Sonza vs.

ABS-CBN
June 10, 2004, GR No. 138051

Facts: In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and
Developments Corporation (MJMDC), a television program. Referred to in the Agreement as
“Agent”, MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN as talent for radio
and television. ABS-CBN agreed to pay Sonza’s services a monthly talent fee of P310, 000 for
the first year and P317,000 for the second and third year of the agreement.

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he
will irrevocably resign in view of the recent events concerning his program and career, that he is
waiving and renouncing recovery of the remaining amount stipulated in the Agreement, but
reserves the right to seek recovery of the other benefits under said agreement.

On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and
Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service incentive
leave, 13th month pay , signing bonus, travel allowance and amounts due under the Employees
Stock Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the ground
that there was no employer-employee relationship between them. ABS-CBN insists that Sonza
was an independent contractor.

Issue: Whether an employer-employee relationship exists.

Ruling: The Court sustained ABS-CBN’s contention and hence, dismissed the petition.

The Supreme Court ratiocinated that Independent contractors often present themselves to
possess unique skills, expertise, 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 an ordinary employee, is a circumstance indicative of an independent
contractual relationship. Whatever benefits Sonza enjoyed arose from a contract and not
because of an employer-employee relationship. Sonza’s talent fees are so huge and out of the
ordinary that they indicate more an independent contractual relationship.

Applying the control test in the case at bar, the Court found that Sonza is not an employee but
an independent contractor. First, ABS-CBN engaged Sonza’s services specifically to co-host the
“Mel and Jay” program. ABS-CBN did not assign any other work to Sonza. To perform his work,
Sonza only needed his skills and talent. Sonza delivered his lines appeared on the television and
sounded on radio, all outside the control of ABS-CBN. Sonza did not have to work eight hours a
day. The Agreement required Sonza to attend only rehearsals and tapings. ABS-CBN could not
dictate the contents of Sonza’s script. Sonza had a free hand on what to say or discuss in his
shows. Clearly, ABS-CBN did not exercise control over the means and methods of performance
of Sonza’s work.

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Television and Production Exponents, Inc. v. Servana January 28, 2008 G.R. No. 167648 542
SCRA 578!
Facts: Television and Production Exponents (TAPE) is a domestic corporation engaged in the
production of television programs, such as the long-running variety program, Eat Bulaga.
Servana had served as a security guard for TAPE. Respondent filed a complaint for illegal
dismissal and non-payment of benefits against TAPE. He alleged that he was first connected
with Agro-Commercial Security Agency but was later absorbed by TAPE as a regular company
guard.On March 2, 2000, respondent received a memorandum informing him of his impending
dismissal on account of TAPEs decision to contract the services of a professional security
agency. At the time of his termination, respondent was receiving a monthly salary P6,000.
Servana contended that his dismissal was undertaken without due process and violation of
existing labor laws, aggravated by non-payment of separation pay. He insisted that he was a
regular employee having been engaged to perform an activity that is necessary and desirable to
TAPEs business for 13 years.TAPE contended that there is no employer-employee relationship
between the parties. TAPE engaged respondents services, as part of the support group to
provide security service and it was agreed that complainant would render his services until such
time that respondent company shall have engaged the services of a professional security
agency. TAPE started negotiations for the engagement of a professional security agency , the
Sun Shield Security Agency.TAPE averred that respondent was an independent contractor
falling under the talent group category and was working under a special arrangement which is
recognized in the industry.!

Issue: WON the Servana is an independent contractor.!

Ruling: TAPE failed to establish that respondent is an independent contractor.Jurisprudence is

abound woith casesn that recite the factors to be considered in determining the existence of
employer-employee relationship, namely:a. The selection and engagement of the
employeeRespondent was first connected with Agro-Commercial Security Agency, which
assigned him to assist TAPE in its live productions. When the security agencys contract with
RPN-9 expired, respondent was absorbed by TAPE , or in the latters language, retained as
talent. Clearly, respondent was hired by TAPE. Respondent presented his identification card. It
has been in held that in business establishment, an identification card is usually provided not
just as a security measure but to mainly identify the holder thereof as a bona fide employee of
the firm who issues it.b. The payment of wagesRespondent claims to have been receiving
P5,444.44 as his monthly salary while TAPE prefers to designate such amount as talent fees.
Wages, as defined in the Labor Code, are remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of employment for work done
or to be done, or for service rendered or to be rendered.c. The power of dismissalThe
Memorandum informing respondent of the discontinuance of his service proves that TAPE had
the power to dismiss respondent.d. The employers power to control the employee with respect
to the means and method by which the work is to be accomplished.Control is manifested in the

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bundy cards submitted by respondent in evidence. He was required to report daily and observe
definite work hours.
ABS-CBN vs Nazareno (2006) G.R. 164156

Facts: ABS-CBN 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, with a monthly
compensation of P4,000. They were issued ABS-CBN employees’ identification cards and were
required to work for a minimum of eight hours a day, including Sundays and holidays.  They
were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily
operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air
interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and
lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public
service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record,
log clerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining

Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999.
However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents
were not included to the CBA.

Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio
operations would be handled by the studio technician. There was a revision of the schedule and
assignments and that respondent Gerzon was assigned as the full-time PA of the TV News
Department reporting directly to Leo Lastimosa.

On Oct 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.

Issue: WON the respondents are regular employees?

Ruling: Respondents are considered regular employees of ABS-CBN and are entitled to the
benefits granted to all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists.  The reason being that a customary
appointment is not indispensable before one may be formally declared as having attained
regular status. Article 280 of the Labor Code provides:
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

3
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.

Any employee who has rendered at least one year of service, whether continuous or
intermittent, is deemed regular with respect to the activity performed and while such activity
actually exists.The fact that respondents received pre-agreed “talent fees” instead of salaries,
that they did not observe the required office hours, and that they were permitted to join other
productions during their free time are not conclusive of the nature of their employment. They
are regular employees who perform several different duties under the control and direction of
ABS-CBN executives and supervisors.

There are two kinds of regular employees under the law: (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer; and
(2) those casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the
activities performed in relation to the particular trade or business taking into account all the
circumstances, and in some cases the length of time of its performance and its continued
existence.

The employer-employee relationship between petitioner and respondents has been proven by
the ff:

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or
celebrity status was required from them because they were merely hired through petitioner’s
personnel department just like any ordinary employee.

Second. The so-called “talent fees” of respondents correspond to wages given as a result of an

employer-employee relationship. Respondents did not have the power to bargain for huge
talent fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work unsatisfactory,
and respondents are highly dependent on the petitioner for continued work.

Fourth. 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.

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FULACHE vs ABS-CBN BROADCASTING CORPORATION Case Digest
FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY
LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS, JR., HARVEY
PONCE and ALAN C. ALMENDRAS, Petitioners, vs ABS-CBN BROADCASTING
CORPORATION, Respondent

G.R. No.   183810  January 21, 2010

FACTS:
       
The petitioners in this case are questioning the CBA executed between ABS-CBN and
the ABS-CBN Rank-and-File Employees Union (Union) because under such agreement,
they are only considered as temporary and not regular employees.  The petitioners
claimed that they should be recognized as regular employees of ABS-CBN because
they had already rendered more than a year of service in the company and,
therefore,  entitled to the benefits of a regular employee. 

Instead of salaries, ABS-CBN pointed out that talents are paid a pre-arranged
consideration called “talent fee” taken from the budget of a particular program and
subject to a ten percent (10%) withholding tax.  Talents do not undergo probation.  Their
services are engaged for a specific program or production, or a segment thereof.  Their
contracts are terminated once the program, production or segment is completed.

ABS-CBN alleged that the petitioners’ services were contracted on various dates by
its Cebu station as independent contractors/off camera talents, and they were not
entitled to regularization in these capacities.

Labor Arbiter Rendoque rendered his decision holding that the petitioners were regular
employees of ABS-CBN, not independent contractors, and are entitled to the benefits
and privileges of regular employees
 
ABS-CBN appealed the ruling to the National Labor Relations Commission (NLRC)
Fourth Division, mainly contending that the petitioners were independent contractors,
not regular employees. 

While the appeal of the regularization case was pending, ABS-CBN dismissed Fulache,
Jabonero, Castillo, Lagunzad and Atinen (all drivers) for their refusal to sign up
contracts of employment with service contractor Able Services.  The four drivers and
Atinen responded by filing a complaint for illegal dismissal.

 The Labor Arbiter Rendoque upheld the validity of ABS-CBN's contracting out of certain
work or services in its operations. The labor arbiter found that petitioners Fulache,
Jabonero, Castillo, Lagunzad and Atinen had been dismissed due to redundancy, an
authorized cause under the law.  
  

5
The NLRC reversed the labor arbiter’s ruling in the illegal dismissal case; it found that
petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen had been illegally
dismissed and awarded them backwages and separation pay in lieu of reinstatement.
Under both cases, the petitioners were awarded CBA benefits and privileges from the
time they became regular employees up to the time of their dismissal.

The NLRC resolved the motions for reconsideration on by both parties, thus, on the
regularization issue, the NLRC stood by the ruling that the petitioners were regular
employees entitled to the benefits and privileges of regular employees. On the illegal
dismissal case, the petitioners, while recognized as regular employees, were declared
dismissed due to redundancy.  The NLRC denied the petitioners’ second motion for
reconsideration in its order of May 31, 2006 for being a prohibited pleading. 

ISSUE: 
WON the petitioners are correct that they should be considered already as regular
employees
WON Fulache and the other petitioners were dismissed illegally

RULING:
1. As regular employees, the petitioners fall within the coverage of the bargaining unit
and are therefore entitled to CBA benefits as a matter of law and contract.

Section 1.  APPROPRIATE BARGAINING UNIT. – The parties agree that the

appropriate bargaining unit shall be regular rank-and-file employees of ABS-CBN
BROADCASTING CORPORATION but shall not include:

a) Personnel classified as Supervisor and Confidential employees;

b)  Personnel who are on “casual” or “probationary” status as defined in Section 2
hereof;
c)  Personnel who are on “contract” status or who are paid for specified units of work
such as writer-producers, talent-artists, and singers.

The inclusion or exclusion of new job classifications into the bargaining unit shall be
subject of discussion between the COMPANY and the UNION.

Under these terms, the petitioners are members of the appropriate bargaining unit
because they are regular rank-and-file employees and do not belong to any of the
excluded categories. Specifically, nothing in the records shows that they are supervisory
or confidential employees; neither are they casual nor probationary employees. Most
importantly, the labor arbiter’s decision of January 17, 2002 – affirmed all the way up to
the CA level – ruled against ABS-CBN’s submission that they are independent
contractors. Thus, as regular rank-and-file employees, they fall within CBA coverage
under the CBA’s express terms and are entitled to its benefits. 

2. Their dismissal was not only unjust and in bad faith as the above discussions
abundantly show.  The bad faith in ABS-CBN’s move toward its illegitimate goal was not
even hidden; it dismissed the petitioners – already recognized as regular employees –

6
for refusing to sign up with its service contractor.  Thus, from every perspective, the
petitioners were illegally dismissed.
                                                                                                                         
By law, illegally dismissed employees are entitled to reinstatement without loss of
seniority rights and other privileges and to full backwages, inclusive of allowances, and
to other benefits or their monetary equivalent from the time their compensation was
withheld from them

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DUMPIT-MURILLO VS CA (GR NO. 164652 JUNE 8, 2007)
Dumpit-Murillo vs Court of Appeals
GR No. 164652 June 8, 2007

Facts: On October 2, 1995, under talent contract no. NT95-1805, private respondent Associated
Broadcasting Company (ABC) hired petitioner Thelma Dumpit-Murillo as a newscaster and co-
anchor of Balitang-Balita, an early evening news program. The contract was for a period of 3
months. It renewed under talent contract nos. NT95-1915, NT96-3002, NT98-4984, and NT99-
5649. In addition, petitioner’s services were engaged for the program “Live on Five.” On
September 30, 1999, after 4 years of repeated renewals, petitioner’s talent contract expired.
Two weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier,
Vice President for news and public affairs of ABC, informing the latter that she was still
interested in renewing her contract subject to a salary increase, thereafter, petitioner stopped
reporting for work. On November 5, 1999 she wrote Mr. Javier another letter.

Issue: Whether or not the continuous renewal of petitioner’s talent contracts constitute
regularity in the employment status.

Held: Yes. An employer-employee relationship was created when the private respondents
started to merely renew the contracts repeatedly 15 times for 4 consecutive years.

Petitioner 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 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 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.

The duties of petitioner as enumerated in her employment contract indicate that ABC had
control over the work or petitioner. 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 petitioner and ABC.

Concerning regular employment, the law provides for 2 kinds of employees, namely: 1.) Those
who are engaged to perform activities which are usually necessary or desirable in the usual

8
business or trade of the employer; and 2.) Those who have rendered at least one year of
service, whether continuous or broken with respect to the activity in which they are employed.
In other words, regular status arises from either the nature of work of the employee or the
duration of his employment.

The primary standard of determining regular employment is the reasonable connection

between the particular activity performed by the employee vis-a-vis the usual trade or business
of the employer. This connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. 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.

9
FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITUG.R. NO. 204944-45DECEMBER 3,
2014J. 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-end bonus, 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 Branch 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?

2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed?
4. Did the Court of Appeals correctly awarded reinstatement, damages and attorneys 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

10
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.Thus, 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 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 Arbiters decision and
ruled that Arlene was a regular employee since she continuously rendered services that were
necessary and desirable to Fujis 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 regular employee, 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

11
over her work; that the employment contracts were renewed upon Arlenes 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 control 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 Employment1) 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; or2) 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
protection of the employee.155(Citations omitted)For as long as the guidelines laid down
inBrentare satisfied, this court will recognize the validity of the fixed-term contract. (GMA
Network, Inc. vs. Pabriga)
Independent ContractorOne who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and under ones own
responsibility according to ones own manner and method, free from the control and direction
of the principal in all matters connected with the performance of the work except as to the

12
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 formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance
with the provisions of this Code.XXXThe 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
contractors services, but there is an employer-employee relationship between the contractor
and workers hired to accomplish the work for the
principal.162chanRoblesvirtualLawlibraryJurisprudence 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.XXXThere 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 EmployeesContracts 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 Constitution

13
provides full protection to labor. Apart from the Constitutional guarantee, Article 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 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.176This 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. Fujis 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 employees 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 employers 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 means 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

14
employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business or
trade of the employer, a fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business or trade is pursued in
the usual course. 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 employees 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. Fujis Manila Bureau Office is a small
unit213and 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 Fujis 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.The successive renewals of her
contract indicated the necessity and desirability of her work in the usual course of Fujis
business. Because of this, Arlene had become a regular employee with the right to security of
tenure. Arlenes 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 Article 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 employees 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

15
employer. Non-compliance leads to illegal dismissal. 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 attorneys fees.The
Court of Appeals awarded moral and exemplary damages and attorneys 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 employees position is no longer available; (3) strained relations; and (4) a substantial
period has lapsed from date 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 Arlenes 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 Arlene 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.With regard to the award of attorneys fees, Article 111 of the Labor
Code states that [i]n cases of unlawful withholding of wages, the culpable party may be
assessed attorneys 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 attorneys fees is legally and morally justifiablen.
Due to her illegal dismissal, Arlene was forced to litigate.Therefore, the awards for
reinstatement, damages and attorneys fees were proper.

16
Labor Standards Midterms
Atty. Jefferson Marquez University of San Carlos — College of Law
SY 2017 — 2018

6. Dasco et al., vs. Phiktranco Service Enterprise

GR No. 211141, June 29, 2016

FACTS
This case is a complaint for regularization, underpayment of wages, non-payment of service
incentive leave (SIL) pay, and attorney's fees, filed by the petitioners against Philtranco
Service Enterprises, Inc., (PSEI), a domestic corporation engaged in providing public utility
transportation, and its Manager, Centurion Solano (respondents).
On various dates from 2006 to 2010, the petitioners were employed by the respondents as
bus drivers and/or conductors with travel routes of Manila (Pasay) to Bicol, Visayas and
Mindanao, and vice versa.
On July 4, 2011, the petitioners filed a case against the respondents alleging that:
(1) they were already qualified for regular employment status since they have been
working with the respondents for several years;
(2) they were paid only P404.00 per round trip, which lasts from two to five days, without
overtime pay and below the minimum wage rate;
(3) they cannot be considered as field personnel because their working hours are controlled
by the respondents from dispatching to end point and their travel time is monitored and
measured by the distance because they are in the business of servicing passengers where
time is of the essence; and
(4) they had not been given their yearly five-day SIL since the time they were hired by the
respondents.
Respondents asserted that:
(1) the petitioners were paid on a fixed salary rate of P0.49 centavos per kilometer run, or
minimum wage, whichever is higher;
(2) the petitioners are seasonal employees since their contracts are for a fixed period and
their employment was dependent on the exigency of the extraordinary public demand for
more buses during peak months of the year; and
(3) the petitioners are not entitled to overtime pay and SIL pay because they are field
personnel whose time outside thecompany premises cannot be determined with reasonable
certainty since they ply provincial routes and are left alone in the field unsupervised

Labor Arbiter: On October 17, 2011, the LA rendered a Decision in favor of the respondents
but declared the petitioners as regular employees of the respondents. The LA held that the
respondents were able to prove that the petitioners were paid on a fixed salary of P0.49 per
kilometer run, or minimum wage, whichever is higher. The LA also found that the petitioners
are not entitled to holiday pay and SIL pay because they are considered as field personnel.

17
NLRC: Held that the petitioners are not field personnel considering that they ply specific
routes with fixed time schedules determined by the respondents; thus, they are entitled to
minimum wage, SIL pay, and overtime benefits. With regard to the respondents' claim that
the petitioners have a fixed term contract, the NLRC concurred with the findings of the LA
that the
respondents failed to show any document, such as employment contracts and employment
records, that would show the dates of hiring, as well as the fixed period agreed upon.

CA: Reversed and set aside the NLRC rulings and reinstated the LA's decision. Consequently,
the writ of execution, levy, auction sale and certificate of sale of PSEI's properties were
declared null and void. The petitioners and the NLRC Sheriff were directed to return the
subject properties or turn over the monetary value thereof to the respondents.

ISSUES:
WON the petitioners as bus drivers and/or conductors are field personnel, and thus entitled
to overtime pay and SIL pay

RULING:

Court reiterates that as a rule, it is not a trier of facts and this applies with greater force in
labor cases. Hence, factual findings of quasi-judicial bodies like the NLRC, particularly when
they coincide with those of the LA and if supported by substantial evidence, are accorded
respect and even finality by this Court. But where the findings of the NLRC and the LA are
contradictory, as in the present case, this Court may delve into the records and examine for
itself the questioned findings.
The NLRC properly concluded that the petitioners are not field personnel but regular
employees who perform tasks usually necessary and desirable to the respondents' business.
Evidently, the petitioners are not field personnel as defined above and the NLRC's finding in
this regard is supported by the established facts of this case: (1) the petitioners, as bus drivers
and/or conductors, are directed to transport their passengers at a specified time and place;
(2) they are not given the discretion to select and contract with prospective passengers; (3)
their actual work hours could be determined with reasonable certainty, as well as their
average trips
per month; and (4) the respondents supervised their time and performance of duties.

In order to monitor their drivers and/or conductors, as well as the passengers and the bus
itself, the bus companies put checkers, who are assigned at tactical places along the travel
routes that are plied by their buses. The drivers and/or conductors are required to be at the
specific bus terminals at a specified time. In addition, there are always dispatchers in each
and every bus terminal, who supervise and ensure prompt departure at specified times and
arrival at the estimated proper time. Obviously, these drivers and/ or conductors cannot be
considered as field personnel because they are under the control and constant supervision of
the bus companies while in the performance of their work.

18
As correctly observed by the NLRC:
It is undisputed that [the petitioners] as bus drivers/conductors ply specific routes of [PSEI],
. . . averaging 2 to 5 days per round trip. They follow fixed time schedules of travel and
follow the designated route of [PSEI]. Thus, in carrying out their functions as bus
drivers/conductors, they are not at liberty to deviate from the fixed time schedules for
departure or arrival or change the routes other than those specifically designated for
[PSEI], in accordance with the franchise granted to the [PSEI] as a public utility provider. In
other words, [the petitioners] are clearly under the strict supervision and control of [PSEI]
in the performance of their functions otherwise the latter will not be able to carry out its
business as public utility service provider in accordance with its franchise.

The Court agrees with the above-quoted findings of the NLRC. Clearly, the petitioners, as bus
drivers and/or conductors, are left alone in the field with the duty to comply with the
conditions of the respondents' franchise, as well as to take proper care and custody of the
bus they are using. Since the respondents are engaged in the public utility business, the
petitioners, as bus drivers and/or conductors, should be considered as regular employees of
the respondents because they perform tasks which are directly and necessarily connected
with the respondents' business. Thus, they are consequently entitled to the benefits accorded
to regular employees of the respondents, including overtime pay and SIL pay.

WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2013 and Resolution
dated January 28, 2014 of the Court of Appeals in CA-G.R. SP No. 126210 are REVERSED and
SET ASIDE. The Decision dated February 22, 2012 and Resolution dated May 30, 2012 of the
National Labor Relations Commission in NLRCNCR Case No. 07-10173-11 are REINSTATED.

19
Jose Mel Bernante v. PBA et al
Facts: Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to
join the PBA as referees and were made to sign contracts on a year-to-year basis.
Bernarte was not made to sign a contract during the 1st conference of the All-Filipino Cup. It
was only during the 2nd conference when he was made to sign a one and a half month
contract.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising
him that his contract would not be renewed citing his unsatisfactory performance on and off
the court. It was a total shock for him who was awarded Referee of the year in 2003. He felt
that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of
referees. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a
yearly contract as Regular Class C referee.

On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing

dissatisfaction over his questioning on the assignment of referees officiating out-of-town
games. Beginning February 2004, he was no longer made to sign a contract.
Respondents aver that complainants were not illegally dismissed because they were not
employees of the PBA. Their respective contracts of retainer were simply not renewed. PBA
had the prerogative of whether or not to renew their contracts, which they knew were fixed.

Issue: whether petitioner is an employee of respondents, which in turn determines whether

petitioner was illegally dismissed.

Ruling: petitioners are not employees of the respondent, for the latter doesn’t exercise
control over the former.

Once in the playing court, the referees exercise their own independent judgment, based on
the rules of the game, as to when and how a call or decision is to be made. The referees
decide whether an infraction was committed, and the PBA cannot overrule them once the
decision is made on the playing court. The referees are the only, absolute, and final authority
on the playing court. Respondents or any of the PBA officers cannot and do not determine
which calls to make or not to make and cannot control the referee when he blows the whistle
because such authority exclusively belongs to the referees.
Moreover, the following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which is
three times a week spread over an average of only 105 playing days a year, and they officiate
games at an average of two hours per game; and (2) the only deductions from the fees
received by the referees are withholding taxes.

In other words, unlike regular employees who ordinarily report for work eight hours per day
for five days a week, petitioner is required to report for work only when PBA games are

20
scheduled or three times a week at two hours per game. In addition, there are no deductions
for contributions to the SSS, Philhealth or Pag-Ibig, which are the usual deductions from
employees’ salaries. These undisputed circumstances buttress the fact that petitioner is an
independent contractor, and not an employee of respondents

21
Coca cola Bottlers vs. Dr. Climaco
GR No. 146881 February 5, 2007

Facts: Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers Phil.
(petitioner) by virtue of a Retainer Agreement. Among the terms and conditions under their
retainer agreement are:
1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either
party may terminate the contract upon giving a 30-day written notice to the other;
2. That petitioner shall compensate respondent a retainer fee of P3,800/month. The
DOCTOR may charge professional fee for hospital services rendered in line with his
specialization;
3. That in consideration of the retainer’s fee, the DOCTOR agrees to perform the duties
and obligations in the COMPREHENSIVE MEDICAL PLAN, made an integral part of this
retainer agreement;
4. That the DOCTOR shall observe clinic hours at the company’s premises from Monday to
Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each
day or treatment from 7:30 a.m. to 8:30 a.m and 3:00pm to 4:00pm. It is further
understood that the DOCTOR shall be on call at all times during the other workshifts to
attend to emergency case(s);
5. That no employee-employer relationship shall exist between the company and the
DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of the
agreement, respondent continued to perform his functions as company doctor to petitioner
until he received a letter dated march 9, 1995 from the company ending their retainership
agreement.

Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular
employee of petitioner and thus prayed from payment of all the benefits of a regular employee
including 13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.

In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed
by the Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer-
employee relationship existed between petitioner company and respondent.

However when it was elevated to CA for review, the latter ruled that employer-employee
relationship existed between the parties after applying the four-fold test: (1) power to hire
employee (2) payment of wages (3) power to dismissal (4) and power to control over the
employee with respect to the means and methods by which the work is to be accomplished.

The CA held it in this wise:

22
 1. First, the agreement provide “the company desires to engage on a retainer basis the
services of a physician and the said DOCTOR is accepting such engagement”. This clearly
shows that coca-cola company exercised its power to hire.
2. Secondly, the agreement showed that petitioner would compensate the doctor for
P3,800/month. This would represent the element of payment of wages.
3. Thirdly, it was provided in the agreement that the same shall be valid only for 1 year.
“the said term notwithstanding, either party may terminated the contract upon giving
30-day written notice”. This would show that petitioner had the power to dismissal.
4. Lastly, the agreement reveal that Coca-cola control over the conduct of respondent in
the latter’s performance of his duties sas a doctor for the company.

Hence, this petition filed by Coca-cola company

Issue: Whether or not there exist an employer-employee relationship between the parties.

Ruling: The Court agrees with the finding of the Labor Arbiter and the NLRC.

The Court held that the Labor Arbiter and the NLRC correctly found that petitioner company
lacked the power of control over the performance by respondent of his duties.

The Court citing the case of Neri vs. NLRC said, petitioner company, through the Comprehensive
Medical Plan, provided guidelines merely to ensure that the end result was achieved. In other
words, what was sought to be controlled by the petitioner company was actually the end result
of the task. The guidelines or the Comprehensive Medical Plan were laid down merely to
ensure that the desired end result was achievedbut did not control the means and methods by
which respondent performed his assigned tasks.

The Supreme Court further held that, an employee is required to stay in the employer’s
workplace or proximately close thereto that he cannot utilize his time effectively and
gainfully for his own purpose. Such is not the prevailing situation here. The respondent does
not dispute that fact that outside of the two (2) hours that he is required to be at petitioner
company’s premises, he is not at all further required to just sit around in the premises and wait
for an emergency to occur so as to enable him from using such hours for his own benefit and
advantage. In fact, respondent maintains his own private clinic attending his private practice in
the city, where he services his patients and bills them accordingly.

The Court finds that the requirement to be on call for emergency cases do not amount to such
control, but are necessary incidents to the Retainership Agreement.

The Supreme Court also notes that the Agreement granted to both parties the power to
terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not
wield the sole power of dismissal or termination.
Therefore, the petition was GRANTED.

23
Francisco vs. NLRC, 500 SCRA 690 (06)

Facts: In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer to the City of
Makati to secure business permits, construction permits and other licenses for the initial
operation of the company. In 1996, she was designated Acting Manager, and was able to
perform the duties of such for 5 years. As of December 31, 2000 her salary was P27,500.00 plus
P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January
2001, she was replaced by Liza R. Fuentes as Manager. She alleged that she was required to
sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her salary by
P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00
as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the
company was not earning well. On October 2001, she did not receive her salary from the
company. She made repeated follow-ups with the company cashier but she was advised that
the company was not earning well. On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed that she is no longer connected with
the company. Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter. The Labor Arbiter ruled in
favor of the petitioner. The NLRC affirmed with modification the Decision of the Labor Arbiter.
On appeal, the Court of Appeals reversed the NLRC decision. The appellate court denied
petitioner’s motion for reconsideration, hence, the present recourse.

Issue: Whether there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation.

Held: The determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the extent of the worker’s
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7)
the degree of dependency of the worker upon the employer for his continued employment in
that line of business.The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of business. In
the United States, the touchstone of economic reality in analyzing possible employment
relationships for purposes of the Federal Labor Standards Act is dependency. By analogy, the
benchmark of economic reality in analyzing possible employment relationships for purposes of
the Labor Code ought to be the economic dependence of the worker on his employer. Under
the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,

24
receiving check vouchers indicating her salaries/wages, benefits, 13 th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. When petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in
the SSS as manifested by a copy of the SSS specimen signature card which was signed by the
President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of
the SSS evinces the existence of an employer-employee relationship between petitioner and
Respondent Corporation. It is therefore apparent that petitioner is economically dependent on
Respondent Corporation for her continued employment in the latter’s line of business. The
petition is GRANTED.

25
Tongko vs. The Manufacturer’s Life Insurance Co., Inc. November 7, 2008

Facts: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation
engaged in life insurance business.  Renato A. Vergel De Dios was, during the period material,
its President and Chief Executive Officer. Gregorio V. Tongko started his professional
relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement)
he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained
herein shall be construed or interpreted as creating an employer-employee relationship
between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of any of the
provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days
from the time of the discovery of the breach. No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to terminate this Agreement by the Company shall be
construed for any previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause,
by giving to the other party fifteen (15) days notice in writing.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization.  In
1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at
Manulife, consisting of commissions, persistency income, and management overrides. The
problem started sometime in 2001, when Manulife instituted manpower development
programs in the regional sales management level. Relative thereto, De Dios addressed a letter
dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales
Managers Meeting. Stating that Tongko’s Region was the lowest performer (on a per Manager
basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in
this area. Other issues were:"Some Managers are unhappy with their earnings and would want
to revert to the position of agents." And "Sales Managers are doing what the company asks
them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife
for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed
the complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife
and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife
filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29,

26
2005, finding the absence of an employer-employee relationship between the parties and
deeming the NLRC with no jurisdiction over the case.  Hence, Tongko filed this petition.

Issue: Whether or not Tongko was an employee of Manulife and that he was illegally dismissed.

Ruling: Yes. In the instant case, Manulife had the power of control over Tongko that would
make him its employee.Several factors contribute to this conclusion.

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided
that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as
herein provided as well as maintain a standard of knowledge and competency in the sale of the
Company's products which satisfies those set by the Company and sufficiently meets the
volume of new business required of Production Club membership.Under this provision, an
agent of Manulife must comply with three (3) requirements: (1) compliance with the
regulations and requirements of the company; (2) maintenance of a level of knowledge of the
company's products that is satisfactory to the company; and (3) compliance with a quota of
new businesses.

Among the company regulations of Manulife are the different codes of.  The fact that Tongko
was obliged to obey and comply with the codes of conduct was not disowned by respondents.

Thus, with the company regulations and requirements alone, the fact that Tongko was an
employee of Manulife may already be established. Certainly, these requirements controlled the
means and methods by which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform
administrative duties that establishes his employment with Manulife.

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a
certain number of agents, in addition to his other administrative functions, leads to no other
conclusion that he was an employee of Manulife.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the
burden of proving the validity of the termination of employment rests on the employer. Failure
to discharge this evidential burden would necessarily mean that the dismissal was not justified,
and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just
cause and this must be supported by substantial evidence. The settled rule in administrative
and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in
determining the legality of an employer's dismissal of an employee, and not even a
preponderance of evidence is necessary as substantial evidence is considered sufficient.
Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a

27
reasonable mind might accept as adequate to support a conclusion, even if other minds,
equally reasonable, might conceivably opine otherwise.

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife
even failed to identify the specific acts by which Tongko's employment was terminated much
less support the same with substantial evidence.  To repeat, mere conjectures cannot work to
deprive employees of their means of livelihood. Thus, it must be concluded that Tongko was
illegally dismissed.

Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko
not being its employee is not entitled to such notices. Since we have ruled that Tongko is its
employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground
too, Manulife is guilty of illegal dismissal.

28
ABELLA VS. PLDT G.R. No. 159469, June 8, 2005,

FACTS:
PSI, a legitimate job contractor, entered into an agreement with the PLDT to provide the
latter with such number of qualified uniformed and properly armed security guards. PSI
determined and paid the compensation of the security guards. Upon deployment, PLDT
conducted interviews and evaluation to ensure that the standards it set are met by the
security guards. PLDT rarely failed to accept security guards referred to by PSI but on account
of height deficiency. PLDT likewise conducted seminars for the security guards in its premises.

65 security guards supplied by respondent PSI filed a Complaint for regularization against the
PLDT with the Labor Arbiter. The Complaint alleged inter alia that petitioner security guards
have been employed by the company through the years commencing from 1982 and that all
of them served PLDT directly for more than 1 year. It was further alleged that PSI or other
agencies supply security to PLDT, which entity controls and supervises the complainants work
through its Security Department. Petitioners likewise alleged that PSI acted as the middleman
in the payment of the minimum pay to the security guards, but no premium for work
rendered beyond eight hours was paid to them nor were they paid their 13th month pay. In
sum, the Complaint states that inasmuch as the complainants are under the direct control
and supervision of PLDT, they should be considered as regular employees by the latter with
compensation and benefits equivalent to ordinary rank-and-file employees of the same job
grade.

Security guards formed the PLDT Company Security Personnel Union with petitioner Zaldy
Abella as union president. A month later, PLDT allegedly ordered PSI to terminate about 25
members of said union who participated in a protest picket in front of the PLDT Office at the
Ramon Cojuangco Building in Makati City.

ISSUE: Whether the security guards were employees of PLDT?

HELD: No. PAL vs NLRC provides for factors in considering the existence of an employer-
employee relationship: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power to dismiss; and (4) the power to control the employees conduct.
Testimonies during the trial reveal that interviews and evaluation were conducted by PLDT to
ensure that the standards it set are met by the security guards. In fact, PLDT rarely failed to
accept security guards referred to by PSI but on account of height deficiency. The referral is
nothing but for possible assignment in a designated client which has the inherent prerogative
to accept and reject the assignee for justifiable grounds or even arbitrarily. We are thus

29
convinced that the employer-employee relationship is deemed perfected even before the
posting of the complainants with the PLDT, as assignment only comes after employment.

PSI is a legitimate job contractor pursuant to Section 8, Rule VII, Book II of the Omnibus Rules
Implementing the Labor Code. It is a registered corporation duly licensed by the Philippine
National Police to engage in security business. It has substantial capital and investment in
the form of guns, ammunitions, communication equipments, vehicles, office equipments like
computer, typewriters, photocopying machines, etc., and above all, it is servicing clients
other than PLDT like PCIBank, Crown Triumph, and Philippine Cable, among others. Here, the
security guards which PSI had assigned to PLDT are already the former’s employees prior to
assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to
the security agreement, then the rejected or terminated guard may still be assigned to other
clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996
but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10
May 1996. Therefore, the evidence as it stands is at odds with petitioners’ assertion that PSI
is an “in-house” agency of PLDT so as to call for a piercing of veil of corporate identity.

It is PSI that determined and paid the petitioners’ wages, salaries, and compensation. As
elucidated by the Labor Arbiter, petitioners’ witness testified that his wages were collected
and withdrawn at the office of PSI and PLDT pays PSI for the security services on a lump-sum
basis and that the wages of complainants are only a portion of the total sum. The signature
of the PLDT supervisor in the Daily Time Records does not ipso facto make PLDT the employer
of complainants inasmuch as the Labor Arbiter had found that the record is replete with
evidence showing that some of the Daily Time Records do not bear the signature of a PLDT
supervisor yet no complaint was lodged for nonpayment of the guard’s wages evidencing that
the signature of the PLDT’s supervisor is not a condition precedent for the payment of wages
of the guards. Notably, it was not disputed that complainants enjoy the benefits and
incentives of employees of PSI and that they are reported as employees of PSI with the SSS.

Lastly, petitioners capitalize on the delinquency reports prepared by PLDT personnel against
some of the security guards as well as certificates of participation in civil disturbance course,
certificates of attendance in first aid training, certificate of completion in fire brigade training
seminar and certificate of completion on restricted land mobile radio telephone operation to
show that the petitioners are under the direct control and supervision of PLDT and that the
latter has, in fact, the power to dismiss them. The Labor Arbiter found from the evidence that
the delinquency reports were nothing but reminders of the infractions committed by the
petitioners while on duty which serve as basis for PLDT to recommend the termination of the
concerned security guard from PLDT. As already adverted to earlier, termination of services

30
from PLDT did not ipso facto mean dismissal from PSI inasmuch as some of those pulled out
from PLDT were merely detailed at the other clients of PSI as in the case of Jonathan Daguno,
who was merely transferred to PCIBank Makati. DENIED

31
Villamaria v CA (Labor Standards)

Villamaria v CA & Bustamante GR No. 165881 April 19, 2006

FACTS:
- Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in
assembling passenger jeepneys with a public utility franchise to operate along the Baclaran-Sucat
route. By 1995, Villamaria stopped assembling jeepneys and retained only nine, four of which
operated by employing drivers on a “boundary basis.” One of those drivers was respondent
Bustamante.
- Bustamante remitted 450 a day to Villamaria as boundary and kept the residue of his daily earnings
as compensation for driving the vehicle. In August 1997, Villamaria verbally agreed to sell the jeepney
to Bustamante under a “boundary-hulog scheme”, where Bustamante would remit to Villamaria P550
a day for a period of 4 years; Bustamane would then become the owner of the vehicle and continue to
drive the same under Villamaria’s franchise, but with Php 10,000 downpayment.
- August 7, 1997, Villamaria executed a contract entitled “Kasunduan ng Bilihan ng Sasakyan sa
Pamamagitan ng Boundary Hulog”. The parties agreed that if Bustamante failed to pay the boundary-
hulog for 3 days, Villamaria Motors would hold on to the vehicle until Bustamante paid his arrears,
including a penalty of 50 a day; in case Bustamante failed to remit the daily boundary-hulog for a
period of one week, the Kasunduan would cease to have the legal effect and Bustamante would have
to return the vehicle to Villamaria motors.
- In 1999, Bustamante and other drivers who also had the same arrangement failed to pay their
respective boundary-hulog. The prompted Villamaria to serve a “Paalala”. On July 24, 2000. Villamaria
took back the jeepney driven by Bustamante and barred the latter from driving the vehicle.
- Bustamante filed a complaint for Illegal Dismissal.

DECISION OF LOWER COURTS:

*Labor Arbiter: petition dismissed.
*NLRC: dismissed appeal.
*CA: reversed NLRC, awarded Bustamante separation pay and backwages.
Hence, this petition for review on certiorari.

ISSUES:
(1) WON the existence of a boundary-hulog agreement negates the employer-employee relationship
between the vendor and vendee

32
(2) WON the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such a case.
HELD:
(1) NO. Under the boundary-hulog scheme, a dual juridical relationship is created; that of employer-
employee and vendor-vendee. The Kasanduan did not extinguish the employer employee relationship
of the parties existing before the execution of said deed.
a. Under this system the owner/operator exercises control and supervision over the driver. It is unlike
in lease of chattels where the lessor loses complete control over the chattel leased but the lessee is
still ultimately responsible for the consequences of its use. The management of the business is still in
the hands of the owner/operator, who, being the holder of the certificate of public convenience, must
see to it that the driver follows the route prescribed by the franchising and regulatory authority, and
the rules promulgated with regard to the business operations.
b. The driver performs activities which are usually necessary or desirable in the usual business or
trade of the owner/operator. Under the Kasunduan, respondent was required to remit Php 550 daily
to petitioner, an amount which represented the boundary of petitioner as well as respondent’s partial
payment (hulog) of the purchase price of the jeepney. Thus, the daily remittances also had a dual
purpose: that of petitioner’s boundary
and respondent’s partial payment (hulog) for the vehicle.
c. The obligation is not novated by an instrument that expressly recognizes the old one,
changes only the terms of payment and adds other obligations not incompatible with the old
provisions or where the contract merely supplements the previous one.
d. The existence of an employment relation is not dependent on how the worker is paid but on the
presence or absence of control over the means and method of the work. The amount earned in excess
of the “boundary hulog” is equivalent to wages and the fact that the power of dismissal was not
mentioned in the Kasunduan did not mean that private respondent never exercised such power, or
could not exercise such power.

(2) YES. The Labor Arbiter and the NLRC has jurisdiction under Article 217 of the Labor Code is limited
to disputes arising from an employer-employee relationship which can only be resolved by reference
to the Labor Code, other labor statues of their collective bargaining agreement.

OTHER NOTES:
(1) The rule is that the nature of an action and subject matter thereof, as well as, which court or
agency of the government has jurisdiction and the character of the reliefs prayed for, whether or not
the complainant/plaintiff is entitled to any or all of such reliefs.
(2) Not every dispute between an employer and employee involves matters that only the Labor
Arbiter and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. Actions

33
between employers and employees where the employer-employee relationship is merely incidental is
within the exclusive original jurisdiction of the regular courts.

34
Republic v. Asiapro Cooperative
(G.R. No. 172101)
Facts:

Respondent Asiapro Cooperative is composed of owners-members with primary

objectives of providing them savings and credit facilities and livelihood services. In
discharge of said objectives, Asiapro entered into several service contracts with Stanfilco.
Sometime later, the cooperative owners-members requested Stanfilco’s help in
registering them with SSS and remitting their contributions. Petitioner SSS informed
Asiapro that being actually a manpower contractor supplying employees to Stanfilco, it
must be the one to register itself with SSS as an employer and remit the contributions.
Respondent continuously ignoring the demand of SSS the latter filed before the SSC.
Asiapro alleges that there exists no employer-employee relationship between it and its
owners-members. SSC ruled in favor of SSS. On appeal, CA reversed the decision.

Issue:

Whether or not there is employer-employee relationship between Asiapro and its owners-
members.

Ruling: YES.

In determining the existence of an employer-employee relationship, the following

elements are considered: (1) the selection and engagement of the workers; (2) the
payment of wages by whatever means; (3) the power of dismissal; and (4) the power to
control the worker‘s conduct, with the latter assuming primacy in the overall
consideration. All the aforesaid elements are present in this case.

35
First. It is expressly provided in the Service Contracts that it is the respondent
cooperative which has the exclusive discretion in the selection and engagement of the
owners-members as well as its team leaders who will be assigned at Stanfilco.

Second. It cannot be doubted then that those stipends or shares in the service surplus are
indeed wages, because these are given to the owners-members as compensation in
rendering services to respondent cooperative‘s client, Stanfilco.

Third. It is also stated in the above-mentioned Service Contracts that it is the respondent
cooperative which has the power to investigate, discipline and remove the owners-
members and its team leaders who were rendering services at Stanfilco.

Fourth. In the case at bar, it is the respondent cooperative which has the sole control over
the manner and means of performing the services under the Service Contracts with
Stanfilco as well as the means and methods of work. Also, the respondent cooperative is
solely and entirely responsible for its owners-members, team leaders and other
representatives at Stanfilco. All these clearly prove that, indeed, there is an employer-
employee relationship between the respondent cooperative and its owners-members.

36
MATLING INDUSTRIAL VS COROS (G.R. NO. 157802 OCTOBER 13, 2010)
Matling Industrial and Commercial Corporation vs Coros
G.R. No. 157802 October 13, 2010

Facts: After his dismissal by Matling as its Vice President for Finance and Administration, the
respondent filed on August 10, 2000 a complaint for illegal suspension and illegal dismissal against
Matling and some of its corporate officers (petitioners) in the NLRC, Sub-Regional Arbitration Branch
XII, Iligan City. The petitioners moved to dismiss the complaint, raising the ground, among others, that
the complaint pertained to the jurisdiction of the Securities and Exchange Commission (SEC) due to
the controversy being intracorporate inasmuch as the respondent was a member of Matlings Board of
Directors aside from being its Vice-President for Finance and Administration prior to his termination.
The respondent opposed the petitioners motion to dismiss, insisting that his status as a member of
Matlings Board of Directors was doubtful, considering that he had not been formally elected as such;
that he did not own a single share of stock in Matling, considering that he had been made to sign in
blank an undated indorsement of the certificate of stock he had been given in 1992; that Matling had
taken back and retained the certificate of stock in its custody; and that even assuming that he had
been a Director of Matling, he had been removed as the Vice President for Finance and
Administration, not as a Director, a fact that the notice of his termination dated April 10, 2000
showed. On October 16, 2000, the LA granted the petitioners motion to dismiss, ruling that the
respondent was a corporate officer because he was occupying the position of Vice President for
Finance and Administration and at the same time was a Member of the Board of Directors of Matling;
and that, consequently, his removal was a corporate act of Matling and the controversy resulting from
such removal was under the jurisdiction of the SEC, pursuant to Section 5, paragraph (c) of
Presidential Decree No. 902.

Issue: Whether or not the respondent is a corporate officer within the jurisdiction of the regular
courts.

Held: No. As a rule, the illegal dismissal of an officer or other employee of a private employer is
properly cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as amended,
which provides as follows:

Article 217. Jurisdiction of the Labor Arbiters and the Commission. – (a) Except as otherwise provided
under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:

37
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P 5,000.00) regardless of
whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of company personnel policies shall be disposed
of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as
may be provided in said agreements.

Where the complaint for illegal dismissal concerns a corporate officer, however, the controversy falls
under the jurisdiction of the Securities and Exchange Commission (SEC), because the controversy
arises out of intra-corporate or partnership relations between and among stockholders, members, or
associates, or between any or all of them and the corporation, partnership, or association of which
they are stockholders, members, or associates, respectively; and between such corporation,
partnership, or association and the State insofar as the controversy concerns their individual franchise
or right to exist as such entity; or because the controversy involves the election or appointment of a
director, trustee, officer, or manager of such corporation, partnership, or association. Such
controversy, among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise known as The
Securities Regulation Code, the SECs jurisdiction over all intra-corporate disputes was transferred to
the RTC, pursuant to Section 5.2 of RA No. 8799.

Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the
corporate officers enumerated in the by-laws are the exclusive Officers of the corporation and the

38
Board has no power to create other Offices without amending first the corporate By-laws. However,
the Board may create appointive positions other than the positions of corporate Officers, but the
persons occupying such positions are not considered as corporate officers within the meaning of
Section 25 of the Corporation Code and are not empowered to exercise the functions of the corporate
Officers, except those functions lawfully delegated to them. Their functions and duties are to be
determined by the Board of Directors/Trustees.

Moreover, the Board of Directors of Matling could not validly delegate the power to create a
corporate office to the President, in light of Section 25 of the Corporation Code requiring the Board of
Directors itself to elect the corporate officers. Verily, the power to elect the corporate officers was a
discretionary power that the law exclusively vested in the Board of Directors, and could not be
delegated to subordinate officers or agents. The office of Vice President for Finance and
Administration created by Matlings President pursuant to By Law No. V was an ordinary, not a
corporate, office.

The criteria for distinguishing between corporate officers who may be ousted from office at will, on
one hand, and ordinary corporate employees who may only be terminated for just cause, on the other
hand, do not depend on the nature of the services performed, but on the manner of creation of the
office. In the respondents case, he was supposedly at once an employee, a stockholder, and a Director
of Matling. The circumstances surrounding his appointment to office must be fully considered to
determine whether the dismissal constituted an intra-corporate controversy or a labor termination
dispute. We must also consider whether his status as Director and stockholder had any relation at all
to his appointment and subsequent dismissal as Vice President for Finance and Administration.

39
CASE DIGEST: RAUL C. COSARE, Petitioner, v. BROADCOM ASIA, INC. and DANTE AREVALO,
Respondents.

FACTS: In 1993, Cosare was employed as a salesman by Arevalo, who was then in the business of
selling broadcast equipment needed by television networks and production houses. In December
2000, Arevalo set up the company Broadcom, still to continue the business of trading communication
and broadcast equipment. Cosare was named an incorporator of Broadcom, having been assigned 100
shares of stock with par value of P1.00 per share. In October 2001, Cosare was promoted to the
position of Assistant Vice President for Sales (AVP for Sales) and Head of the Technical Coordination.

Sometime in 2003, Alex F. Abiog (Abiog) was appointed as Broadcoms Vice President for Sales and
thus, became Cosares immediate superior. Cosare sent a confidential memo to Arevalo to inform him
of the anomalies which were allegedly being committed by Abiog against the company. Cosare ended
his memo by clarifying that he was not interested in Abiogs position, but only wanted Arevalo to
know of the irregularities for the corporations sake.

Apparently, Arevalo failed to act on Cosares accusations. Cosare claimed that he was instead called
for a meeting by Arevalo on March 25, 2009, wherein he was asked to tender his resignation in
exchange for "financial assistance" in the amount ofP300,000.00.Cosare refused to comply with the
directive, as signified in a letter which he sent to Arevalo.

Cosare received from Roselyn Villareal (Villareal), Broadcoms Manager for Finance and
Administration, a memosigned by Arevalo, charging him of serious misconduct and willful breach of
trust. He was given forty-eight (48) hours from the date of the memo within which to present his
explanation on the charges. He was also "suspended from having access to any and all company
files/records and use of company assets effective immediately."Thus, Cosare claimed that he was
precluded from reporting for work and was instead instructed to wait at the offices receiving section.
Upon the specific instructions of Arevalo, he was also prevented by Villareal from retrieving even his
personal belongings from the office until he was totally barred from entering the company premises.

Cosare filed a labor complaint, claiming that he was constructively dismissed from employment by the
respondents. He further argued that he was illegally suspended, as he placed no serious and imminent
threat to the life or property of his employer and co-employees.

In refuting Cosares complaint, the respondents argued that Cosare was neither illegally suspended nor
dismissed from employment. They also contended that Cosare committed the following acts inimical
to the interests of Broadcom.Furthermore, they contended that Cosare abandoned his job by

40
continually failing to report for work beginning April 1, 2009, prompting them to issue on April 14,
2009 a memorandumaccusing Cosare of absence without leave beginning April 1, 2009.

The Labor Arbiter dismissed the complaint on the ground of Cosares failure to establish that he was
constructively dismissed.

Cosare appealed the LA decision to the NLRC. It reversed the LA decision.

The respondents motion for reconsideration was denied.Dissatisfied, they filed a petition for certiorari
with the CA on the issues of constructive dismissal and intra-corporate controversy which was within
the jurisdiction of the RTC, instead of the LA. They argued that the case involved a complaint against a
corporation filed by a stockholder, who, at the same time, was a corporate officer.

The CAgranted the respondents petition. It agreed with the respondents contention that the case
involved an intra-corporate controversy which, pursuant to Presidential Decree No. 902-A, as
amended, was within the exclusive jurisdiction of the RTC. Hence, this petition filed by Cosare.

ISSUES:

Was the case instituted by Cosare an intra-corporate dispute that was within the original jurisdiction
of the RTC, and not of the LAs?
Was Cosare constructively and illegally dismissed from employment by the respondents?

HELD: An intra-corporate controversy, which falls within the jurisdiction of regular courts, has been
regarded in its broad sense to pertain to disputes that involve any of the following relationships: (1)
between the corporation, partnership or association and the public; (2) between the corporation,
partnership or association and the state in so far as its franchise, permit or license to operate is
concerned; (3) between the corporation, partnership or association and its stockholders, partners,
members or officers; and (4) among the stockholders, partners or associates, themselves.Settled
jurisprudence, however, qualifies that when the dispute involves a charge of illegal dismissal, the
action may fall under the jurisdiction of the LAs upon whose jurisdiction, as a rule, falls termination
disputes and claims for damages arising from employer-employee relations as provided in Article 217
of the Labor Code. Consistent with this jurisprudence, the mere fact that Cosare was a stockholder

41
and an officer of Broadcom at the time the subject controversy developed failed to necessarily make
the case an intra-corporate dispute.

In Matling Industrial and Commercial Corporation v. Coros,the Court distinguished between a "regular
employee" and a "corporate officer" for purposes of establishing the true nature of a dispute or
complaint for illegal dismissal and determining which body has jurisdiction over it. Succinctly, it was
explained that "[t]he determination of whether the dismissed officer was a regular employee or
corporate officer unravels the conundrum" of whether a complaint for illegal dismissal is cognizable
by the LA or by the RTC. "In case of the regular employee, the LA has jurisdiction; otherwise, the RTC
exercises the legal authority to adjudicate.

Applying the foregoing to the present case, the LA had the original jurisdiction over the complaint for
illegal dismissal because Cosare, although an officer of Broadcom for being its AVP for Sales, was not a
"corporate officer" as the term is defined by law.

***

There are three specific officers whom a corporation must have under Section 25 of the Corporation
Code. These are the president, secretary and the treasurer. The number of officers is not limited to
these three. A corporation may have such other officers as may be provided for by its by-laws like, but
not limited to, the vice-president, cashier, auditor or general manager. The number of corporate
officers is thus limited by law and by the corporations by-laws.

In Tabang v. NLRC, the Court also made the following pronouncement on the nature of corporate
offices: there are two circumstances which must concur in order for an individual to be considered a
corporate officer, as against an ordinary employee or officer, namely: (1) the creation of the position is
under the corporations charter or by-laws; and (2) the election of the officer is by the directors or
stockholders. It is only when the officer claiming to have been illegally dismissed is classified as such
corporate officer that the issue is deemed an intra-corporate dispute which falls within the jurisdiction
of the trial courts.

The Court disagrees with the respondents and the CA. The only officers who are specifically listed, and
thus with offices that are created under Broadcoms by-laws are the following: the President, Vice-
President, Treasurer and Secretary. Although a blanket authority provides for the Boards appointment
of such other officers as it may deem necessary and proper, the respondents failed to sufficiently
establish that the position of AVP for Sales was created by virtue of an act of Broadcoms board, and

42
that Cosare was specifically elected or appointed to such position by the directors. No board
resolutions to establish such facts form part of the case records.

The CAs heavy reliance on the contents of the General Information Sheets, which were submitted by
the respondents during the appeal proceedings and which plainly provided that Cosare was an
"officer" of Broadcom, was clearly misplaced. The said documents could neither govern nor establish
the nature of the office held by Cosare and his appointment thereto.

Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of the cases filing did not
necessarily make the action an intra-corporate controversy. Not all conflicts between the stockholders
and the corporation are classified as intra-corporate. There are other facts to consider in determining
whether the dispute involves corporate matters as to consider them as intra-corporate controversies.

***

Constructive dismissal occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in
pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to
the employee leaving the latter with no other option but to quit.

The Court emphasized in King of Kings Transport, Inc. v. Mamac 553 Phil. 108 the standards to be
observed by employers in complying with the service of notices prior to termination:

The first written notice to be served on the employees should contain the specific causes or grounds
for termination against them, and a directive that the employees are given the opportunity to submit
their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must accord to the employees to enable them
to prepare adequately for their defense. This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses
they will raise against the complaint. Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A general description
of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if
any, are violated and/or which among the grounds under Art. 282 is being charged against the
employees.

43
In sum, the respondents were already resolute on a severance of their working relationship with
Cosare, notwithstanding the facts which could have been established by his explanations and the
respondents full investigation on the matter. In addition to this, the fact that no further investigation
and final disposition appeared to have been made by the respondents on Cosares case only negated
the claim that they actually intended to first look into the matter before making a final determination
as to the guilt or innocence of their employee. This also manifested from the fact that even before
Cosare was required to present his side on the charges of serious misconduct and willful breach of
trust, he was summoned to Arevalos office and was asked to tender his immediate resignation in
exchange for financial assistance.

The charge of abandonment was inconsistent with this imposed suspension. "Abandonment is the
deliberate and unjustified refusal of an employee to resume his employment. To constitute
abandonment of work, two elements must concur: (1) the employee must have failed to report for
work or must have been absent without valid or justifiable reason; and (2) there must have been a
clear intention on the part of the employee to sever the employer-employee relationship manifested
by some overt act."Cosares failure to report to work beginning April 1, 2009 was neither voluntary nor
indicative of an intention to sever his employment with Broadcom. It was illogical to be requiring him
to report for work, and imputing fault when he failed to do so after he was specifically denied access
to all of the company's assets. Hence, the Court held Petitioner was constructively dismissed by
respondent.

***

Court reiterated that an illegally or constructively dismissed employee is entitled to: (1) either
reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages.The
award of exemplary damages was also justified given the NLRC's finding that the respondents acted in
bad faith and in a wanton, oppressive and malevolent manner when they dismissed Cosare. It is also
by reason of such bad faith that Arevalo was correctly declared solidarily liable for the monetary
awards.

44
.R. No. 187320, January 26, 2011

ATLANTA INDUSTRIES, INC. and/or ROBERT CHAN, petitioners,

vs. APRILITO R. SEBOLINO, KHIM V. COSTALES, ALVIN V.
ALMONTE, and JOSEPH H. SAGUN, respondents.

BRION, J.:

FACTS:

Sebolino et al. filed several complaints for illegal dismissal, regularization,

underpayment, nonpayment of wages and other money claims as well as
damages. They alleged that they had attained regular status as they were
allowed to work with Atlanta for more than six (6) months from the start of a
purported apprenticeship agreement between them and the company. They
claimed that they were illegally dismissed when the apprenticeship agreement
expired.

In defense, Atlanta and Chan argued that the workers were not entitled to
regularization and to their money claims because they were engaged as
apprentices under a government-approved apprenticeship program. The
company offered to hire them as regular employees in the event vacancies for
regular positions occur in the section of the plant where they had trained.
They also claimed that their names did not appear in the list of employees
(Master List) prior to their engagement as apprentices.

The Labor Arbiter found the dismissal to be illegal with respect to nine out of
the twelve complainants. Atlanta appealed the decision to the NLRC which
reversed the illegal dismissal decision with respect to Sebolino and three
others. They moved for reconsideration but this was denied. They then
brought the case up to the Court of Appeals, which held that Sebolino and the
three others were illegally dismiised.

The CA ruled that Sebolino and the three others were already employees of the
company before they entered into the first and second apprenticeship
agreements. For example, Sebolino was employed by Atlanta on March 3,
2004 then he entered into his first apprenticeship agreement with the
company on March 20, 2004 to August 19, 2004. The second apprenticeship
agreement was from May 28, 2004 to October 8, 2004. However, the CA
found the apprenticeship agreements to be void because they were executed in
violation of the law and the rules. Therefore, in the first place, there were no
apprenticeship agreements.

45
Also, the positions occupied by the respondents machine operator, extruder
operator and scaleman are usually necessary and desirable in the manufacture
of plastic building materials, the companys main business. Sebolino and the
three others were, therefore, regular employees whose dismissals were illegal
for lack of a just or authorized cause and notice.

ISSUE: Whether or not the CA erred in ruling that Sebolino and

three others were illegally dismissed.

HELD: The petition is unmeritorious.

LABOR LAW - Illegal dismissals

The CA committed no reversible error in nullifying the NLRC decision and in

affirming the labor arbiters ruling, as it applies toCostales, Almoite, Sebolino
and Sagun. Specifically, the CA correctly ruled that the four were illegally
dismissed because (1) they were already employees when they were required
to undergo apprenticeship and (2) apprenticeship agreements were invalid.

The following considerations support the CA ruling.

FBased on company operations at the time material to the case, Costales,

Almoite, Sebolino and Sagun were already rendering service to the company
as employees before they were made to undergo apprenticeship. The company
itself recognized the respondents status through relevant operational records
in the case of Costales and Almoite, the CPS monthly report for December
2003 which the NLRC relied upon and, for Sebolino and Sagun, the
production and work schedule for March 7 to 12, 2005 cited by the CA.

The CA correctly recognized the authenticity of the operational documents, for

the failure of Atlanta to raise a challenge against these documents before the
labor arbiter, the NLRC and the CA itself. The appellate court, thus, found the
said documents sufficientto establish the employment of the respondents
before their engagement as apprentices.

The fact that Sebolino and the three others were already rendering service to
the company when they were made to undergo apprenticeship (as established
by the evidence) renders the apprenticeship agreements irrelevant as far as
the four are concerned. This reality is highlighted by the CA finding that the
respondents occupied positions such as machine operator, scaleman and
extruder operator - tasks that are usually necessary and desirable in Atlantas

46
usual business or trade as manufacturer of plastic building materials. These
tasks and their nature characterized the four as regular employees under
Article 280 of the Labor Code.Thus, when they were dismissed without just or
authorized cause, without notice, and without the opportunity to be heard,
their dismissal was illegal under the law.

DENIED.

47
G.R. No. 200575 : February 5, 2014 INTEL TECHNOLOGY PHILIPPINES, INC.,Petitioner, v. NATIONAL
LABOR RELATIONS COMMISSION AND JEREMIAS CABILES, Respondents. MENDOZA, J.:
FACTS: Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He was
subsequently promoted several times over the years and was also assigned at Intel Arizona and Intel
Chengdu. He later applied for a position at Intel Semiconductor Limited Hong Kong (Intel HK). He
received a letter offering the position of Finance Manager by Intel HK. Before accepting the offer, he
inquired from Intel Phil., through an email the consequences of accepting the newly presented
opportunity in Hong Kong. He asked the process he need to go through regarding the benefits and
clearances in Intel Phils and would an email notification be enough. He also clarified whether he will
receive retirement benefits considering he will be in the service for 10 years on April 16, 2007 with
Intel and should he accept the offer of Intel HK, will the 9.5 years in the service be rounded of to 10
years. Intel Phil., through Penny Gabronino (Gabronino), replied that he will not be eligible to receive
his retirement benefit not having reached 10 years of service at the time he moved to Hong Kong.
Further, Intel do not round up the years of service. In case he move back to the Philippines his total
tenure of service will be computed less on the period that you are out of Intel Philippines. On January
31, 2007, Cabiles signed the job offer. On March 8, 2007, Intel Phil. issued Cabiles his "Intel Final Pay
Separation Voucher" indicating a net payout ofP165,857.62. On March 26, 2007, Cabiles executed a
Release, Waiver and Quitclaim in favor of Intel Phil. acknowledging receipt of P165,857.62 as full and
complete settlement of all benefits due him by reason of his separation from Intel Phil. On September
8, 2007, after seven (7) months of employment, Cabiles resigned from Intel HK. About two years
thereafter, Cabiles filed a complaint for non-payment of retirement benefits and for moral and
exemplary damages with the NLRC. He insisted that he was employed by Intel for 10 years and 5
months from April 1997 to September 2007 a period which included his seven (7) month stint with
Intel HK. Thus, he believed he was qualified to avail of the benefits under the company's retirement
policy allowing an employee who served for 10 years or more to receive retirement benefits. The LA
held that Cabiles did not sever his employment with Intel Phil. when he moved to Intel HK, similar to
the instances when he was assigned at Intel Arizona and Intel Chengdu. On appeal, the NLRC affirmed
the LA decision. It determined that his decision to move to Intel HK was not definitive proof of
permanent severance of his ties with Intel Phil. It treated his transfer to Hong Kong as akin to his
overseas assignments in Arizona and Chengdu. As to the email exchange between Cabiles and Intel
Phil., the NLRC considered the same as insufficient to diminish his right over retirement benefits under
the law. Meanwhile, the NLRC disregarded the Waiver because at the time it was signed, the
retirement pay due him had not yet accrued.

Aggrieved, Intel Phil. elevated the case to the CA via a petition for certiorari with application for a
Temporary Restraining Order (TRO). The application for TRO was denied. A motion for
reconsideration, was filed, but it was also denied in a Resolution, which also dismissed the petition for
certiorari. Intel Phil. filed a motion for reconsideration. The NLRC issued a writ of execution against

48
Intel Phil. to pay P3,201,398.60 and P31,510.00 representing the execution fees. Intel Phil. satisfied
the judgment on by paying the amount of P3,201,398.60 which included the applicable withholding
taxes due and paid to the BIR. Cabiles received a net amount ofP2,485,337.35, covered by a BPI
Managers check. Intel Phil. filed restitution of all the amounts paid by them pursuant to the NLRC's
writ of execution and the NLRC order. Intel filed a petition for review, however, the CA dismissed the
same, affirming the NLRC decision.
ISSUE: Whether the CA erred in ruling that private respondent was entitled to retire under Intel
Philippines retirement plan.

HELD: The Court of Appeals decision is reversed. LABOR LAW Resignation

Resignation is the formal relinquishment of an office,the overt act of which is coupled with an intent
to renounce. This intent could be inferred from the acts of the employee before and after the alleged
resignation. In contemplating whether to accept the offer from Intel HK, Cabiles wrote Intel Phil.
through Gabronino. This communication manifested two of his main concerns: a) clearance
procedures; and b) the probability of getting his retirement pay despite the non-completion of the
required 10 years of employment service. Beyond these concerns, however, was his acceptance of the
fact that he would be ending his relationship with Intel Phil. as his employer. The words he used - local
hire, close, clearance denote nothing but his firm resolve to voluntarily disassociate himself from Intel
Phil. and take on new responsibilities with Intel HK. His acceptance of the offer meant letting go of the
retirement benefits he now claims as he was informed through email correspondence that his 9.5
years of service with Intel Phil. would not be rounded off in his favor. He, thus, placed himself in this
position, as he chose to be employed in a company that would pay him more than what he could earn
in Chengdu or in the Philippines.
LABOR LAW Theory of Secondment
Cabiles views his employment in Hong Kong as an assignment or an extension of his employment
with Intel Phil. The continuity, existence or termination of an employer-employee relationship in a
typical secondment contract or any employment contract for that matter is measured by the following
yardsticks: 1. the selection and engagement of the employee; 2. the payment of wages; 3. the power
of dismissal; and 4. the employers power to control the employees conduct. Victorio Meteor v.
Creative Creatures Inc, G.R. No. 171275, July 13, 2009 As applied, all of the above benchmarks ceased
upon Cabiles assumption of duties with Intel HK on February 1, 2007. Intel HK became the new
employer. Undoubtedly, Cabiles decision to move to Hong Kong required the abandonment of his
permanent position with Intel Phil. in order for him to assume a position in an entirely different
company. Clearly, the "transfer" was more than just an assignment. It constituted a severance of
Cabiles relationship with Intel Phil., for the assumption of a position with a different employer, rank,
compensation and benefits. Hence, Cabiles theory of secondment must fail. What distinguishes Intel
Chengdu and Intel Arizona from Intel HK is the lack of intervention of Intel Phil. on the matter. In the
two previous transfers, Intel Phil. remained as the principal employer while Cabiles was on a
temporary assignment.

49
LABOR LAW - Release, Waiver and Quitclaim
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not later be
disowned simply because of a change of mind. It is only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its
face, that the law will step in to annul the questionable transaction. But where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a
valid and binding undertaking. Goodrich Manufacturing Corporation, v. Ativo, G.R. No. 188002,
February 1, 2010 Suffice it to state that nothing is clearer than the words used in the Waiver duly
signed by Cabiles - that all claims, in the present and in the future, were waived in consideration of his
receipt of the amount of P165,857.62. Because the waiver included all present and future claims, the
non-accrual of benefits cannot be used as a basis in awarding retirement benefits to him.
LABOR LAW Retirement benefits
Cabiles is not entitled to the Retirement Benefits Having effectively resigned before completing his
10th year anniversary with Intel Phil. and after having validly waived all the benefits due him, if any,
Cabiles is hereby declared ineligible to receive the retirement pay pursuant to the retirement policy of
Intel Phil. For that reason, Cabiles must return all the amounts he received from Intel Phil. pursuant to
the Writ of Execution issued by the NLRC.
The petition is granted.

50
G.R. No. 195190               July 28, 2014

ROYALE HOMES MARKETING CORPORATION vs. FIDEL P. ALCANTARA

Case Doctrine: Not every form of control that a hiring party imposes on the hired party is indicative of
employee-employer relationship. Rules and regulations that merely serve as guidelines towards the
achievement of a mutually desired result without dictating the means and methods of accomplishing it do
not establish employer-employee relationship.

Facts: Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Royale
Homes’ real estate inventories on an exclusive basis. Royale Homes reappointed him for several
consecutive years, the last of which covered the period January 1 to December 31, 2003.

Alcantara filed a Complaint for Illegal Dismissal against Royale. Alcantara alleged that he is a regular
employee of Royale Homes since he is performing tasks that are necessary and desirable to its business
and that the acts of the executive officers of Royale Homes amounted to his dismissal from work without
any valid or just cause and in gross disregard of the proper procedure for dismissing employees.

Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the
appointment paper of Alcantara is clear that it engaged his services as an independent sales contractor for
a fixed term of one year only. He never received any salary, 13th month pay, overtime pay or holiday pay
from Royale Homes as he was paid purely on commission basis. In addition, Royale Homes had no
control on how Alcantara would accomplish his tasks and responsibilities as he was free to solicit sales at
any time and by any manner which he may deem appropriate and necessary. According to Royale Homes,
Alcantara decided to leave the company after his wife, who was once connected with it as a sales agent,
had formed a brokerage company that directly competed with its business, and even recruited some of its
sales agents. Two months after he relinquished his post, however, Alcantara appeared in Royale Homes
and submitted a letter claiming that he was illegally dismissed.

The Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale Homes and that
the pre-termination of his contract was against the law. The NLRC rendered its Decision,  ruling that
Alcantara is not an employee but a mere independent contractor of Royale Homes. It based its ruling
mainly on his employment contract. The CA promulgated its Decision granting Alcantara’s Petition and
reversing the NLRC’s Decision. Applying the four-fold and economic reality tests, it held that Alcantara
is an employee of Royale Homes.

Issue: Whether or not Alcantara was an independent contractor or an employee of Royale Homes.

Held: The primary evidence of the nature of the parties’ relationship in this case is the written contract
that they signed and executed in pursuance of their mutual agreement. While the existence of employer-
employee relationship is a matter of law, the characterization made by the parties in their contract as to
the nature of their juridical relationship cannot be simply ignored, particularly in this case where the
parties’ written contract unequivocally states their intention at the time they entered into it. In this case,
the contract, duly signed and not disputed by the parties, conspicuously provides that "no employer-
employee relationship exists between" Royale Homes and Alcantara, as well as his sales agents. It is clear
that they did not want to be bound by employer-employee relationship at the time of the signing of the
contract.

51
In determining the existence of an employer-employee relationship, this Court has generally relied on the
four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the employer’s power to control the employee with respect to the means and
methods by which the work is to be accomplished. 

However, not every form of control is indicative of employer-employee relationship. A person who
performs work for another and is subjected to its rules, regulations, and code of ethics does not
necessarily become an employee. As long as the level of control does not interfere with the means and
methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do
not amount to the labor law concept of control that is indicative of employer-employee relationship. In
Insular Life Assurance Co., Ltd. v. National Labor Relations Commission it was pronounced that:

Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used to achieve it.

Notably, Alcantara was not required to observe definite working hours. Except for soliciting sales, Royale
Homes did not assign other tasks to him. He had full control over the means and methods of
accomplishing his tasks as he can "solicit sales at any time and by any manner which [he may] deem
appropriate and necessary." He performed his tasks on his own account free from the control and
direction of Royale Homes in all matters connected therewith, except as to the results thereof. This Court
is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere independent
contractor.

52
Case Digest: Olympia Housing, Inc. v. Allan
Lapastora and Irene Ubalubao
November 3, 2017
|

Nathalie Pattugalan

G.R. No. 187691

January 13, 2016
REYES, J.:
 
Facts:
A complaint for illegal dismissal, payment of backwages and other benefits, and
regularization of employment filed by Allan Lapastora (Lapastora) and Irene Ubalubao
(Ubalubao) against Olympic Housing, Inc. (OHI), the entity engaged in the management
of the Olympia Executive Residences (OER), a condominium hotel building situated in
Makati City. Lapastora and Ubalubao alleged that they worked as room attendants of
OHI from March 1995 and June 1997, respectively, until they were placed on floating
status on February 24, 2000, through a memorandum sent by Fast
Manpower.chanroblesvirtuallawlibrary
 
To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged
that they were directly hired by the company and received salaries directly from it. They
also claimed that OHI exercised control over them as they were issued time cards,
disciplinary action reports and checklists of room assignments. It was also OHI which
terminated their employment after they petitioned for regularization. Prior to their
dismissal, they were subjected to investigations for their alleged involvement in the theft
of personal items and cash belonging to hotel guests and were summarily dismissed by
OHI despite lack of evidence.chanroblesvirtuallawlibrary
 
For their part, OHI and Limcaoco alleged that Lapastora and Ubalubao were not
employees of the company but of Fast Manpower, an independent contractor with which
it had a contract of services, particularly, for the provision of room attendants.
 
Reinforcing OHI's claims, Fast Manpower reiterated that it is a legitimate manpower
agency and that it had a valid contract of services with OHI, pursuant to which
Lapastora and Ubalubao were deployed as room attendants. Lapastora and Ubalubao
were, however, found to have violated house rules and regulations and were
reprimanded accordingly. It denied the employees' claim that they were dismissed and
maintained they were only placed on floating status for lack of available work
assignments.
 
During the pendency of the case, Ubalubao, on her own behalf, filed a Motion to
Dismiss/Withdraw Complaint and Waiver.

53
 
Issue:
Whether or not Lapastora was illegally dismissed.
 
Ruling:
The court ruled in the affirmative.
 
Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has
been under the continuous employ of OHI since March 3, 1995 until he was placed on
floating status in February 2000. His uninterrupted employment by OHI, lasting for more
than a year, manifests the continuing need and desirability of his services, which
characterize regular employment.
 
By the nature of its petitioner’s business, it is necessary that it maintains a pool of
housekeeping staff to ensure that the premises remain an uncluttered place of comfort
for the occupants. It is no wonder why Lapastora, among several others, was
continuously employed by OHI precisely because of the indispensability of their services
to its business.
 
The argument that formal notices of investigation were not complied with since he was
not an employee of OHI but of Fast Manpower does not hold because Lapastora was
under the effective control and supervision of OHI through the company supervisor. She
gave credence to the pertinent records of Lapastora's employment, i.e., timecards,
medical records and medical examinations, which all indicated OHI as his
employer. That there is an existing contract of services between OHI and Fast
Manpower where both parties acknowledged the latter as the employer of the
housekeeping staff, including Lapastora, did not alter established facts proving the
contrary.
 
To justify fully the dismissal of a regular employee, the employer must, as a rule, prove
that the dismissal was for a just cause and that the employee was afforded due process
prior to dismissal. As a complementary principle, the employer has the burden of
proving with clear, accurate, consistent, and convincing evidence the validity of the
dismissal.
 
It appears that OHI failed to prove that Lapastora's dismissal was grounded on a just or
authorized cause. While it claims that it had called Lapastora's attention several times
for his infractions, it does not appear from the records that the latter had been notified of
the company's dissatisfaction over his performance and that he was not given an
opportunity to explain. In the same manner, allegations regarding Lapastora's
involvement in the theft of personal items and cash belonging to hotel guests remained
unfounded suspicions as they were not proven despite OHI's probe into the incidents.
 
In the present case, Lapastora was not informed of the charges against him and was
denied the opportunity to disprove the same. He was summarily terminated from
employment.

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