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LABOR RELATIONS

CASE DIGESTS SET 1

and caused to be enforced the rules and


regulations thus adopted.

General Principles
(Art 211)

Maximo Calalang, in his capacity as a private


citizen and as a taxpayer of Manila, brought
before the Supreme court the petition for a
writ of prohibition against A. D. Williams, as
Chairman of the National Traffic Commission;
Vicente Fragante, as Director of Public Works;
Sergio Bayan, as Acting Secretary of Public
Works
and
Communications;
Eulogio
Rodriguez, as Mayor of the City of Manila; and
Juan Dominguez, as Acting Chief of Police of
Manila.

1.
MAXIMO
CALALANG
WILLIAMS, ET AL., G.R.
December 2, 1940

vs.
No.

A.
D.
47800.

FACTS:
The National Traffic Commission, in its
resolution of 17 July 1940, resolved to
recommend to the Director of Public Works
and to the Secretary of Public Works and
Communications that animal-drawn vehicles
be prohibited from passing along Rosario
Street extending from Plaza Calderon de la
Barca to Dasmarias Street, from 7:30 a.m. to
12:30 p.m. and from 1:30 p.m. to 5:30 p.m.;
and along Rizal Avenue extending from the
railroad crossing at Antipolo Street to Echague
Street, from 7 a.m. to 11 p.m., from a period
of one year from the date of the opening of
the Colgante Bridge to traffic. The Chairman
of the National Traffic Commission, on 18 July
1940, recommended to the Director of Public
Works the adoption of the measure proposed
in the resolution, in pursuance of the
provisions of Commonwealth Act 548, which
authorizes said Director of Public Works, with
the approval of the Secretary of Public Works
and Communications, to promulgate rules and
regulations to regulate and control the use of
and traffic on national roads.
On 2 August 1940, the Director of Public
Works, in his first indorsement to the
Secretary
of
Public
Works
and
Communications, recommended to the latter
the approval of the recommendation made by
the Chairman of the National Traffic
Commission, with the modification that the
closing of Rizal Avenue to traffic to animaldrawn vehicles be limited to the portion
thereof extending from the railroad crossing
at Antipolo Street to Azcarraga Street. On 10
August 1940, the Secretary of Public Works
and
Communications,
in
his
second
indorsement addressed to the Director of
Public Works, approved the recommendation
of the latter that Rosario Street and Rizal
Avenue be closed to traffic of animal-drawn
vehicles, between the points and during the
hours as indicated, for a period of 1 year from
the date of the opening of the Colgante
Bridge to traffic. The Mayor of Manila and the
Acting Chief of Police of Manila have enforced

ISSUES:
1) Whether the rules and regulations
promulgated by the Director of Public Works
infringe upon the constitutional precept
regarding the promotion of social justice to
insure the well-being and economic security
of all the people?
2) Whether or not there is undue delegation of
legislative power?
RULING:
1) The promotion of social justice is to be
achieved not through a mistaken sympathy
towards any given group. Social justice is
"neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization
of laws and the equalization of social and
economic forces by the State so that justice in
its rational and objectively secular conception
may at least be approximated. Social justice
means the promotion of the welfare of all the
people, the adoption by the Government of
measures calculated to insure economic
stability of all the competent elements of
society, through the maintenance of a proper
economic and social equilibrium in the
interrelations of the members of the
community, constitutionally, through the
adoption of measures legally justifiable, or
extra-constitutionally, through the exercise of
powers underlying the existence of all
governments on the time-honored principle of
salus populi est suprema lex. Social justice,
therefore, must be founded on the recognition
of the necessity of interdependence among
divers and diverse units of a society and of
the protection that should be equally and
evenly extended to all groups as a combined
force in our social and economic life,
consistent
with
the
fundamental
and
paramount objective of the state of promoting
the health, comfort, and quiet of all persons,
and of bringing about "the greatest good to
the greatest number."

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2) There is no undue delegation of legislative


power. Commonwealth Act 548 does not
confer legislative powers to the Director of
Public Works. The authority conferred upon
them and under which they promulgated the
rules and regulations now complained of is
not to determine what public policy demands
but merely to carry out the legislative policy
laid down by the National Assembly in said
Act, to wit, to promote safe transit upon and
avoid obstructions on, roads and streets
designated as national roads by acts of the
National Assembly or by executive orders of
the President of the Philippines and to close
them temporarily to any or all classes of
traffic whenever the condition of the road or
the traffic makes such action necessary or
advisable in the public convenience and
interest.
The delegated power, if at all, therefore, is not
the determination of what the law shall be,
but merely the ascertainment of the facts and
circumstances upon which the application of
said law is to be predicated.
To promulgate rules and regulations on the
use of national roads and to determine when
and how long a national road should be closed
to traffic, in view of the condition of the road
or the traffic thereon and the requirements of
public convenience and interest, is an
administrative function which cannot be
directly discharged by the National Assembly.
It must depend on the discretion of some
other government official to whom is confided
the duty of determining whether the proper
occasion exists for executing the law. But it
cannot be said that the exercise of such
discretion is the making of the law.
2. BENJAMIN VICTORIANO vs. ELIZALDE
ROPE WORKERS UNION, ET. AL.
G.R. No. L-25246, 12 September 1974
FACTS:
Victoriano, an Iglesia ni Cristo member, has
been an employee of the Elizalde Rope
Factory since 1958. He was also a member of
the EPWU. Under the CBA between ERF and
EPWU, a close shop agreement is being
enforced which means that employment in
the factory relies on the membership in the
EPWU; that in order to retain employment in
the said factory one must be a member of the
said Union. In 1962, Victoriano tendered his
resignation from EPWU claiming that as per
RA 3350 he is an exemption to the close shop
agreement by virtue of his being a member of
the INC because apparently in the INC, one is

forbidden from being a member of any labor


union. It was only in 1974 that his resignation
from the Union was acted upon by EPWU
which notified ERF about it. ERF then moved
to terminate Victoriano due to his nonmembership from the EPWU. EPWU and ERF
reiterated that he is not exempt from the
close shop agreement because RA 3350 is
unconstitutional and that said law violates the
EPWUs and ERFs legal/contractual rights.
ISSUE:
Whether or not RA 3350 is unconstitutional.
HELD:
The right to religion prevails over contractual
or legal rights. As such, an INC member may
refuse to join a labor union and despite the
fact that there is a close shop agreement in
the factory where he was employed, his
employment could not be validly terminated
for his non-membership in the majority
therein. Further, the right to join a union
includes the right not to join a union. The law
is not unconstitutional. It recognizes both the
rights of unions and employers to enforce
terms of contracts and at the same time it
recognizes the workers right to join or not to
join union. But the RA recognizes as well the
primacy of a constitutional right over a
contractual right.
3.
PHILIPPINE
BLOOMING
MILLS
EMPLOYMENT ORGANIZATION, ET AL. vs.
PHILIPPINE BLOOMING MILLS CO., INC.
and CIR
G.R. No. L-31195 June 5, 1973
5. PAL vs. NLRC
G.R. No. 85985 August 13, 1993
FACTS:
The Philippine Airlines, Inc. (PAL) completely
revised its 1966 Code of Discipline.
Subsequently, some of the employees were
subjected to disciplinary measures for alleged
violation of revised code.
Philippine Airlines Employees Association
(PALEA) filed a complaint before the (NLRC)
for "ULP with arbitrary implementation of
PAL's Code of Discipline without notice and
prior discussion with Union by Management."
PALEA contended that PAL was guilty of ULP
because the copies of the Code had been
circulated in limited numbers; that being
penal in nature the Code must conform with
the requirements of sufficient publication, and

2 | LABOR RELATIONS Digested Cases | Venessa Barbiran, Year 3 | UPang

that the Code was arbitrary, oppressive, and


prejudicial to the rights of the employees.
PAL filed a motion to dismiss the complaint,
asserting its prerogative as an employer to
prescribe rules and
regulations regarding
employees' conduct in carrying out their
duties and functions.
Labor Arbiter: dismissed the complaint and
ruled that no ULP had been committed and no
bad faith in adopting the Code.
NLRC: found no evidence of ULP and affirmed
the dismissal of the complaint.
Issue: Whether or not the formulation of a
Code of Discipline among employees is a
shared responsibility of the employer and the
employees.
Held:
YES. The Court upheld the unions right, and
ruled that, the management should see to it
that its employees are at least properly
informed of its decisions or modes of action,
because the implementation of the provisions
may result in the deprivation of an
employees means of livelihood which is a
property right.
And the CBA may not be interpreted as
cession of employees right to participate in
the deliberation of matters which may affects
their rights and the formulation of a code of
discipline.
4. EASTERN SHIPPING LINES, INC, ET AL.
vs. PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION (POEA), ET AL.
G.R. No. 76633 October 18, 1988
5. PHILIPPINE AIRLINES, INC. (PAL) vs.
NATIONAL
LABOR
RELATIONS
COMMISSION, ET. AL.
G.R. No. 85985 August 13, 1993
6. INVESTMENT PLANNING CORPORATION
OF
THE
PHILIPPINES
vs.
SOCIAL
SECURITY SYSTEM
G. .R. No. L-19124
November 18, 1967
7. INSULAR LIFE ASSURANCE CO., LTD.
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION and MELECIO BASIAO
G.R. No. 84484 November 15, 1989

8. LVN PICTURES, INC. vs. PHILIPPINE


MUSICIANS Guild (FFW) and COURT OF
INDUSTRIAL RELATIONS
G.R. No. L-12582
January 28,
1961
x--------------------------------------------------------x
SAMPAGUITA
PICTURES,
INC.
vs.
PHILIPPINE MUSICIANS Guild (FFW) and
COURT OF INDUSTRIAL RELATIONS
G.R. No. L-12598
January 28,
1961
FACTS:
LVN Pictures, Inc., Sampaguita Pictures, Inc.,
and
Premiere
Productions,
Inc.
are
corporations engaged in the making of motion
pictures and in the processing and distribution
thereof. Said companies employ musicians for
the purpose of making music recordings for
title music, background music, musical
numbers, finale music and other incidental
music, without which a motion picture is
incomplete.
In its petition in the lower court, the Philippine
Musicians Guild (FFW), averred that it is a duly
registered legitimate labor organization; that
ninety-five (95%) percent of all the musicians
playing for the musical recordings of said
companies are members of the Guild; and
that the same has no knowledge of the
existence of any other legitimate labor
organization representing musicians in said
companies. Premised upon such allegations,
the Guild prayed that it be certified as the
sole and exclusive bargaining agency for all
musicians working in the aforementioned
companies.
In their respective answers to the complaint of
the Guild, the petitioners denied that they
have any musicians as employees, and
alleged that the musical numbers in the filing
of
the
companies
are
furnished
by
independent contractors. The lower court,
however, rejected this pretense and sustained
the theory of the Guild, with the result already
adverted to. A reconsideration of the order
complained of having been denied by the
Court en banc, LVN Pictures, inc., and
Sampaguita Pictures, Inc., filed these petitions
for review for certiorari.
ISSUE:
WON the musicians in question are employees
of the film companies.
HELD:

3 | LABOR RELATIONS Digested Cases | Venessa Barbiran, Year 3 | UPang

YES. The scope of the term 'employee' must


be understood with reference to the purposes
of R.A. Act 875 and the facts involved in the
economic
relationship.
Where
all
the
conditions of relation require protection,
protection ought to be given. In other words,
to determine whether a person who performs
work for another is the latter's employee or an
independent contractor, the National Labor
Relations relies on 'the right to control' test.
Under the control test relied to by the NLRC,
an employer-employee relationship exist
where the person for whom the services are
performed reserves the right to control not
only the end to be achieved, but also the
manner and means to be used in reaching the
end.
As a normal and usual course of procedure
employed by the companies when a picture is
to be made, after the selection of the musical
director for the film by the producer, a price is
agreed upon verbally between the producer
and musical director for the cost of furnishing
such musical background. The musical
director may compose his own music specially
written for or adapted to the picture. He
engages his own men and pays the
corresponding compensation of the musicians
under him. When the music is ready for
recording, the musicians are summoned
through 'call slips' in the name of the film
company, which show the name of the
musician, his musical instrument, and the
date, time and place where he will be picked
up by the truck of the film company. The film
company provides the studio for the use of
the musicians for the recordings. The
musicians are also provided transportation to
and from the studio by the company.
Similarly, the company furnishes them meals
at dinner time. During the recording sessions,
the motion picture director, who is an
employee of the company, supervises the
recording of the musicians and tells what to
do in every detail. He solely directs the
performance of the musicians before the
camera as director, he supervises the
performance of all the action, including the
musicians who appear in the scenes so that in
the actual performance to be shown on the
screen, the musical director's intervention has
stopped. And even in the recording sessions
and during the actual shooting of a scene, the
technicians, soundmen and other employees
of the company assist in the operation.
Hence, the work of the musicians is an
integral part of the entire motion picture since

they not only furnish the music but are also


called upon to appear in the finished picture.
The Court affirmed the ruling of the CIR due to
the fact that the three (3) film companies did
not question the union's majority. As the
musical directors have no such control over
the musicians involved in the present case.
Said musical directors control neither the
music to be played, nor the musicians playing
it. The film companies summon the musicians
to work, through the musical directors. The
film companies, through the musical directors,
fix the date, the time and the place of work.
The aforementioned control over the "means
to be used" in reading the desired end is
possessed and exercised by the film
companies over the musicians in the cases.
9.
PHILIPPINE
LONG
DISTANCE
TELEPHONE COMPANY vs. NATIONAL
LABOR RELATIONS COMMISSION and
MARILYN ABUCAY
G.R. No. 80609 August 23, 1988
FACTS:
Marilyn Abucay, a traffic operator of the
Philippine Long Distance Telephone Company,
was accused by two complainants of having
demanded and received from them the total
amount of P3,800.00 in consideration of her
promise to facilitate approval of their
applications
for
telephone
installation.
Investigated and heard, she was found guilty
as charged and accordingly separated from
the service. She went to the Ministry of Labor
and Employment claiming she had been
illegally removed. After consideration of the
evidence and arguments of the parties, the
company was sustained and the complaint
was dismissed for lack of merit.
Upon appeal, the National Labor Relations
Board upheld the said decision in toto and
dismissed
the
appeals.
The
private
respondent took no further action, thereby
impliedly accepting the validity of her
dismissal.
The
petitioner,
however,
questioned the affirmance of the ruling
regarding the one month pay for every year of
service as financial assistance award as
having been made with grave abuse of
discretion.
ISSUE:
Was the financial assistance to an Abucay
who had been dismissed for cause as found
by the public respondent legal.

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HELD:
NO. The challenged resolution was affirmed
AFFIRMED in toto except for the grant of
separation pay in the form of financial
assistance, which was disallowed.
There should be no question that where it
comes to such valid but not iniquitous causes
as failure to comply with work standards, the
grant of separation pay to the dismissed
employee
may
be
both
just
and
compassionate, particularly if he has worked
for some time with the company. The award to
the employee of separation pay would be
sustainable under the social justice policy
even if the separation is for cause.
But where the cause of the separation is more
serious than mere inefficiency, the generosity
of the law must be more discerning. There is
no doubt it is compassionate to give
separation pay to a salesman if he is
dismissed for his inability to fill his quota but
surely he does not deserve such generosity if
his offense is misappropriation of the receipts
of his sales. This is no longer mere
incompetence but clear dishonesty.
The policy of social justice is not intended to
countenance wrongdoing simply because it is
committed by the underprivileged. At best it
may mitigate the penalty but it certainly will
not condone the offense. Compassion for the
poor is an imperative of every humane society
but only when the recipient is not a rascal
claiming an undeserved privilege. Social
justice cannot be permitted to be refuge of
scoundrels any more than can equity be an
impediment to the punishment of the guilty.
Those who invoke social justice may do so
only if their hands are clean and their motives
blameless and not simply because they
happen to be poor. This great policy of our
Constitution is not meant for the protection of
those who have proved they are not worthy of
it, like the workers who have tainted the
cause of labor with the blemishes of their own
character.
10.
JOSE
Y.
SONZA
vs.
ABS-CBN
BROADCASTING CORPORATION
G.R. No. 138051
June 10, 2004
FACTS:
In May 1994, ABS-CBN signed an agreement
with Mel & Jay Management and Development
Corp for a radio and television program. ABS-

CBN agreed to pay for SONZAs services a


monthly talent fee of P310,000 for the first
year and P317,000 for the second and third
year of the Agreement. ABS-CBN would pay
the talent fees on the 10th and 25th days of
the month.
On April 1996, Sonza wrote a letter to ABSCBN President Eugenio Lopez III about a
recent event concerning his programs and
career, and that the said violation of the
company has breached the agreement, thus,
the notice of rescission of Agreement was
sent.
At the end of the same month, Sonza filed a
complaint against ABS-CBN before the DOLE
for non-payment of salaries, separation pay,
service incentive leave pay, 13th month pay,
signing bonus, travel allowance and amounts
due under the Employees Stock Option Plan
(ESOP) which was opposed by ABS-CBN on the
ground there was no employer-employee
relationship existed between the parties.
ISSUE:
WON Sonza was an employee or independent
contractor?
HELD:
There was no employer-employee relationship
that existed, but that of an independent
contractor.
Case law has consistently held that the
elements
of
an
employer-employee
relationship are:
(a) The selection and engagement of the
employee - ABS-CBN engaged SONZAs
services to co-host its television and radio
programs because of SONZAs peculiar
skills, talent and celebrity status. The
specific selection and hiring of SONZA,
because of his unique skills, talent
and celebrity status not possessed
by
ordinary
employees,
is
a
circumstance
indicative,
but
not
conclusive, of an independent contractual
relationship.
(b) The payment of wages - ABS-CBN
directly paid SONZA his monthly talent
fees with no part of his fees going to
MJMDC. All the talent fees and benefits
paid to SONZA were the result of
negotiations that led to the Agreement. If
SONZA were ABS-CBNs employee, there
would be no need for the parties to
stipulate on benefits such as "SSS,
Medicare, x x x and 13th month pay"

5 | LABOR RELATIONS Digested Cases | Venessa Barbiran, Year 3 | UPang

which the law automatically incorporates


into every employer-employee contract.
(c) The power of dismissal - For violation
of any provision of the Agreement, either
party may terminate their relationship.
During the life of the Agreement, ABSCBN agreed to pay SONZAs talent fees
as long as "AGENT and Jay Sonza shall
faithfully and completely perform each
condition of this Agreement." Even if it
suffered severe business losses, ABS-CBN
could not retrench SONZA because ABSCBN remained obligated to pay SONZAs
talent fees during the life of the
Agreement.
(d) The employers power to control the
employee
on
the
means
and
methods by which the work is
accomplished - The control test is the
most important test. This test is based
on the extent of control the hirer
exercises over a worker. The greater the
supervision
and
control
the
hirer
exercises, the more likely the worker is
deemed an employee. The converse
holds true as well the less control the
hirer exercises, the more likely the worker
is considered an independent contractor.
First, ABS-CBN engaged SONZAs services
specifically to co-host the "Mel & Jay"
programs. ABS-CBN did not assign any
other work to SONZA. To perform his
work, SONZA only needed his skills and
talent. How SONZA delivered his lines,
appeared on television, and sounded on
radio were outside ABS-CBNs control.
SONZA did not have to render eight hours
of work per day. The Agreement required
SONZA to attend only rehearsals and
tapings of the shows, as well as pre- and
post-production staff meetings. ABS-CBN
could not dictate the contents of SONZAs
script.
However,
the
Agreement
prohibited SONZA from criticizing in his
shows ABS-CBN or its interests. The clear
implication is that SONZA had a free hand
on what to say or discuss in his shows
provided he did not attack ABS-CBN or its
interests.
Second, The Agreement stipulates that
SONZA shall abide with the rules and
standards of performance "covering
talents" of ABS-CBN. The Agreement
does not require SONZA to comply with
the rules and standards of performance
prescribed for employees of ABS-CBN.
The code of conduct imposed on SONZA
under the Agreement refers to the
"Television and Radio Code of the

Kapisanan ng mga Broadcaster sa


Pilipinas (KBP), which has been adopted
by the COMPANY (ABS-CBN) as its Code of
Ethics." The KBP code applies to
broadcasters, not to employees of radio
and television stations. Broadcasters are
not necessarily employees of radio and
television stations. Clearly, the rules and
standards of performance referred to in
the Agreement are those applicable to
talents and not to employees of ABS-CBN.
Lastly, being an exclusive talent does not
by itself mean that SONZA is an
employee
of
ABS-CBN.
Even
an
independent
contractor
can
validly
provide his services exclusively to the
hiring party. In the broadcast industry,
exclusivity is not necessarily the same as
control. The hiring of exclusive talents is
a widespread and accepted practice in
the entertainment industry. This practice
is not designed to control the means and
methods of work of the talent, but simply
to protect the investment of the
broadcast station. The broadcast station
normally spends substantial amounts of
money, time and effort "in building up its
talents as well as the programs they
appear in and thus expects that said
talents remain exclusive with the station
for a commensurate period of time."
Normally, a much higher fee is paid to
talents who agree to work exclusively for
a particular radio or television station. In
short, the huge talent fees partially
compensates for exclusivity.
11. ELDO J. CARIO, ET AL. vs.
AGRICULTURAL
CREDIT
AND
COOPERATIVE
FINANCING
ADMINISTRATION (ACCFA), ET. Al.
G.R. No. L-19808 - September 29, 1966
FACTS:
Cario and the other petitioners-appellants
were appointed permanent employees of the
ACCFA who were originally assigned to the
Special Operations Service unit. Their duties
consisted of conducting investigations of
charges of irregularities in any branch of the
ACCFA and appearing as witnesses in court.
In 1958, the petitioners were advised that
their items in the budget were abolished by
the Board of Governors. Consequently, their
services were terminated.

6 | LABOR RELATIONS Digested Cases | Venessa Barbiran, Year 3 | UPang

Upon learning of their separation from


service, petitioners wrote the ACCFA Board of
Governors underscoring their civil service
eligibility, efficiency and permanence of their
positions, and have requested reinstatement.
They also wrote the CSC but it referred the
matter to the Board. Thereafter, they wrote
Major Federico Salcedo of the PCAPE
complaining against their separation and
prayed for presidential intervention. Major
Salcedo on behalf of the Office of the
President of the Philippines answered that
no action could be taken on their cases "in
view of the policy of retrenchment enunciated
by the ACCFA Board of Governors." , Finally,
they turned to the court but it dismissed the
petition ruling that they have not exhausted
all remedies.
ISSUE:
WON the petitioner-appellants were validly
dismissed.
HELD:
NO. Petitioners' dismissal was patently illegal.
No necessity there was to resort first to
administrative remedies. Acceptance of onemonth separation pay and terminal leave pay
would not amount to estoppel. The reason is
plain. Employer and employee, obviously, do
not stand on the same footing. The employer
drove the employee to the wall. The latter
must have to get hold of money. Because, out
of job, he had to face the harsh necessities of
life. He thus found himself in no position to
resist money proffered. His, then, is a case of
adherence, not of choice. One thing sure,
however, is that petitioners did not relent on
their claim. They pressed it. They are deemed
not to have waived any of their rights.
12.
BROTHERHOOD
LABOR
UNITY
MOVEMENT vs HON. RONALDO ZAMORA,
ET AL.
G.R. No. L-48645 January 7, 1987
FACTS:
Petitioners-members of Brotherhood Labor
Unit Movement of the Philippines (BLUM),
worked as cargadores or pahinante since
1961 at the SMC Plant. Sometime in January
1969, the petitioner workers numbering 140
organized themselves and engaged in union
activities.
Believing that they are entitled to overtime
and holiday pay, the petitioners aired their
gripes and grievances but it was not heeded

by the respondents. One of the union member


was dismissed from work. Hence, the
petitioners filed a complaint of unfair labor
practice against respondent SMC on the
ground of illegal dismissal.
On the other hand, SMC argued that the
complainant are not or have never been their
employees but they are the employees of the
Guaranteed
Labor
Contractor,
an
independent labor contracting firm
Labor Arbiter Nestor Lim rendered a decision
in favor of the complainants which was
affirmed by the NLRC
On appeal, the Secretary set aside the NLRC
ruling stressing the absence of an employeremployee relationship
ISSUE:
Whether an employer-employee relationship
exists between petitioners and respondent
San Miguel Corporation
HELD:
YES. In determining the existence of an
employer-employee
relationship,
the
elements that are generally considered are
the following:
(a) the selection and engagement of the
employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the
employee with respect to the means and
methods by which the work is to be
accomplished. It is the called "control test"
that is the most important element
In the CAB, petitioners worked continuously
and exclusively for an average of 7 years for
the company. Considering the length of time
that the petitioners have worked, there is
justification to conclude that they were
engaged to perform activities necessary or
desirable in the usual business of trade of the
respondent. Hence, petitioners are considered
regular employees.
Even assuming that there is a contract of
employment executed between SMC and the
said labor contractor, the court ruled that
Guaranteed and Reliable Labor contractors
have
neither
substantial
capital
nor
investment to qualify as an independent
contractor under the law. The premises, tools
and equipments used by the petitioners in
their jobs are all supplied by the respondent
SMC. It is only the manpower or labor force
which the alleged contractors supply,

7 | LABOR RELATIONS Digested Cases | Venessa Barbiran, Year 3 | UPang

suggesting the existence of a "labor only"


contracting scheme prohibited by law
It is important to emphasize that that in a
truly
independent
contractor-contractee
relationship, the fees are paid directly to the
manpower agency in lump sum without
indicating or implying that the basis of such
lump sum is the salary per worker multiplied
by the number of workers assigned to the
company.
In the CAB, the alleged independent
contractors
were
paid
a
lump
sum
representing only the salaries the workers
were entitled to, arrived at by adding the
salaries of each worker which depend on the
volume of work they had accomplished
individually.
Therefore,
there
is
no
independent
contractor-contractee
relationship.
WHEREFORE, PETITION IS GRANTED.
13. DY KEH BENG vs. INTERNATIONAL
LABOR and MARINE UNION OF THE
PHILIPPINES, ET AL.
G.R. No. L-32245 May 25, 1979
FACTS:
A charge of unfair labor practice was filed
against Dy Keh Beng, proprietor of a basket
factory, for discriminatory acts by dismissing
Carlos N. Solano and Ricardo Tudla for their
union
activities.
After
preliminary
investigation was conducted, a case was filed
in the Court of Industrial Relations for in
behalf of the International Labor and Marine
Union of the Philippines.

HELD:
YES. An employee-employer relationship was
found to have existed between Dy Keh Beng
and complainants Tudla and Solano, although
Solano was admitted to have worked on piece
basis.
The test of the existence of employee and
employer relationship is whether there is an
understanding between the parties that one is
to render personal services to or for the
benefit of the other and recognition by them
of the right of one to order and control the
other in the performance of the work and to
direct the manner and method of its
performance. It should be borne in mind that
the control test calls merely for the existence
of the right to control the manner of doing the
work, not the actual exercise of the right.
Parenthetically, since the work on the baskets
is done at Dy's establishments, it can be
inferred that the proprietor Dy could easily
exercise control on the men he employed.
Circumstances
must
be
construed
to
determine indeed if payment by the piece is
just a method of compensation and does not
define the essence of the relation.

Dy Keh Beng contended that he did not know


Tudla and that Solano was not his employee
because the latter came to the establishment
only when there was work which did on
pakiaw basis, and worked on piece basis.
The hearing examiner found that Solano and
that Tudla became employees of DY KEH
BENG from may 1953 and July 1955,
respectively, and that both worked with
establishment
continuously
although
compensated on piece basis. This report was
adopted in toto by the court of industrial
relations. The CIR found DY KEH BENG guilty
of unfair labor practice and was affirmed by
the court en banc.
ISSUE:
WON there exists an employee employer
relation between petitioner Dy Keh Beng and
the respondents Solano and Tudla.
8 | LABOR RELATIONS Digested Cases | Venessa Barbiran, Year 3 | UPang