
Mayor’s Permit (7) RDG’s Certificate of Accreditation issued by DTI (8)
performance bond and insurance policy posted to insure against liabilities;
(9) SSS Online Inquiry System Employee Contributions and Employee Static
Information and, (10) Romeo’s affidavit stating that he had paid the salaries
of his employees assigned to Petron. Petron argued that with the expiration
of the service contract it entered with RDG, petitioners’ term of employment
has concomitantly ended. And not being the employer, Petron cannot be held
liable for petitioners’ claim of illegal dismissal.
Labor Arbiter ruled that petitioners are regular employees of Petron. It foundthat their jobs were directly related to Petron’s business operations; they
worked under the supervision of Petron’s foreman and supervisor; and they
were using Petron’s tools and equipment in the performance of their works.
Petron merely utilized RDG in its attempt to hide the existence of employee-
employer relationship between it and petitioners and avoid liability under
labor laws. And there being no showing that petitioners’ dismissal was for
just or authorized cause, the Labor Arbiter declared them to have been
illegally dismissed. Petron was thus held solidarily liable with Romeo for the
payment of petitioners’ separation pay (in lieu of reinstatement due to
strained relations with Petron) fixed at one month pay for every year of
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service and backwages computed on the basis of the last salary rate at the
time of dismissal.
NLRC ruled that petitioners are Petron’s regular employees because they are
performing job assignments which are germane to its main business. Petron
Corporation appeal was DISMISSED for lack of merit. Petron filed a Petition
for Certiorari with prayer for the issuance of a temporary restraining order or
writ of injunction before the CA. CA resolved to grant the injunction. A Writ of
Preliminary Injunction to restrain the implementation of the Decision andResolution of the NLRC was issued.
The CA found no employer-employee relationship between the parties. The
records of the case do not show that petitioners were directly hired, selected
or employed by Petron; that their wages and other wage related benefits
were paid by the said company; and that Petron controlled the manner by
which they carried out their tasks. On the other hand, RDG was shown to be
responsible for paying petitioners’ wages. In fact, SSS records show that
RDG is their employer and actually the one remitting their contributions
thereto. Also, two former employees of RDG who were likewise assigned in
the Mandaue Bulk Plant confirmed by way of a joint affidavit that it was
Romeo and his brother Alejandre Gindang who supervised their work, not
Petron’s foreman or supervisor. This was even corroborated by the Terminal
Superintendent of the Mandaue Bulk Plant.The CA also found RDG to be an
independent labor contractor with sufficient capitalization and investment as
shown by its financial statement for year-end 2000. In addition, the works for
which RDG was contracted to provide were menial which were neither
directly related nor sensitive and critical to Petron’s principal business.
CA: WHEREFORE, the Petition is GRANTED. The February 18, 2005
Decision and the August 24, 2005 Resolution of the Fourth Division of theNational Labor Relations Commission in NLRC Case No. V-000481-2003,
entitled "Teodoro Calesa et al. vs. Petron Corporation and R.D. Gindang
Services", having been rendered with grave abuse of discretion amounting to
excess of jurisdiction, are hereby REVERSED and SET ASIDE and a NEW
ONE is entered DISMISSING private respondents’ complaint against
petitioner.
Petitioners filed a Motion for Reconsideration insisting that Petron illegally
dismissed them; that RDG is a labor-only contractor; and that they performed
jobs which a re sensitive to Petron’s business operations. To support these,
they attached to their Supplemental Motion for Reconsideration38
Affidavits39 of former employees of Petron attesting to t he fact that thei r jobs
were critical to Petron’s business operations and that they were carried out
under the control of a Petron employee. Pet itioners’ motions were, however,
denied by the CA in a Resolution40 dated March 30, 2007. Hence, this
Petition.
ISSUE: The primary issue to be resolved in this case is whether RDG is a
legitimate job contractor. Upon such finding hinges the determination ofwhether an employer-employee relationship exists between the parties as to
make Petron liable for petitioners’ dismissal.
HELD:
The Petition is impressed with merit.
While it is true that the determination of whether an employer-employee
relationship existed between the parties basically involves a question of fact,
the conflicting findings of the Labor Arbiter and the NLRC on one hand, and
of the CA on the other, constrains the Court to review and reevaluate such
factual findings.
Labor-only contracting, distinguished from permissible job contracting
The prevailing rule on labor-only contracting at the time Petron and RDG
entered into the Contract for Services in June 2000 is DOLE Department
Order No. 10, series of 1997 the pertinent provision of which reads:
Section 4. x x x
x x x x
(f) "Labor-only contracting" prohibited under this Rule is an arrangement
where the contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal and the followingelements are present:
(i) The contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work or service under its own
account and responsibility; and
(ii) The employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the
main business of the principal.
x x x x
Section 6. Permissible contracting or subcontracting. - Subject to the
conditions set forth in Section 3 (d) and (e) and Section 5 hereof, the
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principal may engage the services of a contractor or subcontractor for the
performance of any of the following:
(a) Works or services temporarily or occasionally needed to meet abnormal
increase in the demand of products or services, provided that the normal
production capacity or regular workforce of the principal cannot reasonably
cope with such demands;
(b) Works or services temporarily or occasionally needed by the principalfor undertakings requiring expert or highly technical personnel to improve
the management or operations of an enterprise;
(c) Services temporarily needed for the introduction or promotion of new
products, only for the duration of the introductory or promotional period;
(d) Works or services not directly related or not integral to the main
business or operation of the principal, including casual work, janitorial,
security, landscaping, and messengerial services, and work not related to
manufacturing processes in manufacturing establishments;
(e) Services involving the public display of manufacturers’ products which
do not involve the act of selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some particular, unusual or
peculiar skills, expertise, tools or equipment the performance of which is
beyond the competence of the regular work force or production capacity of
the principal; and
(g) Unless a reliever system is in place among the regular workforce,
substitute services for absent regular employees, provided that the periodof service shall be coextensive with the period of absence and the same is
made clear to the substitute employee at the time of engagement. The
phrase "absent regular employees" includes those who are serving
suspensions or other disciplinary measures not amounting to termination of
employment meted out by the principal, but excludes those on strike where
all the formal requisites for the legality of the strike have been prima facie
complied with based on the records filed with the National Conciliation and
Mediation Board.
“Permissible job contracting or subcontracting refers to an arrangement
whereby a principal agrees to farm out with a contractor or subcontractor
the performance of a specific job, work, or service within a definite or
predetermined period, regardless of whether such job, work or, service is
to be performed or completed within or outside the premises of the
principal. Under this arrangement, the following conditions must be met: (a)
the contractor carries on a distinct and independent business and
undertakes the contract work on his account under his own responsibility
according to his own manner and method, free from the control anddirection of his employer or principal in all matters connected with the
performance of his work except as to the results thereof; (b) the contractor
has substantial capital or investment; and (c) the agreement between the
principal and contractor or subcontractor assures the contractual
employees’ entitlement to all labor and occupational safety and health
standards, free exercise of the right to self-organization, security of tenure,
and social welfare benefits."44 Labor-only contracting, on the other hand,
is a prohibited act, defined as "supplying workers to an employer who does
not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and
placed by such person are performing activities which are directly related
to the principal business of such employer."45 "[I]n distinguishing between
prohibited labor-only contracting and permissible job contracting, the
totality of the facts and the surrounding circumstances of the case shall be
considered.”
Generally, the contractor is presumed to be a labor-only contractor, unless
such contractor overcomes the burden of proving that it has the substantial
capital, investment, tools and the like. However, where the principal is the
one claiming that the contractor is a legitimate contractor, as in the present
case, said principal has the burden of proving that supposed status.47 It isthus incumbent upon Petron, and not upon petitioners as Petron insists,48 to
prove that RDG is an independent contractor.
Petron failed to discharge the burden of proving that RDG is a legitimate
contractor.
The presumption that RDG is a labor-only contractor stands. The audited
financial statements and other financial documents of RDG establish that it
does have sufficient working capital to meet the requirements of its service
contract. In fact, the financial evaluation conducted by Petron of RDG’s
financial showed RDG to have a maximum financial capability. Petron was
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able to establish RDG’s sufficient capitalization when it entered into the
service contract in 2000. The Court stresses though that this determination of
RDG’s status as an independent contractor is only with respect to its financial
capability for the period covered by the financial and other documents
presented. In other words, the evidence adduced merely proves that RDG
was financially qualified as a legitimate contractor but only with respect to its
last service contract with Petron.
Petitioners have rendered work for Petron for a long period of time evenbefore the service contract was executed in 2000. The respective dates on
which petitioners claim to have started working for Petron, as well as the fact
that they have rendered continuous service to it until October 16, 2002, when
they were prevented from entering the premises of Petron’s Mandaue Bulk
Plant, were not at all disputed by Petron. In fact, Petron even recognized that
some of the petitioners were initially fielded by Romualdo Gindang, the father
of Romeo, through RDG’s precursor, Romualdo D.Gindang Contractor, while
the others were provided by Romeo himself when he took over the business
of his father in 1989. Hence, while Petron was able to establish that RDG
was financially capable as a legitimate contractor at the time of the execution
of the service contract in 2000, it nevertheless failed to establish the financial
capability of RDG at the time when petitioners actually started to work for
Petron in 1968, 1979, 1981, 1987, 1990, 1992 and 1993.
Sections 8 and 9,Rule VIII, Book III51 of the implementing rules of the Labor
Code, in force since 1976 and prior to DOLE Department Order No. 10,
series of 1997,52 provide that for job contracting to be permissible, one of
the conditions that has to be met is that the contractor must have substantial
capital or investment. Petron having failed to show that this condition was
met by RDG, it can be concluded, on this score alone, that RDG is a mere
labor-only contractor. Otherwise stated, the presumption that RDG is a labor-only contractor stands due to the failure of Petron to discharge the burden of
proving the contrary.
The Court also finds, as will be discussed below, that the works performed by
petitioners were directly related to Petron’s business, another factor which
negates Petron’s claim that RDG is an independent contractor.
Petron’s power of control over petitioners exists in this case.
"[A] finding that a contractor is a ‘labor -only’ contractor is equivalent to
declaring that there is an employer-employee relationship between the
principal and the employees of the supposed contractor."53 In this case, the
employer employee relationship between Petron and petitioners becomes all
the more apparent due to the presence of the power of control on the part of
the former over the latter.
It was held in Orozco v. The Fifth Division of the Hon. Court of Appeals that:
This Court has constantly adhered to the "four-fold test" to determinewhether there exists an employer-employee relationship between the parties.
The four elements of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the power to control the employee’s conduct.
Of these four elements, it is the power to control which is the most crucial
and most determinative factor, so important, in fact, that, the other elements
may even be disregarded." (Emphasis supplied)
Hence, the facts that petitioners were hired by Romeo or his father and that
their salaries were paid by them do not detract from the conclusion that there
exists an employer-employee relationship between the parties due to
Petron’s power of control over the petitioners. One manifestation of the
power of control is the power to transfer employees from one work
assignment to another.55 Here, Petron could order petitioners to do work
outside of their regular "maintenance/utility" job. Also, petitioners were
required to report for work everyday at the bulk plant, observe an 8:00 a.m.
to 5:00 p.m. daily work schedule, and wear proper uniform and safety
helmets as prescribed by the safety and security measures being
implemented within the bulk plant. All these imply control. In an industry
where safety is of paramount concern, control and supervision over sensitiveoperations, such as those performed by the petitioners, are inevitable if not at
all necessary. Indeed, Petron deals with commodities that are highly volatile
and flammable which, if mishandled or not properly attended to, may cause
serious injuries and damage to property and the environment. Naturally,
supervision by Petron is essential in every aspect of its product handling in
order not to compromise the integrity, quality and safety of the products that
it distributes to the consuming public.
Petitioners already attained regular status as employees of Petron.
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Petitioners were given various work assignments such as tanker receiving,
barge loading, sounding, gauging, warehousing, mixing, painting, carpentry,
driving, gasul filling and other utility works. Petron refers to these work
assignments as menial works which could be performed by any able-bodied
individual. The Court finds, however, that while the jobs performed by
petitioners may be menial and mechanical, they are nevertheless necessary
and related to Petron’s business operations. If not for these tasks, Petron’s
products will not reach the consumers in their proper state. Indeed,
petitioners’ roles were vital inasmuch as they involve the preparation of theproducts that Petron will distribute to its consumers.
Furthermore, while it may be true that any able-bodied individual can perform
the tasks assigned to petitioners, the Court notes the undisputed fact that for
many years, it was the same able-bodied individuals (petitioners) who
performed the tasks for Petron. The engagement of petitioners for the same
works for a long period of time is a strong indication that such works were
indeed necessary to Petron’s business. In view of these, and considering
further that petitioners’ length of service entitles them to become regular
employees under the Labor Code, petitioners are deemed by law to have
already attained the status as Petron’s regular employees. As such, Petron
could not terminate their services on the pretext that the service contract it
entered with RDG has already lapsed. For one, and as previously discussed,
such regular status had already attached to them even before the execution
of the service contract in 2000. For another, the same does not constitute a
just or authorized cause for a valid dismissal of regular employees.
In sum, the Court finds that RDG is a labor-only contractor. As such, it is
considered merely as an agent of Petron. Consequently, the employer-
employee relationship which the Court finds to exist in this case is between
petitioners as employees and Petron as their employer. Petron therefore,being the principal employer and RDG, being the labor-only contractor, are
solidarily liable for petitioners' illegal dismissal and monetary claims.
WHEREFORE, the Petition is GRANTED. The May 10, 2006 Decision and
March 30, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 01291
are REVERSED and SET ASIDE. The February 18, 2005 Decision and
August 24, 2005 Resolution of the National Labor Relations Commission in
NLRC Case No. V-000481-2003 are hereby REINSTATED and AFFIRMED.