BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES VS. ZAMORA (GR No.

L-48645 January 7, 1987)

Facts:
Petitioners worked at “cargadores” and employed at the San Miguel Parola Glass Factory for seven years until
their termination. Work did not necessarily mean a full eight hour day however, at times, their work exceeded the eight
hour day and necessitated work on Sundays and holidays. Petitioners were paid every ten days on a piece rate basis. The
pay check is given to the group leaders for encashment, distribution, and payment to the petitioners in accordance with
payrolls prepared by said leaders.

Petitioners filed a complaint charging respondent San Miguel Corporation (SMC) for illegal dismissal and unfair
labor practice when respondent SMC dismissed the petitioners from their jobs and refused to pay the petitioners their
overtime and holiday pay. Respondent SMC argued that employee-employer relationship did not exist for the reason
that they never had control over the means and methods followed by independent contractor.

Issue:
Does an employer-employee relationship exists between petitioners and respondent?

Law application:
As stated in Investment Planning Corp. of the Phils. V. SSS, to determine the existence of such relationship the
following elements must exist: (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 with respect to the means and methods by
which the work is to be accomplished. Control Test is the most important element. As to the validity of the existence of
the independent contractor, Sec 8, Rule 8, Book 3 of the Implementing Rules of the Labor Code provides that job
contracting is permissible when there is a substantial capital or investment to qualify as an independent contractor
under the law.

Case history:
The Labor Arbiter found for complainants which was concurred in by the NLRC. However, upon appeal, the
Secretary ruled that there is no employer-employee relationship.

Rulings:
Applying the above criteria, the evidence strongly indicates the existence of an employer-employee relationship
between petitioner workers and respondent San Miguel Corporation. The respondent asserts that the petitioners are
employees of the Guaranteed Labor Contractor, an independent labor contracting firm. However, Guaranteed and
Reliable Labor contractors have neither substantial capital nor investment to. The premises, tools, equipment and
paraphernalia used by the petitioners in their jobs are admittedly all supplied by respondent company and only the
manpower or labor force which the alleged contractors supply, suggesting the existence of a "labor only" contracting
scheme prohibited by law.

Opinion:
I strongly agree with the decision of the SC. It is clear that the petitioners worked exclusively with the
respondent company thus, negating the claim that the petitioners were employed by an independent contractor.
Respondent SMC had total control on the work of the petitioners during their employment. during their employment.
MA. WENELITA S. TIRAZONA VS. PHILIPPINE EDS TECHNO-SERVICE (PET) INC. (GR No. 169712 January 20, 2009)

Facts:
Respondent PET, a corporation engaged in the business of designing automative wiring harnesses for
automobile manufacturers, hired petitioner Tirazona as Administrative Manager. Ms. Balonzo, a rank-and-file employee
wrote a letter complaining that petitioner Tirazona humiliated her when Tirazona insinuated, in a manner loud enough
to be heard from the outside, that Balonzo still had tuberculosis despite Balonzo’s possession of a medical clearance that
proved her fitness to return to work. PET director Ono sent a memorandum to the petitioner stating that the
Management found the handling of the situation by the petitioner was less than ideal considering the sensitive nature of
the issue and the high expectations of the petitioner’s position.

Petitioner wrote a letter to Director Ono demanding a payment for damages for injured feelings and besmirched
reputation. Petitioner also stated that her constitutional right to due process was violated. However, because of
Tirazona’s obstinate demand for compensation, PET sent her a Notice of Charge which informed her that they were
considering her termination. An administrative hearing was conducted but Tirazona and her counsel failed to appear.
Consequently, a Notice of Termination was sent to petitioner for serious misconduct and breach of trust because of her
demand against the company and her invasion of PET’s right to privileged communication.

Issue: Does the dismissal of petitioner Tirazona legal? Does it comply with the substantive and procedural due process
required by Labor Code?

Law application:
Dismissals have two facets: first, the legality of the act of dismissal, which constitutes substantive due process;
and second, the legality in the manner of dismissal, which constitutes procedural due process. As to the issue of
substantive due process, under Article 282(c) of the Labor Code, loss of trust and confidence is one of the just causes for
dismissing an employee. It is an established principle that loss of confidence must be premised on the fact that the
employee concerned holds a position of trust and confidence. This situation obtains where a person is entrusted with
confidence on delicate matters, such as care and protection, handling or custody of the employer’s property. But, in
order to constitute a just cause for dismissal, the act complained of must be "work-related" such as would show the
employee concerned to be unfit to continue working for the employer. As to the issue of procedural due process, the
employer must furnish the employee two written notices before termination may be effected. The first notice apprises
the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the
employee of the employer’s decision to dismiss him.

Case history:
Labor Arbiter ruled that the petitioner’s termination was illegal. On appeal by PET, NLRC reversed the rulings of
the Labor Arbiter. This was affirmed by the appellate court.

Ruling:
Clearly, petitioner Tirazona’s letter to respondent Ono as DIRECTOR of PET was addressed to an officer and
representative of the corporation. The accusations in the aforesaid demand letter were directed against his official act
as a representative of respondent PET. Suffice it to stress, an attack on the integrity of his corporate act is necessarily
aimed at respondent PET because a corporation can only act through its officers, agents and representatives. Her
dismissal was premised on the fact that she is a managerial and confidential employee, and she never denied that fact.
Petitioner Tirazona’s actions or omissions affecting her employer’s rights and interest, would undoubtedly show that she
is no longer worthy of being a recipient of the trust and confidence of her employer.

This Court has held that there is no violation of due process even if no hearing was conducted, where the party
was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be
heard. Tirazona in this case has been afforded a number of opportunities to defend her actions. Notices were sent to her
to inform her of the reason and the decision for her dismissal.

Opinion: I agree with the rulings of the SC in affirming the decision of the NLRC and CA.
DANILO B. TABAS VS. CALIFORNIA MFG. CO., INC. (GR No. L-80680 January 26, 1989)

Facts:
Petitioners were, prior to their stint with California, employees of Livi Manpower Services, Inc., and independent
contractor who provided California promotional merchandisers pursuant to a manpower supply agreement. Petitioners
were made to sign employment contracts for six months and upon expiration, they signed new agreements with the
same period. Unlike the regular employees of California, petitioners received only P38.56 plus P15.00 in allowance daily.
Petitioners claimed that they had become regular California employees thus, demanding similar benefits. However,
California denied such claims arguing that an employer-employee relationship did not exist and that Livi Manpower
Services, Inc. should be the one to shoulder the claims of the petitioners. The petitioners were notified that they would
not be rehired. Consequently, petitioners petitioned the NLRC for reinstatement and payment of various benefits.

Issue:
Does an employer-employee relationship exist despite of the manpower supply agreement between California
and Livi?

Law application:
Based on Article 106 of the Labor Code, there is ‘labor-only’ contracting where the person supplying workers to
an employer does not have substantial capital or investment. 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 manner and extent as if
the latter were directly employed by him.

Accordingly, Article 281 of the Code, probationary employment shall not exceed six months. An employee who
is allowed to work after a probationary period shall be considered a regular employee.

Case history:
The Labor Arbiter ruled against the existence of any employer-employee relation in the light of the manpower
supply contract which was affirmed on appeal.

Ruling:
The nature of one's business is not determined by self-serving appellations one attaches thereto but by the tests
provided by statute and prevailing case law. The bare fact that Livi maintains a separate line of business does not
extinguish the equal fact that it has provided California with workers to pursue the latter's own business, merchandising
promotion or sale of the products, an activity that is doubtless, an integral part of the manufacturing business. When Livi
provided California with manpower, it supplied California with personnel, as if such personnel had been directly hired by
California. Hence, Article 106 of the Code applies.

The records show that the petitioners bad been given an initial six-month contract, renewed for another six
months. Accordingly, under Article 281 of the Code, they had become regular employees-of-California-and had acquired
a secure tenure. Hence, they cannot be separated without due process of law.

Opinion:
Though in form the manpower supply agreement contract appears to establish that Livi was an independent
contractor, in substance, Livi was a mere agent of California who would supply manpower which will eventually become
regular employees in California thus, I agree with the SC’s decision of setting aside the decision of NLRC and reinstating
the petitioners with full status and rights of regular employees.
COCA-COLA BOTTLERS, PHILS INC, VS. DELFIN HINGPIT (GR No. 127238 August 25, 1998)

Facts and case history:

Complainants were supplied as workers to COCA-COLA first by Pioneer, and later, by Lipercon. Pioneer and
Lipercon are manning companies with which Coca-cola successively entered into contracts for the supply of the
manpower needs of its plants in Tagbilaran. The Labor Arbiter ruled that Lipercon was an independent contractor while
Pioneer was not and when Lipercon entered into the picture, the complainants were already regular employees of Coca-
cola thus, sentencing the respondent to pay the complainants a separation pay. However, NLRC modify the decision of
the Labor Arbiter and instead increased the amount representing full back wages and 13th month pay, holiday pay, etc.
The complainants were also granted reinstatement to their former position without loss of seniority rights and other
privileges.

Issue:
Is the NLRC correct in granting the complainants reinstatement as opposed to the decision of the Labor Arbiter?
Is Lipercon an independent contractor or labor-only contractor?

Ruling and Law application:

As to Hingpit, the Court ruled that since he was recruited originally by Lipercon his services — considered
temporary or probationary — its termination on July 22, 1988 on the ground that he had (1) failed to measure up to the
standards of the firm, having flunked the required qualifying tests, and (2) been shown to be dishonest, for not
disclosing that he had been charged with 3 counts of physical injuries were valid.

There is substantial evidence, detailed by the Labor Arbiter, to establish LIPERCON's character as an
independent contractor in the real sense of the word, which makes the Labor Arbiter's ruling more acceptable than
respondent Commission's on the same matter, being founded solely on an inapplicable precedent. It was LIPERCON that
terminated their services at which time, as found by the Labor Arbiter, the complainants "signed quitclaim and release
documents" in favor of LIPERCON. COCA COLA was not privy either to that act of employment-termination or execution
of "quitclaim and release documents," or to the earlier act of creation of the employment relationship between the
complainants and LIPERCON. COCA COLA was in no position to intervene in any manner in the creation or termination of
the relationship between complainants and LIPERCON.

Opinion:
As correctly presented by the Labor Arbiter, it is clear that Lipercon is an independent contractor thus,
responsible for its employees.
MAFINCO TRADING CORPORATION VS. OPLE, ET AL. (GR No. L-37790 March 25, 1976)

Facts:
A labor union called FOITAF (in behalf of Repomanta and Moralde) lodged a complaint against Mafinco Trading,
alleging that Mafinco unlawfully dismissed both individuals. Repomanta and Mafinco executed a peddling contract
whereby Repomanta agreed to “buy and sell” Cosmos soft drinks. Rey Moralde entered into a similar contract. The
contracts were to remain in force for one year unless sooner terminated by either party upon five days’ notice to the
other. Based on this stipulation, Mafinco terminated its contracts with Repomanta and Moralde.

Mafinco argued that Repomanta and Moralde were not its employees but were independent contractors and
employers in their own right. The old NLRC ruled in favor of Mafinco, but Labor Sec. Ople reversed the decision,
asserting that both Repomanta and Moralde are employees of Mafinco. Ople’s decision highlighted that these peddling
contracts were pseudo contracts devised to evade coverage under the labor laws. According to Mafinco, the relationship
between them is not of employee-employer, but that of buyer and seller.

Issue: Are Repomanta and Moralde employees of Mafinco? Is the contract an employment contract or a contract to
sell? Is the issue within the jurisdiction of the NLRC?

Law application:

PD 21 Section 2 states that the NLRC shall have original and exclusive jurisdiction over all matters involving
employee-employer relations.

Ruling:

Under their peddling contracts Repomanta and Moralde were not employees of Mafinco but were independent
contractors as found by the NLRC and its fact-finder and by the committee appointed by the Secretary of Labor to look
into the status of Cosmos and Mafinco peddlers. They were distributors of Cosmos soft drinks with their own capital and
employees. Ordinarily, an employee or a mere peddler does not execute a formal contract of employment. He is simply
hired and he works under the direction and control of the employer. Circumstance signifies that they were acting as
independent businessmen. They were to sign or not to sign that contract. If they did not want to sell Cosmos products
under the conditions defined in that contract; they were free to reject it.

The tests for determining the existence of employer-employee relationship is not met: (1) Selection and
Engagement of Employee; (2) Payment of Wages; (3) Power of Dismissal; (4) Power of Control. First, selection and
engagement of employee. Nothing in the Agreement to Peddle Soft Drinks in the case of Cosmos and in the Peddling
Contract in the case of Mafinco, will reveal and cannot logically infer therefrom, that the Peddlers were engaged as
employees of Cosmos or Mafinco. Second, payment of wages. On the basis of the clear terms of the Agreement or
Contract, no mention was made of the wages of the Peddlers; neither can an inference be made that any salary or wage
was given to Peddlers. Third, power of dismissal. A search of the alleged dismissal however shows that the identical
letters both dated December 7, 1972 addressed to the said complainants were not actually what complainants pictured
them to be, but the termination of the peddling contract in accordance with paragraph 9 of said Contract. And lastly,
power of control. As to the aspect of employer-employee relation, therefore, between Cosmos or Mafinco and the
Peddlers, the committee does not have sufficient basis to reasonably sustain the stand of the Peddlers that there is such
power of control. However, an independent contractor is one who exercises independent employment and contracts to
do a piece of work according to his own methods and without being subject to control of his employer except as to the
result of the work. The following are the factors to determine existence of independent contract: (a) independent
business; (b) work is part of employee’s general business; (c) nature and extent of work; (d) skill required; (e) term and
duration of relationship, etc.

Opinion:

I agree with the SC’s rulings because it shows that the essence of the contract is one as a contract to sell thus,
not for employment.