MILES DELOS REYES- Cases No: 64-70

64. VICTORY LINER V. PABLO RACE

Labor Law; Dismissals; Prescription; In illegal dismissal cases, the employee concerned is given a period
of four years from the time of his dismissal within which to institute a complaint, which period shall
commence to run only upon the accrual of a cause of action of the worker.In illegal dismissal cases, the
employee concerned is given a period of four years from the time of his dismissal within which to
institute a complaint. This is based on Article 1146 of the New Civil Code which states that actions based
upon an injury to the rights of the plaintiff must be brought within four years. We explained the rationale
in the case of Callanta v. Carnation Philippines, Inc., 145 SCRA 268 (1986), thus: [O]nes employment,
profession, trade or calling is a property right, and the wrongful interference therewith is an actionable
wrong. The right is considered to be property within the protection of a constitutional guaranty of due
process of law. Clearly then, when one is arbitrarily and unjustly deprived of his job or means of
livelihood, the action instituted to contest the legality of ones dismissal from employment constitutes, in
essence, an action predicated upon an injury to the rights of the plaintiff, as contemplated under Art.
1146 of the New Civil Code, which must be brought within four years. The four-year prescriptive period
shall commence to run only upon the accrual of a cause of action of the worker. It is settled that in illegal
dismissal cases, the cause of action accrues from the time the employment of the worker was unjustly
terminated. Thus, the four-year prescriptive period shall be counted and computed from the date of the
employees dismissal up to the date of the filing of complaint for unlawful termination of employment.

Same; Same; Abandonment; Requisites.As to the alleged abandonment of work by the respondent on
10 November 1994, it should be emphasized that two factors must be present in order to constitute an
abandonment: (a) the failure to report for work or absence without valid or justifiable reason; and (2) a
clear intention to sever employer-employee relationship. The second factor is the more determinative
factor and is manifested by overt acts from which it may be deduced that the employee has no more
intention to work. The intent to discontinue the employment must be shown by clear proof that it was
deliberate and unjustified. Mere absence from work does not imply abandonment.

Same; Same; Same; Neglect of Duty; Abandonment of work, or the deliberate and unjustified refusal of
an employee to resume his employment, may be a just cause for the termination of employment under
paragraph (b) of Article 282 of the Labor Code since it is a form of neglect of duty.The Labor Code
mandates that before an employer may legally dismiss an employee from the service, the requirement of
substantial and procedural due process must be complied with. Under the requirement of substantial due
process, the grounds for termination of employment must be based on just or authorized causes. The
following are just causes for the termination of employment under Article 282 of the Labor Code: (a)
Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative; (d) Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized representative; and (e) Other causes
analogous to the foregoing. Abandonment of work, or the deliberate and unjustified refusal of an
employee to resume his employment, may be a just cause for the termination of employment under
paragraph (b) of Article 282 of the Labor Code since it is a form of neglect of duty.
Same; Same; Due Process; Procedural Requirements for Dismissal of Employees.It has been
established that petitioners failed to comply with the requirement of substantial due process in terminating
the employment of respondent. We will now determine whether the petitioner had complied with the
procedural aspect of a lawful dismissal. In the termination of employment, the employer must (a) give the
employee a written notice specifying the ground or grounds of termination, giving to said employee
reasonable opportunity within which to explain his side; (b) conduct a hearing or conference during which
the employee concerned, with the assistance of counsel if the employee so desires, is given the
opportunity to respond to the charge, present his evidence or rebut the evidence presented against him;
and (c) give the employee a written notice of termination indicating that upon due consideration of all
circumstances, grounds have been established to justify his termination.

FACTS:

Pablo M. Race was employed by Victory Liner, Inc. as a bus driver for the Alaiminos,
Pangasinan Cubao, Quezon City evening route. On 24 August 1994,Races bus figured in an accident,
wherein Race suffered a fractured leg, for which he was confined in the hospital until 10 October 1994.
On 10 November 1994, Race was confined again for further treatment for another month. Victory Liner
shouldered all of Races medical expenses for both instances. On January 1998, Race reported for work,
but was informed that he was considered resigned, and was offered consideration of P50,000.00, which he
rejected. Before Christmas 1998, Victory Liner reiterated that he was regarded as resigned, this time,
offering him P100,000.00, which he again rejected. On 30 June 1999, Race sent a letter to Victory Liner
demanding employment-related money claims; no response from Victory Liner.
On 1 September 1999, Race filed a complaint before the Labor Arbiter for:
o Unfair labor practice;
o Illegal dismissal;
o Underpayment of wages;
o Nonpayment of overtime and holiday premium, service incentive leave pay, vacation and
sick leave benefits, 13th month pay;
o Excessive deduction of withholding tax and SSS premium; and
o Moral and exemplary damages and attorneys fees.
LABOR ARBITER: Dismissed; stating that the prescriptive period for filing a case for illegal
dismissal had elapsedconsidered dismissed on 24 November 1994.
NLRC: Reversed Labor Arbiter; cause of action accrued in January 1998, when Race reported
for work but was rejected; Also stated that Victory Liner failed to accord Race due process in terminating
his employment.

ISSUES:

[1] WoN the cause of action for illegal dismissal had prescribed.NO. Cause of action accrued
January 1998.

[2] WoN Race was illegally dismissed, thus entitled to reinstatement with full back wages and other
benefits.YES. But separation pay in lieu of reinstatement.

HELD:

[1] Prescription
 Victory Liner insists that Race already abandoned his work and ceased to be its employee since
November 1994.
o Among other arguments, under the 4-fold test of employer-employee relationship:
Victory claimed that it no longer paid Race wages nor exercised control over him since
November 1994.
o If reckoning period is counted from when the written demand was made by Race, the 4-
year prescriptive period would be indeterminate, contrary to the spirit of the law.
In illegal dismissal cases, the employee concerned is given a period of four years from the time
of his dismissal within which to institute a complaint.
o Art. 1146 [CC] Actions based upon an injury to the rights of the plaintiff must be
brought within four years.
o Employment is a property rightwithin the protection of a constitutional guarantee of
dues process of law.
o Therefore, when one is arbitrarily and unjustly deprived of his job or means of livelihood,
the action instituted to contest the legality of ones dismissal from employment
constitutes, an action predicated "upon an injury to the rights of the plaintiff."
The four-year prescriptive period shall commence to run only upon the accrual of a cause of
action of the workerthe time the employment of the worker was unjustly terminated.
Race was not unjustly terminated on 10 November 1994
o At that time, still confined for further treatment of his fractured left leg.
o He must be considered as merely on sick leave
Neither could be deemed as illegally dismissed from work upon his release in December 1994 up
to December 1997.
o Race still reported for work to the petitioner and was granted sick and disability leave by
Victory Liner for that period.
Race must be considered as unjustly terminated in January 1998 since this was the first time he
was informed by the Victory Liner that he was deemed resigned from his work.
Consequently, Races filing of complaint for illegal dismissal on 1 September 1999 was well
within the four-year prescriptive period.
It must also be noted that from 10 November 1994 up to December 1997, Victory Liner never
formally informed the respondent of the fact of his dismissal
Moveover, Race did not abandon his work for lack of the 2 factors that constitute abandonment:
o Failure to report for work or absence without valid or justifiable reason; and
o A clear intention to sever employer-employee relationship.
Similarly, the employer-employee relationship between the petitioner and respondent cannot be
deemed to have been extinguished on 10 November 1994,.
o Race reported for work to the petitioner after his release from the hospital in December
1994.
o He was also granted a 120-day sick leave and disability leave
o And also availed himself of the services of the Victory Liners physician on two
occasions after his release
o Victory Liner failed to establish the fact that Race ceased to be its employee on 10
November 1994, except for its flimsy reason that the sick leave, disability leave and
physician consultations were given to the respondent as mere accommodations for a
former employee.

[2.a.] Illegal dismissal

The Labor Code mandates that before an employer may legally dismiss an employee from the
 service, the requirement of substantial and procedural due process must be complied with.
Substantial due processthe grounds for termination of employment must be based on just or
authorized causes.
o Although abandonment of work is within the scope of the just causes for termination
(under gross and habitual neglect by the emlployee of his duties), the court found that
there was not abandonment on the part of Race.
The records also failed to show that the said charges were proven and that respondent was duly
informed and heard with regard to the accusations.
And as Victory Liner is the employer, it is its burdened to prove just cause for terminating the
employment of respondent with clear and convincing evidence, and that Victory Liner failed to
discharge this burden, we hold that respondent was dismissed without just cause by the petitioner.

[2.b.] Reinstatement

Race was willing to be hired as a dispatcher or conductor, and was no longer requesting to be
reinstated as a driver since he cannot drive anymore due to his leg injury.
Even assuming that Race was willing, reinstatement would still be unwarranted.
o Since Victory Liner is a common carrier, and is obliged to exercise extra-ordinary
diligence in transporting its passengers, it would be a violation of this diligence to
reinstate an incapacitated driver.
o An employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interests.
Therefore, in lieu of reinstatement, payment to respondent of separation pay equivalent to one
month pay for every year of service.

65. ABS-CBN BROADCASTING CORP. VS. NAZARENO

Labor Law; Appeals; In exceptional cases, a belated appeal may be given due course if greater injustice
may occur if an appeal is not given due course.We agree with petitioners contention that the perfection
of an appeal within the statutory or reglementary period is not only mandatory, but also jurisdictional;
failure to do so renders the assailed decision final and executory and deprives the appellate court or body
of the legal authority to alter the final judgment, much less entertain the appeal. However, this Court has
time and again ruled that in exceptional cases, a belated appeal may be given due course if greater
injustice may occur if an appeal is not given due course than if the reglementary period to appeal were
strictly followed. The Court resorted to this extraordinary measure even at the expense of sacrificing order
and efficiency if only to serve the greater principles of substantial justice and equity.

Same; Broadcast Industry; Regular Employees; Project Employees; While the question of whether
respondents are regular or project employees or independent contractors is essentially factual in nature,
the Court is constrained to resolve it due to its tremendous effects on the legions of production assistants
working in the Philippine broadcasting industry.Case law is that this Court has always accorded respect
and finality to the findings of fact of the CA, particularly if they coincide with those of the Labor Arbiter
and the National Labor Relations Commission, when supported by substantial evidence. The question of
whether respondents are regular or project employees or independent contractors is essentially factual in
nature; nonetheless, the Court is constrained to resolve it due to its tremendous effects to the legions of
production assistants working in the Philippine broadcasting industry. We agree with respondents
contention that where a person has rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the employment is considered regular
as long as the activity exists, the reason being that a customary appointment is not indispensable before
one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:
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.

Same; Same; Same; Same; Respondents cannot be considered talents because they are not actors or
actresses or radio specialists or mere clerks or utility employeesthey are regular employees who
perform several different duties under the control and direction of the broadcast company executives and
supervisors.It is of no moment that petitioner hired respondents as talents. The fact that respondents
received pre-agreed talent fees instead of salaries, that they did not observe the required office hours,
and that they were permitted to join other productions during their free time are not conclusive of the
nature of their employment. Respondents cannot be considered talents because they are not actors or
actresses or radio specialists or mere clerks or utility employees. They are regular employees who
perform several different duties under the control and direction of ABS-CBN executives and supervisors.

Same; Same; Same; Same; 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.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. The law
overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining
situation necessitates the succor of the State. What determines whether a certain employment is regular or
otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less
the procedure of hiring the employee or the manner of paying the salary or the actual time spent at work.
It is the character of the activities performed in relation to the particular trade or business taking into
account all the circumstances, and in some cases the length of time of its performance and its continued
existence. It is obvious that one year after they were employed by petitioner, respondents became regular
employees by operation of law.

Same; Same; Same; Same; Words and Phrases; Under existing jurisprudence, project could refer to two
distinguishable types of activitiesfirst, a project may refer to a particular job or undertaking that is
within the regular or usual business of the employer, but which is distinct and separate, and identifiable as
such, from the other undertaking of the company, and second, the term project may also refer to a
particular job or undertaking that is not within the regular business of the employer.Respondents cannot
be considered as project or program employees because no evidence was presented to show that the
duration and scope of the project were determined or specified at the time of their engagement. Under
existing jurisprudence, project could refer to two distinguishable types of activities. First, a project may
refer to a particular job or undertaking that is within the regular or usual business of the employer, but
which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such
job or undertaking begins and ends at determined or determinable times. Second, the term project may
also refer to a particular job or undertaking that is not within the regular business of the employer. Such a
job or undertaking must also be identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends at determined or determinable
times. The principal test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time the employees were
engaged for that project.

Same; Same; Same; Same; While length of time may not be a sole controlling test for project
employment, it can be a strong factor to determine whether the employee was hired for a specific
undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the
usual trade or business of the employer.It is undisputed that respondents had continuously performed
the same activities for an average of five years. Their assigned tasks are necessary or desirable in the
usual business or trade of the petitioner. The persisting need for their services is sufficient evidence of the
necessity and indispensability of such services to petitioners business or trade. While length of time may
not be a sole controlling test for project employment, it can be a strong factor to determine whether the
employee was hired for a specific undertaking or in fact tasked to perform functions which are vital,
necessary and indispensable to the usual trade or business of the employer. We note further that petitioner
did not report the termination of respondents employment in the particular project to the Department of
Labor and Employment Regional Office having jurisdiction over the workplace within 30 days following
the date of their separation from work, using the prescribed form on employees
termination/dismissals/suspensions.

Same; Same; Same; Same; Program employees, or project employees, are different from independent
contractors because in the case of the latter, no employer-employee relationship exists.As gleaned from
the records of this case, petitioner itself is not certain how to categorize respondents. In its earlier
pleadings, petitioner classified respondents as program employees, and in later pleadings, independent
contractors. Program employees, or project employees, are different from independent contractors
because in the case of the latter, no employer-employee relationship exists.

Same; Same; Same; Same; 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.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. The Court will peruse beyond any such agreement to examine the facts that typify
the parties actual relationship.

FACTS: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting

business and owns a network of television and radio stations, whose operations revolve around the
broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes
the airtime it generates from its radio and television operations. It has a franchise as a broadcasting
company, and was likewise issued a license and authority to operate by the National Telecommunications
Commission.

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production

assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station. On December 19, 1996, petitioner and the ABS-CBN Rank-
and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period
from December 11, 1996 to December 11, 1999. However, since petitioner refused to recognize PAs as
part of the bargaining unit, respondents were not included to the CBA.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave
Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter
rendered judgment in favor of the respondents, and declared that they were regular employees of
petitioner as such, they were awarded monetary benefits. NLRC affirmed the decision of the Labor
Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.

ISSUE: Whether or not the respondents were considered regular employees of ABS-CBN.

HELD: The respondents are regular employees of ABS-CBN. It was held that where a person has
rendered at least one year of service, regardless of the nature of the activity performed, or where the work
is continuous or intermittent, the employment is considered regular as long as the activity exists, the
reason being that a customary appointment is not indispensable before one may be formally declared as
having attained regular status.

In Universal Robina Corporation v. Catapang, the Court states that the primary standard,
therefore, of determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer. The test is whether
the former is usually necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been performing the job for at least a
year, even if the performance is not continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with respect to such
activity and while such activity exists.

Additionally, respondents cannot be considered as project or program employees because no

evidence was presented to show that the duration and scope of the project were determined or specified at
the time of their engagement. In the case at bar, however, the employer-employee relationship between
petitioner and respondents has been proven. In 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
petitioners personnel department just like any ordinary employee. Respondents did not have the power to
bargain for huge talent fees, a circumstance negating independent contractual relationship. Respondents
are highly dependent on the petitioner for continued work. The degree of control and supervision
exercised by petitioner over respondents through its supervisors negates the allegation that respondents
are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the
employer and when the worker, relative to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such employee and not an independent
contractor. As regular employees, respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA . Besides, only talent-artists were excluded from the CBA and not
production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the
New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living of the laborer.

66. ANGELINA FRANCISCO VS. NLRC

Labor Law; Employment; Control Test; The better approach would therefore be to adopt a two-tiered
test.The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which the work is to
be accomplished; and (2) the underlying economic realities of the activity or relationship. This two-tiered
test would provide us with a framework of analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. This is especially
appropriate in this case where there is no written agreement or terms of reference to base the relationship
on; and due to the complexity of the relationship based on the various positions and responsibilities given
to the worker over the period of the latters employment.

Same; Same; Same; Economic Activity; The determination of the relationship between employer and
employee depends upon the circumstances of the whole economic activity.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 employers
business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree
of control exercised by the employer; (4) the workers 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.

Dismissals; Constructive Dismissals; A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal.A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to
when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to an employee. In Globe Telecom, Inc. v. Florendo-Flores, 390 SCRA 201 (2002),
we ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay, an
unreasonable situation arises which creates an adverse working environment rendering it impossible for
such employee to continue working for her employer. Hence, her severance from the company was not of
her own making and therefore amounted to an illegal termination of employment.
Labor Law; Equal Work Opportunity; In affording full protection to labor, this Court must ensure equal
work opportunities regardless of sex, race or creed.In affording full protection to labor, this Court must
ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to
carefully balance the fragile relationship between employees and employers, we are mindful of the fact
that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable
employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving
maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social
economic force in furtherance of social justice and national development.

FACTS:

Year 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.

Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate Secretary. 1996, petitioner was designated
Acting Manager. Petitioner was assigned to handle recruitment of all employees and perform
management administration functions; represent the company in all dealings with government agencies,
especially with the BIR, SSS and in the city government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.

January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. Kasei
Corporation reduced her salary, she was not paid her mid-year bonus allegedly because the company was
not earning well. On October 2001, petitioner 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. Eventually 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. Private respondents averred that petitioner is not an
employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical
consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant,
petitioner performed her work at her own discretion without control and supervision of Kasei
Corporation. Petitioner had no daily time record and she came to the office any time she wanted and that
her services were only temporary in nature and dependent on the needs of the corporation.

The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with
modification the Decision of the Labor Arbiter. On appeal, CA reversed the NLRC decision. CA denied
petitioners MR, hence, the present recourse.

ISSUES: Whether or not there was an employer-employee relationship between petitioner and private
respondent; and if in the affirmative,

Whether or not petitioner was illegally dismissed.

HELD:

Generally, courts have relied on the so-called right of control test where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be
used in reaching such end. In addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in
determining the existence of an employer-employee relationship.

There are instances when, aside from the employers power to control the employee, economic
realities of the employment relations help provide a comprehensive analysis of the true classification of
the individual, whether as employee, independent contractor, corporate officer or some other capacity.

It is better, therefore, to adopt a two-tiered test involving: (1) the employers power to control;
and (2) the economic realities of the activity or relationship.

The control test means that there is an employer-employee relationship when the person for
whom the services are performed reserves the right to control not only the end achieved but also the
manner and means used to achieve that end.

There has to be analysis of the totality of economic circumstances of the worker. Thus, 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
employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature
and degree of control exercised by the employer; (4) the workers 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

By applying the control test, it can be said that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporations Technical
Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job
functions, that is, rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation of the corporation such as securing business permits and
other licenses over an indefinite period of engagement. Respondent corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.

Under the economic reality test, the petitioner can also be said to be an employee of respondent
corporation because she had served the company for 6 yrs. before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions
and Social Security contributions from. When petitioner was designated General Manager, respondent
corporation made a report to the SSS. Petitioners membership in the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent corporation. The coverage of Social
Security Law is predicated on the existence of an employer-employee relationship.
 The corporation constructively dismissed petitioner when it reduced her. This amounts to an
illegal termination of employment, where the petitioner is entitled to full back wages.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.

Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank
or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. Petition is GRANTED.

67. DANILO TABAS ET. AL VS. CALIFORNIA MANUFACTURING CO., INC.

Labor Law; Labor Relations; Employer-Employee Relationship; The existence of an employer-employee

relation cannot be made the subject of an agreement.The existence of an employer-employee relation is
a question of law and being such, it cannot be made the subject of agreement. Hence, the fact that the
manpower supply agreement between Livi and California had specifically designated the former as the
petitioners employer and had absolved the latter from any liability as an employer, will not erase either
partys obligations as an employer, if an employer-employee relation otherwise exists between the
workers and either firm. At any rate, since the agreement was between Livi and California, they alone are
bound by it, and the petitioners cannot be made to suffer from its adverse consequences.

Same; Same; Same; Labor Only Contracting; The labor only contractor is considered merely an agent
of the employer, liability therefore must be shouldered by either one or shared by both.On the other
hand, we have likewise held, based on Article 106 of the Labor Code. xxx that notwithstanding the
absence of a direct employeremployee relationship between the employer in whose favor work had been
contracted out by a labor-only contractor, and the employees, the former has the responsibility, together
with the labor-only contractor for any valid labor claims, by operation of law. The reason, so we held, is
that the labor-only contractor is considered merely an agent of the employer, and liability must be
shouldered by either one or shared by both.

Same; Same; Same; Casual Employees; A temporary or casual employee becomes regular after service of
one year, unless he has been contracted for a specific project.The fact that the petitioners have been
hired on a temporary or seasonal basis merely is no argument either. As we held in Philippine Bank of
Communications v. NLRC, a temporary or casual employee, under Article 281 of the Labor Code,
becomes regular after service of one year, unless he has been contracted for a specific project. And we
cannot say that merchandising is a specific project for the obvious reason that it is an activity related to
the day-to-day operations of California.

FACTS: Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits
against California Manufacturing Company. The respondent company then denied the existence of an
employer-employee relationship between the company and the petitioners.

Pursuant to a manpower supply agreement, it appears that the petitioners prior their involvement
with California Manufacturing Company were employees of Livi Manpower service, an independent
contractor, which assigned them to work as promotional merchandisers. The agreement provides that:

California has no control or supervisions whatsoever over Livis workers with respect to how they
accomplish their work or perform Californias obligation It was further expressly stipulated that the
assignment of workers to California shall be on a seasonal and contractual basis; that cost of living
allowance and the 10 legal holidays will be charged directly to [California] at cost ; and that payroll for
the preceding [sic] week shall be delivered by [Livi] at [Californias] premises.

ISSUE: WON principal employer is liable.

HELD: Yes. The existence of an employer-employee relation cannot be made the subject of an
agreement. Based on Article 106, labor-only contractor is considered merely as an agent of the
employer, and the liability must be shouldered by either one or shared by both.

There is no doubt that in the case at bar, Livi performs manpower services, meaning to say, it
contracts out labor in favor of clients. We hold that it is one notwithstanding its vehement claims to the
contrary, and notwithstanding the provision of the contract that it is an independent contractor. The
nature of ones business is not determined by self-serving appellations one attaches thereto but by the
tests provided by statute and prevailing case law. The bare fact that Livi maintains a separate line of
business does not extinguish the equal fact that it has provided California with workers to pursue the
latters own business. In this connection, we do not agree that the petitioners had been made to perform
activities which are not directly related to the general business of manufacturing, Californias purported
principal operation activity. Livi, as a placement agency, had simply supplied California with the
manpower necessary to carry out its (Californias) merchandising activities, using its (Californias)
premises and equipment.

68. BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHIL. V. ZAMORA

Labor Relations; Factors considered in determining employeremployee relationship.In determining the

existence of an employeremployee relationship, the elements that are generally considered are the
following: (a) the selection and engagement of the employee; (b) the payment of wages; (Q) the power of
dismissal; and (d) the employers power to control the employee with respect to the means and methods
by which the work is to be accomplished. It is the socalled control test that is the most important
element.

Labor Relations; Criteria for determining existence of independent contractor relationship.The

existence of an independent contractor relationship is generally estabished by the following criteria:
whether or not the contractor is carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to assign the performance of a
specified piece of work; the control and supervision of the work to another; the employers power with
respect to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty
to supply the premises tools, appliances, materials and laborer; and the mode, manner, and terms of
payment.

Ibid; Unfair Labor Practice; Where there is an existing CBA, a group of employees who wish to form
another union must follow Labor Code procedures.The respondent company had an existing collective
bargaining agreement with the IBM Union which is the recognized collective bargaining representative at
the respondents glass placed there being a recognized bargaining representative of all employees at the
companys glass plant, the petitioners cannot merely form a union and demand bargaining. The Labor
Code provides the proper procedure for the recognition of unions as sale bargaining representatives. This
must be followed.

FACTS: The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as
pahinantes or kargadors for almost seven years. They worked exclusively at the SMC plant, never
having been assigned to other companies or departments of San Miguel Corp, even when the volume of
work was at its minimum. Their work was neither regular nor continuous, depending on the volume of
bottles to be loaded and unloaded, as well as the business activity of the company. However, work
exceeded the eight-hour day and sometimes, necessitated work on Sundays and holidays. -for this, they
were neither paid overtime nor compensation.

Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor
Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay. They pressed the SMC
management to hear their grievances. BLUM filed a notice of strike with the Bureau of Labor Relations in
connection with the dismissal of some of its members. San Miguel refused to bargain with the union
alleging that the workers are not their employees but the employees of an independent labor contracting
firm, Guaranteed Labor Contractor.

The workers were then dismissed from their jobs and denied entrance to the glass factory despite
their regularly reporting for work. A complaint was filed for illegal dismissal and unfair labor practices.

ISSUE: Whether or not there was employer-employee (ER-EE) relationship between the workers and San
Miguel Corp.

HELD:

YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was used by
the Supreme Court. These are:

The selection and engagement of the employee

Payment of wages

Power of dismissal

Control Test- the employers power to control the employee with respect to the means and methods
by which work is to be accomplished

In the case, the records fail to show that San Miguel entered into mere oral agreements of
employment with the workers. Considering the length of time that the petitioners have worked with the
company, there is justification to conclude that they were engaged to perform activities necessary in the
usual business or trade. Despite past shutdowns of the glass plant, the workers promptly returned to their
jobs. The term of the petitioners employment appears indefinite and the continuity and habituality of the
petitioners work bolsters the claim of an employee status.

As for the payment of the workers wages, the contention that the independent contractors were
paid a lump sum representing only the salaries the workers where entitled to have no merit. The amount
paid by San Miguel to the contracting firm is no business expense or capital outlay of the latter. What the
contractor receives is a percentage from the total earnings of all the workers plus an additional amount
from the earnings of each individual worker.

The power of dismissal by the employer was evident when the petitioners had already been
refused entry to the premises. It is apparent that the closure of the warehouse was a ploy to get rid of the
petitioners, who were then agitating the company for reforms and benefits.

The inter-office memoranda submitted in evidence prove the companys control over the workers.
That San Miguel has the power to recommend penalties or dismissal is the strongest indication of the
companys right of control over the workers as direct employer.

SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

69. GREAT PACIFIC LIFE ASSURANCE CORPORATION vs. HONORATO JUDICO and
NLRC
Same; Same; Same; Labor; Employer-employee relationship; Test to determine employer-employee
relationship.One salient point in the determination of employer-employee relationship which cannot be
easily ignored is the fact that the compensation that these agents on commission received is not paid by
the insurance company but by the investor (or the person insured). After determining the commission
earned by an agent on his sales the agent directly deducts it from the amount he received from the
investor or the person insured and turns over to the insurance company the amount invested after such
deduction is made. The test therefore is whether the employer controls or has reserved the right to
control the employee not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished.

Same; Same; Same; Same; Element of control by petitioner on the private respondent is present; Contract
of services with petitioner by private respondent is not for a piece of work nor for a definite period.
Applying the aforementioned test to the case at bar, We can readily see that the element of control by the
petitioner on Judico was very much present. The record shows that petitioner Judico received a definite
minimum amount per week as his wage known as sales reserve wherein the failure to maintain the same
would bring him back to a beginners employment with a fixed weekly wage of P200.00 for thirteen
weeks regardless of production. He was assigned a definite place in the office to work on when he is not
in the field; and in addition to his canvassing work he was burdened with the job of collection. In both
cases he was required to make regular report to the company regarding these duties, and for which an
anemic performance would mean a dismissal. Conversely faithful and productive service earned him a
promotion to Zone Supervisor with additional supervisors allowance, a definite amount of P110.00 aside
from the regular P200.00 weekly allowance. Furthermore, his contract of services with petitioner is not
for a piece of work nor for a definite period.

Same; Same; Same; Same; Same; Illegal dismissal; Private respondent by the nature of his position and
work had been a regular employee of petitioner and entitled to the protection of the law and could not just
be terminated without valid and justifiable cause.On the other hand, an ordinary commission insurance
agent works at his own volition or at his own leisure without fear of dismissal from the company and
short of committing acts detrimental to the business interest of the company or against the latter, whether
he produces or not is of no moment as his salary is based on his production, his anemic performance or
even dead result does not become a ground for dismissal. Whereas, in private respondents case, the
undisputed facts show that he was controlled by petitioner insurance company not only as to the kind of
work; the amount of results, the kind of performance but also the power of dismissal. Undoubtedly,
private respondent, by nature of his position and work, had been a regular employee of petitioner and is
therefore entitled to the protection of the law and could not just be terminated without valid and justifiable
cause.

FACTS: On June 09, 1976, Great Pacific Life Assurance Corporation (Grepalife, for brevity) entered
into an agreement of agency with Honorato Judico to become a debit agent to the industrial life agency.

Debit agent-an insurance agent selling/servicing industrial life plans and policy holders.

Industrial life plans-are those whose premiums are payable either daily, weekly or monthly and which
are collectible b the debit agents at the home or any place designated by the policy holder.

As a debit agent, Judico had definite work assignments including but not limited to collections of
premiums from policy holders and selling insurance to prospective clients. Judico was initially paid
P200.00 as allowance for thirteen (13) weeks regardless of production and later a certain percentage
denominated as sales reserve of his total collections but not lesser than P200.00. In September 1981,
he was promoted to the position of Zone Supervisor and paid additional (supervisors) allowance fixed
at P110,00 per week. However, two months thereafter, he was reverted to his former position as debit
agent, but, for unknown reasons, not paid so-called weekly sales reserve of at least P200.00. Finally,
on June 28, 1982, he was dismissed by way of termination of his agency contract.

The Contentions of the petitioner are:

Judicos compensation was not based on any fixed number of hours but was based on actual
production.

Judicos compensation, in the form of commissions and bonuses, cannot be construed as

salary, but as a subsidy or way of assistance for transportation and meal expenses of a new
debit agent during the initial period of his training which was fixed for thirteen (13) weeks.

The Contentions of the respondent are adopted by SC in its ruling.

Ruling of the Labor Arbiter (LA) In favor of Grepalife : The LA dismissed the complaint on the
ground that no employer-employee relationship exist.

Ruling of the NLRC - In favor of Honorato Judico: It ruled that Judico is a regular employee as
defined under Article 281 of the Labor Code.

Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.

Not convinced, the matter was elevated to the Supreme Court.

ISSUE: Whether or not: (1) the debit agent is considered as regular employee; and (2) the
dismissal was valid.

HELD:

Salaried employees vs. Registered representatives

1. In Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance agent may have two classes of
agents who sell its insurance policies.

a. Salaried employees who keep definite hours and work under the control and supervision of the
company.

b. Registered representatives who works on a commission basis.

These agents are not required to report for work anytime;

They do not have to devote their time exclusively to or work exclusively for the company
since the time and effort they spend in their work depend entirely upon their own will and
initiative;
They are not required to account for their time nor submit a report of their activities;
They shoulder their own selling and transportation expenses; and
They are paid their commission based on a certain percentage of their sales.

Element of control

2. The test is whether the employer controls or has reserved the right to control the employee not only
as to the result of the work to be done but also as to the means and methods by which the same is to be
accomplished.

3. In this case, the element of control is evident.

The element of control by the petitioner on Judico was very much present.
The record shows that petitioner Judico received a definite minimum amount per week as his
wage known as "sales reserve" wherein the failure to maintain the same would bring him back
to a beginner's employment with a fixed weekly wage of P 200.00 for thirteen weeks
regardless of production.
He was assigned a definite place in the office to work on when he is not in the field; and in
addition to his canvassing work he was burdened with the job of collection.
In both cases he was required to make regular report to the company regarding these duties,
and for which an anemic performance would mean a dismissal.
Conversely faithful and productive service earned him a promotion to Zone Supervisor with
additional supervisor's allowance, a definite amount of P110.00 aside from the regular P
200.00 weekly "allowance".
Furthermore, his contract of services with petitioner is not for a piece of work nor for a
definite period.

Ordinary commission insurance agent in brief.

4. An ordinary commission agent works at his own volition or at his own leisure without fear of dismissal
from the company and short of committing acts detrimental to the business interest of the company or
against the latter, whether he produces or not is of no moment as his salary is based on his production,
his anemic performance or even dead result does not become a ground for dismissal.

The appealed decision of AFFIRMED in toto.

70. FEATI UNIVERSITY V. BAUTISTA

Same; Employee under the Industrial Peace Act.Under section 2(d) of the Industrial Peace Act, the
term "employee" embraces not only those who are usually and ordinarily considered as employees but
also those who have ceased as employees as a consequence of a labor dispute. An employee is one who is
engaged in the service of another; who performs services for another; who works for salary or wages.

Same.Professors and instructors, who are under contract to teach particular courses and are paid for
their services, are employees under the Industrial Peace Act. Teachers are employees.

Same.Striking professors and instructors of a university are employees because striking employees
retain their status as employees.

Same; Independent contractors; Evidence; Judicial notice.Professors and instructors are not
independent contractors. The Court may take judicial notice that a university controls the work of the
members of its faculty; that it prescribes the courses or subjects that they teach and the time and place for
teaching; that the professor's work is characterized by regularity and continuity for a fixed duration; that
professors are compensated for their services by wages and salaries, rather than by a share of the profits;
that professors or instructors cannot substitute others to do their work without the consent of the
university; and that they can be laid off if their work is unsatisfactory. All these indicate that the
university has control over their work and that they are, therefore, employees and not independent
contractors.

Same.Under the Industrial Peace Act independent contractors are included in the term "employee".

Same; Right to unionize.University professors and instructors, as employees, have the right to unionize.
The right of employees to self-organization is guaranteed by the Constitution. Said right would exist even
if there is no Industrial Peace Act and regardless of whether the employers are engaged in commerce or
not.

Same; Meaning of labor dispute.The test of whether a controversy comes within the definition of "labor
dispute" depends on whether the controversy involves or concerns "terms, tenure or condition of
employment" or "representation". Where the labor union of professors and instructors employed in a
university made certain demands and declared a strike thereafter and filed a charge of unfair labor
practice against the university, a labor dispute existed between the said union and the university.

Same; Replacements.Employees, who took the place of strikers, do not displace them as employees.
Strikers maintain their status as employees of the employer. A return-to-work order cannot be considered
as an impairment of the contract entered into by an employer with replacements.
FACTS: The private respondent wrote a letter to president of petitioner informing her of the organization
of the Faculty Club into a registered labor union. President of the Faculty Club sent another letter
containing twenty-six demands that have connection with the employment of the members of the Faculty
Club by the University, and requesting an answer within ten days from receipt thereof. The President of
the University answered the two letters, requesting that she be given at least thirty days to study
thoroughly the different phases of the demands.

Meanwhile counsel for the University, to whom the demands were referred, wrote a letter to the
President of the Faculty Club demanding proof of its majority status and designation as a bargaining
representative. President of the Faculty Club filed a notice of strike with the Bureau of Labor alleging as
reason therefore the refusal of the University to bargain collectively. The parties were called to
conferences but efforts to conciliate them failed.

Members of the Faculty Club declared a strike and established picket lines in the premises of the
University, resulting in the disruption of classes in the University. President of the Philippines certified to
the Court of Industrial Relations the dispute between the management of the University and the Faculty
Club pursuant to the provisions of Section 10 of Republic Act No. 875.

The Judge endeavoured to reconcile the part and it was agreed upon that the striking faculty
members would return to work and the University would readmit them under a status quo arrangement.
On that very same day, however, the University, thru counsel filed a motion to dismiss the case upon the
ground that the CIR has no jurisdiction over the case, because (1) the Industrial Peace Act is not
applicable to the University, it being an educational institution, nor to the members of the Faculty Club,
they being independent contractors; and (2) the presidential certification is violative of Section 10 of the
Industrial Peace Act, as the University is not an industrial establishment and there was no industrial
dispute which could be certified to the CIR.

The respondent judge denied the motion to dismiss. The University filed a motion for
reconsideration by the CIR en banc, without the motion for reconsideration having been acted upon by the
CIR en banc, respondent Judge set the case for hearing but the University moved the cancellation of the
said hearing upon the ground that the court en banc should first hear the motion for reconsideration and
resolve the issues raised therein before the case is heard on the merits but denied.

Faculty Club filed with the CIR in Case 41-IPA a petition to declare in contempt of court certain
parties, alleging that the University refused to accept back to work the returning strikers, in violation of
the return-to-work order.

The University filed its opposition to the petition for contempt by way of special defense that
there was still the motion for reconsideration which had not yet been acted upon by the CIR en banc.
Hence, this petition.

ISSUE: Whether or not FEATI is an employer within the purview of the Industrial Peace Act.

HELD: The Supreme Court denied the petition. Based on RA 875 Section 2(c) The term employer
include any person acting in the interest of an employer, directly or indirectly, but shall not include any
labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent
of such labor organization.
 In this case, the University is operated for profit hence included in the term of employer.
Professors and instructors, who are under contract to teach particular courses and are paid for their
services, are employees under the Industrial Peace Act.

Professors and instructors are not independent contractors. university controls the work of the
members of its faculty; that a university prescribes the courses or subjects that professors teach, and when
and where to teach; that the professors work is characterized by regularity and continuity for a fixed
duration; that professors are compensated for their services by wages and salaries, rather than by profits;
that the professors and/or instructors cannot substitute others to do their work without the consent of the
university; and that the professors can be laid off if their work is found not satisfactory. All these indicate
that the university has control over their work; and professors are, therefore, employees and not
independent contractors.