G.R. No. 81958 June 30, 1988 right.
right. The right to travel is subject, among other things, to the requirements of "public
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D.
ACHACOSO, as Administrator of the Philippine Overseas Employment
Administration, respondents.
FACTS: The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for
short), a firm "engaged principally in the recruitment of Filipino workers, male and
female, for overseas placement," 1 challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE TEMPORARY
SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS,"
in this petition for certiorari and prohibition. Specifically, the measure is assailed for
"discrimination against males or females;" 2 that it "does not apply to all Filipino
workers but only to domestic helpers and females with similar skills;" 3 and that it is
violative of the right to travel. It is held likewise to be an invalid exercise of the
lawmaking power, police power being legislative, and not executive, in character.
ISSUE: WON Department Order No. 1 is constitutional.
HELD: YES. As a matter of judicial notice, the Court is well aware of the unhappy plight
that has befallen our female labor force abroad, especially domestic servants, amid
exploitative working conditions marked by, in not a few cases, physical and personal
abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even
rape and various forms of torture, confirmed by testimonies of returning workers,
are compelling motives for urgent Government action. As precisely the caretaker of
Constitutional rights, the Court is called upon to protect victims of exploitation. In
fulfilling that duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no
evidence that, except perhaps for isolated instances, our men abroad have been
afflicted with an Identical predicament. The petitioner has proffered no argument
that the Government should act similarly with respect to male workers. The Court, of
course, is not impressing some male chauvinistic notion that men are superior to
women. What the Court is saying is that it was largely a matter of evidence (that
women domestic workers are being ill-treated abroad in massive instances) and not
upon some fanciful or arbitrary yardstick that the Government acted in this case. It is
evidence capable indeed of unquestionable demonstration and evidence this Court
accepts. The Court cannot, however, say the same thing as far as men are concerned.
There is simply no evidence to justify such an inference. Suffice it to state, then, that
insofar as classifications are concerned, this Court is content that distinctions are
borne by the evidence. Discrimination in this case is justified.
The consequence the deployment ban has on the right to travel does not impair the
safety," "as may be provided by law." 25 Department Order No. 1 is a valid
implementation of the Labor Code, in particular, its basic policy to "afford protection
to labor," 26 pursuant to the respondent Department of Labor's rule-making authority
vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable
simply because of its impact on the right to travel, but as we have stated, the right
itself is not absolute. The disputed Order is a valid qualification thereto.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all. 30
"Protection to labor" does not signify the promotion of employment alone. What
concerns the Constitution more paramountly is that such an employment be above
all, decent, just, and humane. It is bad enough that the country has to send its sons
and daughters to strange lands because it cannot satisfy their employment needs at
home. Under these circumstances, the Government is duty-bound to insure that our
toiling expatriates have adequate protection, personally and economically, while
away from home. In this case, the Government has evidence, an evidence the
petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and
as part of its duty, it has precisely ordered an indefinite ban on deployment.
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S. CANILAO, and
SEGUNDINA NOGUERA, respondents-appellees.
FACTS: On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the
appellees) entered into on Oct. 19, 1960 by and between Mrs. Segundina Noguera,
party of the first part; the Tourist World Service, Inc., represented by Mr. Eliseo
Canilao as party of the second part, and hereinafter referred to as appellants, the
Tourist World Service, Inc. leased the premises belonging to the party of the first part
at Mabini St., Manila for the former-s use as a branch office. In the said contract the
party of the third part held herself solidarily liable with the party of the part for the
prompt payment of the monthly rental agreed on. When the branch office was
opened, the same was run by the herein appellant Una 0. Sevilla payable to Tourist
World Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina
Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld by the Tourist World
Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears
to have been informed that Lina Sevilla was connected with a rival firm, the Philippine
Travel Bureau, and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office. This was firmed up by two resolutions of
the board of directors of Tourist World Service, Inc. dated Dec. 2, 1961 (Exhibits 12
and 13), the first abolishing the office of the manager and vice-president of the
Tourist World Service, Inc., Ermita Branch, and the second, authorizing the corporate
secretary to receive the properties of the Tourist World Service then located at the
said branch office. It further appears that on Jan. 3, 1962, the contract with the
appellees for the use of the Branch Office premises was terminated and while the
effectivity thereof was Jan. 31, 1962, the appellees no longer used it. As a matter of
fact appellants used it since Nov. 1961. Because of this, and to comply with the
mandate of the Tourist World Service, the corporate secretary Gabino Canilao went
over to the branch office, and, finding the premises locked, and, being unable to
contact Lina Sevilla, he padlocked the premises on June 4, 1962 to protect the
interests of the Tourist World Service. When neither the appellant Lina Sevilla nor
any of her employees could enter the locked premises, a complaint wall filed by the
herein appellants against the appellees with a prayer for the issuance of mandatory
preliminary injunction. Both appellees answered with counterclaims. For apparent
lack of interest of the parties therein, the trial court ordered the dismissal of the case
without prejudice.
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered
into by and between her and appellee TWS with offices at the Ermita branch office
and that she was not an employee of the TWS to the end that her relationship with
TWS was one of a joint business venture appellant made declarations showing:
Upon the other hand, appellee TWS contend that the appellant was an employee of
the appellee Tourist World Service, Inc. and as such was designated manager.1
xxx xxx xxx
The trial court2 held for the private respondent on the premise that the private
respondent, Tourist World Service, Inc., being the true lessee, it was within its
prerogative to terminate the lease and padlock the premises. 3 It likewise found the
petitioner, Lina Sevilla, to be a mere employee of said Tourist World Service, Inc. and
as such, she was bound by the acts of her employer. 4 The respondent Court of
Appeal 5 rendered an affirmance.
ISSUE: WON there is an employer-employee relationship.
HELD: NO. The Court finds the resolution of the issue material, for if, as the private
respondent, Tourist World Service, Inc., maintains, that the relation between the
parties was in the character of employer and employee, the courts would have been
without jurisdiction to try the case, labor disputes being the exclusive domain of the
Court of Industrial Relations, later, the Bureau Of Labor Relations, pursuant to
statutes then in force. 9
In this jurisdiction, there has been no uniform test to determine the evidence of an
employer-employee relation. In general, we 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." 10 Subsequently, however, we have considered, 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, in determining the existence of an
employer-employee relationship.11
The records will show that the petitioner, Lina Sevilla, was not subject to control by
the private respondent Tourist World Service, Inc., either as to the result of the
enterprise or as to the means used in connection therewith. In the first place, under
the contract of lease covering the Tourist Worlds Ermita office, she had bound herself
in solidum as and for rental payments, an arrangement that would be like claims of a
master-servant relationship. True the respondent Court would later minimize her
participation in the lease as one of mere guaranty, 12 that does not make her an
employee of Tourist World, since in any case, a true employee cannot be made to
part with his own money in pursuance of his employer's business, or otherwise,
assume any liability thereof. In that event, the parties must be bound by some other
relation, but certainly not employment.
In the second place, and as found by the Appellate Court, '[w]hen the branch office
was opened, the same was run by the herein appellant Lina O. Sevilla payable to
Tourist World Service, Inc. by any airline for any fare brought in on the effort of Mrs.
Lina Sevilla. 13 Under these circumstances, it cannot be said that Sevilla was under the
control of Tourist World Service, Inc. "as to the means used." Sevilla in pursuing the
business, obviously relied on her own gifts and capabilities.
It is further admitted that Sevilla was not in the company's payroll. For her efforts,
she retained 4% in commissions from airline bookings, the remaining 3% going to
Tourist World. Unlike an employee then, who earns a fixed salary usually, she earned
compensation in fluctuating amounts depending on her booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo,
Tourist World's employee. As we said, employment is determined by the right-of-
control test and certain economic parameters. But titles are weak indicators.
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO
TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA
and RAMON ESCUETA, Respondents.
FACTS: In 1995, petitioner was hired by Kasei Corporation during its incorporation
stage. She was designated as Accountant and Corporate Secretary and was assigned
to handle all the accounting needs of the company. She was also designated as
Liaison Officer to the City of Makati to secure business permits, construction permits
and other licenses for the initial operation of the company. 5
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry
Nino as accountant in lieu of petitioner. As 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 Bureau of Internal Revenue (BIR), Social Security System (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.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner
alleged that she was required to sign a prepared resolution for her replacement but
she was assured that she would still be connected with Kasei Corporation. Timoteo
Acedo, the designated Treasurer, convened a meeting of all employees of Kasei
Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge
of all BIR matters. 9
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning
January up to September 2001 for a total reduction of P22,500.00 as of September
2001. Petitioner was not paid her mid-year bonus allegedly because the company
was not earning well. On October 2001, 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. 10
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the
officers but she was informed that she is no longer connected with the company. 11
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. The company never interfered with her work
except that from time to time, the management would ask her opinion on matters
relating to her profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a Board Resolution
designating her as technical consultant. The money received by petitioner from the
corporation was her professional fee subject to the 10% expanded withholding tax
on professionals, and that she was not one of those reported to the BIR or SSS as one
of the company’s employees. 12
Petitioner’s designation as technical consultant depended solely upon the will of
management. As such, her consultancy may be terminated any time considering 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, thus:
On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor
Arbiter, the dispositive portion of which reads:
On appeal, the Court of Appeals reversed the NLRC decision, thus:
ISSUE:
(1) whether there was an employer-employee relationship between petitioner and
private respondent Kasei Corporation; and if in the affirmative,
(2) whether petitioner was illegally dismissed.
HELD: The better approach would therefore be to adopt a two-tiered test involving:
(1) the putative employer’s 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.
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. 24 In
the United States, the touchstone of economic reality in analyzing possible
employment relationships for purposes of the Federal Labor Standards Act is
dependency. 25 By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic
dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji
Kamura, the corporation’s 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.
Under the broader economic reality test, the petitioner can likewise be said to be an
employee of respondent corporation because she had served the company for six
years before her dismissal, receiving check vouchers indicating her salaries/wages,
benefits, 13th month pay, bonuses and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to December 18, 2000. 26 When petitioner
was designated General Manager, respondent corporation made a report to the SSS
signed by Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the President of Kasei
Corporation and the inclusion of her name in the on-line inquiry system of the SSS
evinces the existence of an employer-employee relationship between petitioner and
respondent corporation. 27
Based on the foregoing, there can be no other conclusion that petitioner is an
employee of respondent Kasei Corporation. She was selected and engaged by the
company for compensation, and is economically dependent upon respondent for her
continued employment in that line of business. Her main job function involved
accounting and tax services rendered to respondent corporation on a regular basis
over an indefinite period of engagement. Respondent corporation hired and engaged
petitioner for compensation, with the power to dismiss her for cause. More
importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by
P2,500 a month from January to September 2001. This amounts to an illegal
termination of employment, where the petitioner is entitled to full backwages. Since
the position of petitioner as accountant is one of trust and confidence, and under the
principle of strained relations, petitioner is further entitled to separation pay, in lieu
of reinstatement. 34
G.R. Nos. 83380-81 November 15, 1989
MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter,
Department of Labor and Employment, National Capital Region), SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO
GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO
L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO
ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN
A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA
ANGELES, respondents.
FACTS: Individual complainants, private respondents herein, have been working for
petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters
(manlililip) and "plantsadoras". They are paid on a piece-rate basis except Maria
Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their
piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they
report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00
p.m. from Monday to Saturday and during peak periods even on Sundays and
holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of
the respondent workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-
84 for (a) underpayment of the basic wage; (b) underpayment of living allowance; (c)
non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of
service incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage
Orders Nos. 1, 2, 3, 4 and 5.1
During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro
Pelobello left with Salvador Rivera, a salesman of petitioner Haberdashery, an open
package which was discovered to contain a "jusi" barong tagalog. When confronted,
Pelobello replied that the same was ordered by respondent Casimiro Zapata for his
customer. Zapata allegedly admitted that he copied the design of petitioner
Haberdashery. But in the afternoon, when again questioned about said barong,
Pelobello and Zapata denied ownership of the same. Consequently a memorandum
was issued to each of them to explain on or before February 4, 1985 why no action
should be taken against them for accepting a job order which is prejudicial and in
direct competition with the business of the company. 2 Both respondents allegedly
did not submit their explanation and did not report for work. 3 Hence, they were
dismissed by petitioners on February 4, 1985. They countered by filing a complaint
for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4
On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding
respondents guilty of illegal dismissal and ordering them to reinstate Dioscoro
Pelobello and Casimiro Zapata to their respective or similar positions without loss of
seniority rights, with full backwages from July 4, 1985 up to actual reinstatement. The
charge of unfair labor practice is dismissed for lack of merit.
In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re
violation of the minimum wage law is hereby ordered dismissed for lack of merit.
Respondents are hereby found to have violated the decrees on the cost of living
allowance, service incentive leave pay and the 13th Month Pay. In view thereof, the
economic analyst of the Commission is directed to compute the monetary awards
due each complainant based on the available records of the respondents retroactive
as of three years prior to the filing of the instant case.
From the foregoing decision, petitioners appealed to the NLRC. The latter on March
30, 1988 affirmed said decision but limited the backwages awarded the Dioscoro
Pelobello and Casimiro Zapata to only one (1) year. 6
ISSUE: WON there is an employer-employee relationship.
HELD: YES. The first issue which is the pivotal issue in this case is resolved in favor of
private respondents. We have repeatedly held in countless decisions that the test of
employer-employee relationship is four-fold: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee's conduct. It is the so called "control test" that is the
most important element. 8 This simply means the determination of whether the
employer controls or has reserved the right to control the employee not only as to
the result of the work but also as to the means and method by which the same is to
be accomplished. 9
The facts at bar indubitably reveal that the most important requisite of control is
present. As gleaned from the operations of petitioner, when a customer enters into
a contract with the haberdashery or its proprietor, the latter directs an employee
who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's
measurements, and to sew the pants, coat or shirt as specified by the customer.
Supervision is actively manifested in all these aspects — the manner and quality of
cutting, sewing and ironing.
Under the circumstances, it is evident that there is no illegal dismissal of said
employees. Thus, We have ruled that:
No employer may rationally be expected to continue in employment a person whose
lack of morals, respect and loyalty to his employer, regard for his employer's rules,
and appreciation of the dignity and responsibility of his office, has so plainly and
completely been bared.
G.R. No. 159333 July 31, 2006
ARSENIO T. MENDIOLA, petitioner,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PACIFIC FOREST
RESOURCES, PHILS., INC. and/or CELLMARK AB, respondents.
FACTS: Private respondent Pacfor entered into a "Side Agreement on Representative
Office known as Pacific Forest Resources (Phils.), Inc."5 with petitioner Arsenio T.
Mendiola (ATM), effective May 1, 1995, "assuming that Pacfor-Phils. is already
approved by the Securities and Exchange Commission [SEC] on the said date." 6 The
Side Agreement outlines the business relationship of the parties with regard to the
Philippine operations of Pacfor. Private respondent will establish a Pacfor
representative office in the Philippines, to be known as Pacfor Phils, and petitioner
ATM will be its President. Petitioner's base salary and the overhead expenditures of
the company shall be borne by the representative office and funded by Pacfor/ATM,
since Pacfor Phils. is equally owned on a 50-50 equity by ATM and Pacfor-usa.
In July 2000, petitioner wrote Kevin Daley, Vice President for Asia of Pacfor, seeking
confirmation of his 50% equity of Pacfor Phils. 10 Private respondent Pacfor, through
William Gleason, its President, replied that petitioner is not a part-owner of Pacfor
Phils. because the latter is merely Pacfor-USA's representative office and not an
entity separate and distinct from Pacfor-USA. "It's simply a 'theoretical company'
with the purpose of dividing the income 50-50."11 Petitioner presumably knew of this
arrangement from the start, having been the one to propose to private respondent
Pacfor the setting up of a representative office, and "not a branch office" in the
Philippines to save on taxes.12
Petitioner claimed that he was all along made to believe that he was in a joint venture
with them. He alleged he would have been better off remaining as an independent
agent or representative of Pacfor-USA as ATM Marketing Corp.13 Had he known that
no joint venture existed, he would not have allowed Pacfor to take the profitable
business of his own company, ATM Marketing Corp.14 Petitioner raised other issues,
such as the rentals of office furniture, salary of the employees, company car, as well
as commissions allegedly due him. The issues were not resolved, hence, in October
2000, petitioner wrote Pacfor-USA demanding payment of unpaid commissions and
office furniture and equipment rentals, amounting to more than one million dollars. 15
On November 27, 2000, private respondent Pacfor, through counsel, ordered
petitioner to turn over to it all papers, documents, files, records, and other materials
in his or ATM Marketing Corporation's possession that belong to Pacfor or Pacfor
Phils.16 On December 18, 2000, private respondent Pacfor also required petitioner to
remit more than three hundred thousand-peso Christmas giveaway fund for clients
of Pacfor Phils.17 Lastly, private respondent Pacfor withdrew all its offers of
settlement and ordered petitioner to transfer title and turn over to it possession of
the service car.18
On the basis of the "Side Agreement," petitioner insisted that he and Pacfor equally
own Pacfor Phils. Thus, it follows that he and Pacfor likewise own, on a 50/50 basis,
Pacfor Phils.' office furniture and equipment and the service car. He also reiterated
his demand for unpaid commissions, and proposed to offset these with the remaining
Christmas giveaway fund in his possession.23 Furthermore, he did not renew the lease
contract with Pulp and Paper, Inc., the lessor of the office premises of Pacfor Phils.,
wherein he was the signatory to the lease agreement. 24
On February 2, 2001, private respondent Pacfor placed petitioner on preventive
suspension and ordered him to show cause why no disciplinary action should be
taken against him. Private respondent Pacfor charged petitioner with willful
disobedience and serious misconduct for his refusal to turn over the service car and
the Christmas giveaway fund which he applied to his alleged unpaid commissions.
Private respondent also alleged loss of confidence and gross neglect of duty on the
part of petitioner for allegedly allowing another corporation owned by petitioner's
relatives, High End Products, Inc. (HEPI), to use the same telephone and facsimile
numbers of Pacfor, to possibly steal and divert the sales and business of private
respondent for HEPI's principal, International Forest Products, a competitor of
private respondent.25
Petitioner denied the charges. He reiterated that he considered the import of Pacfor
President William Gleason's letters as a "cessation of his position and of the existence
of Pacfor Phils." He likewise informed private respondent Pacfor that ATM Marketing
Corp. now occupies Pacfor Phils.' office premises,26 and demanded payment of his
separation pay.27 On February 15, 2001, petitioner filed his complaint for illegal
dismissal, recovery of separation pay, and payment of attorney's fees with the
NLRC.28
Labor Arbiter Felipe Pati ruled in favor of petitioner, finding there was constructive
dismissal. By directing petitioner to turn over all office records and materials,
regardless of whether he may have retained copies, private respondent Pacfor
virtually deprived petitioner of his job by the gradual diminution of his authority as
resident manager. Petitioner's position as resident manager whose duty, among
others, was to maintain the security of its business transactions and communications
was rendered meaningless. The dispositive portion of the decision of the Labor
Arbiter reads:
Private respondent Pacfor appealed to the NLRC which ruled in its favor. On
December 20, 2001, the NLRC set aside the July 30, 2001 decision of the labor arbiter,
for lack of jurisdiction and lack of merit. 31 It held there was no employer-employee
relationship between the parties. Based on the two agreements between the
parties, it concluded that petitioner is not an employee of private respondent Pacfor,
but a full co-owner (50/50 equity).
Petitioner was not successful on his appeal to the Court of Appeals. The appellate
court upheld the ruling of the NLRC.
ISSUE:
(1) Whether an employer-employee relationship exists between petitioner and
private respondent Pacfor.
(2) If petitioner was constructively dismissed from employment.
HELD: (1) YES. We hold that petitioner is an employee of private respondent Pacfor
and that no partnership or co-ownership exists between the parties.
In a partnership, the members become co-owners of what is contributed to the firm
capital and of all property that may be acquired thereby and through the efforts of
the members.36 The property or stock of the partnership forms a community of
goods, a common fund, in which each party has a proprietary interest. 37 In fact, the
New Civil Code regards a partner as a co-owner of specific partnership property.38
Each partner possesses a joint interest in the whole of partnership property. If the
relation does not have this feature, it is not one of partnership. 39 This essential
element, the community of interest, or co-ownership of, or joint interest in
partnership property is absent in the relations between petitioner and private
respondent Pacfor. Petitioner is not a part-owner of Pacfor Phils. William Gleason,
private respondent Pacfor's President established this fact when he said that Pacfor
Phils. is simply a "theoretical company" for the purpose of dividing the income 50-50.
He stressed that petitioner knew of this arrangement from the very start, having been
the one to propose to private respondent Pacfor the setting up of a representative
office, and "not a branch office" in the Philippines to save on taxes. Thus, the parties
in this case, merely shared profits. This alone does not make a partnership. 40
Be that as it may, we hold that on the basis of the evidence, an employer-employee
relationship is present in the case at bar. The elements to determine the existence
of an employment relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee's conduct. The most important element
is the employer's control of the employee's conduct, not only as to the result of the
work to be done, but also as to the means and methods to accomplish it.43
In the instant case, all the foregoing elements are present. First, it was private
respondent Pacfor which selected and engaged the services of petitioner as its
resident agent in the Philippines. Second, as stipulated in their Side Agreement,
private respondent Pacfor pays petitioner his salary amounting to $65,000 per
annum which was later increased to $78,000. Third, private respondent Pacfor holds
the power of dismissal, as may be gleaned through the various memoranda it issued
against petitioner, placing the latter on preventive suspension while charging him
with various offenses, including willful disobedience, serious misconduct, and gross
neglect of duty, and ordering him to show cause why no disciplinary action should be
taken against him.
Lastly and most important, private respondent Pacfor has the power of control over
the means and method of petitioner in accomplishing his work.
The power of control refers merely to the existence of the power, and not to the
actual exercise thereof. The principal consideration is whether the employer has the
right to control the manner of doing the work, and it is not the actual exercise of the
right by interfering with the work, but the right to control, which constitutes the test
of the existence of an employer-employee relationship.44 In the case at bar, private
respondent Pacfor, as employer, clearly possesses such right of control. Petitioner,
as private respondent Pacfor's resident agent in the Philippines, is, exactly so, only an
agent of the corporation, a representative of Pacfor, who transacts business, and
accepts service on its behalf.
(2) YES. The evidence shows that when petitioner insisted on his 50% equity in Pacfor
Phils., and would not quit however, private respondent Pacfor began to
systematically deprive petitioner of his duties and benefits to make him feel that his
presence in the company was no longer wanted. First, private respondent Pacfor
directed petitioner to turn over to it all records of Pacfor Phils. This would certainly
make the work of petitioner very difficult, if not impossible. Second, private
respondent Pacfor ordered petitioner to remit the Christmas giveaway fund intended
for clients of Pacfor Phils. Then it ordered petitioner to transfer title and turn over to
it the possession of the service car. It also advised its clients in the Philippines,
particularly Intercontinental Paper Industries, Inc. and DAVCOR, not to deal with
petitioner and/or Pacfor Phils. Lastly, private respondent Pacfor appointed a new
resident agent for Pacfor Phils.45
Although there is no reduction of the salary of petitioner, constructive dismissal is
still present because continued employment of petitioner is rendered, at the very
least, unreasonable.46 There is an act of clear discrimination, insensibility or disdain
by the employer that continued employment may become so unbearable on the part
of the employee so as to foreclose any choice on his part except to resign from such
employment.47
G.R. No. 138051 June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
FACTS: In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN")
signed an Agreement ("Agreement") with the Mel and Jay Management and
Development Corporation ("MJMDC"). ABS-CBN was represented by its corporate
officers while MJMDC was represented by SONZA, as President and General
Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in
the Agreement as "AGENT," MJMDC agreed to provide SONZA’s services exclusively
to ABS-CBN as talent for radio and television. The Agreement listed the services
SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.3
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez III,
which reads:
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events
concerning his programs and career. We consider these acts of the station violative
of the Agreement and the station as in breach thereof. In this connection, we hereby
serve notice of rescission of said Agreement at our instance effective as of date.
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department
of Labor and Employment, National Capital Region in Quezon City. SONZA
complained that ABS-CBN did not pay his salaries, separation pay, service incentive
leave pay, 13th month pay, signing bonus, travel allowance and amounts due under
the Employees Stock Option Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-
employee relationship existed between the parties. SONZA filed an Opposition to the
motion on 19 July 1996.
LA: no employer-employee relationship, dismissed for lack of jurisdiction
NLRC: affirmed
CA: affirmed
ISSUE: WON there is an employer-employee relationship.
HELD: NO. We affirm the assailed decision.
The present controversy is one of first impression. Although Philippine labor laws and
jurisprudence define clearly the elements of an employer-employee relationship, this
is the first time that the Court will resolve the nature of the relationship between a
television and radio station and one of its "talents." There is no case law stating that
a radio and television program host is an employee of the broadcast station.
Employee or Independent Contractor?
SONZA maintains that all essential elements of an employer-employee relationship
are present in this case. Case law has consistently held that the elements of an
employer-employee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee on the means and methods by which the
work is accomplished.18 The last element, the so-called "control test", is the most
important element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and radio programs
because of SONZA’s peculiar skills, talent and celebrity status. SONZA contends that
the "discretion used by respondent in specifically selecting and hiring complainant
over other broadcasters of possibly similar experience and qualification as
complainant belies respondent’s claim of independent contractorship."
In any event, the method of selecting and engaging SONZA does not conclusively
determine his status. We must consider all the circumstances of the relationship, with
the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to
MJMDC. SONZA asserts that this mode of fee payment shows that he was an
employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and
privileges "which he would not have enjoyed if he were truly the subject of a valid
job contract."
All the talent fees and benefits paid to SONZA were the result of negotiations that led
to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for
the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month
pay"20 which the law automatically incorporates into every employer-employee
contract.21 Whatever benefits SONZA enjoyed arose from contract and not because
of an employer-employee relationship.22
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on
grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws.23
D. Power of Control
Applying the control test to the present case, we find that SONZA is not an employee
but an independent contractor. The control test is the most important test our
courts apply in distinguishing an employee from an independent contractor. 29 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. 30
SONZA’s argument is misplaced. ABS-CBN engaged SONZA’s services specifically to
co-host the "Mel & Jay" programs. ABS-CBN did not assign any other work to SONZA.
To perform his work, SONZA only needed his skills and talent. How SONZA delivered
his lines, appeared on television, and sounded on radio were outside ABS-CBN’s
control. SONZA did not have to render eight hours of work per day. The Agreement
required SONZA to attend only rehearsals and tapings of the shows, as well as pre-
and post-production staff meetings.31 ABS-CBN could not dictate the contents of
SONZA’s script. However, the Agreement prohibited SONZA from criticizing in his
shows ABS-CBN or its interests.32 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.
We find that ABS-CBN was not involved in the actual performance that produced the
finished product of SONZA’s work.33 ABS-CBN did not instruct SONZA how to perform
his job. ABS-CBN merely reserved the right to modify the program format and airtime
schedule "for more effective programming."34 ABS-CBN’s sole concern was the
quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZA’s work.
SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s
power over the means and methods of the performance of his work. Although ABS-
CBN did have the option not to broadcast SONZA’s show, ABS-CBN was still obligated
to pay SONZA’s talent fees... Thus, even if ABS-CBN was completely dissatisfied with
the means and methods of SONZA’s performance of his work, or even with the quality
or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that
ABS-CBN could do is not to broadcast SONZA’s show but ABS-CBN must still pay his
talent fees in full.35
SONZA further contends that ABS-CBN exercised control over his work by supplying
all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and
airtime needed to broadcast the "Mel & Jay" programs. However, the equipment,
crew and airtime are not the "tools and instrumentalities" SONZA needed to perform
his job. What SONZA principally needed were his talent or skills and the costumes
necessary for his appearance.38 Even though ABS-CBN provided SONZA with the place
of work and the necessary equipment, SONZA was still an independent contractor
since ABS-CBN did not supervise and control his work. ABS-CBN’s sole concern was
for SONZA to display his talent during the airing of the programs. 39
A radio broadcast specialist who works under minimal supervision is an independent
contractor.40 SONZA’s work as television and radio program host required special
skills and talent, which SONZA admittedly possesses. The records do not show that
ABS-CBN exercised any supervision and control over how SONZA utilized his skills and
talent in his shows.
The Agreement stipulates that SONZA shall abide with the rules and standards of
performance "covering talents"41 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."42 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.
This argument is futile. Being an exclusive talent does not by itself mean that SONZA
is an employee of ABS-CBN. Even an independent contractor can validly provide his
services exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.
Talents as Independent Contractors
Individuals with special skills, expertise or talent enjoy the freedom to offer their
services as independent contractors. The right to life and livelihood guarantees this
freedom to contract as independent contractors. The right of labor to security of
tenure cannot operate to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an independent contractor. An
individual like an artist or talent has a right to render his services without any one
controlling the means and methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to compel artists and talents
to render their services only as employees. If radio and television program hosts can
render their services only as employees, the station owners and managers can dictate
to the radio and television hosts what they say in their shows. This is not conducive
to freedom of the press.
Nature of SONZA’s Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation
pay, service incentive leave, signing bonus, travel allowance, and amounts due under
the Employee Stock Option Plan. We agree with the findings of the Labor Arbiter and
the Court of Appeals that SONZA’s claims are all based on the May 1994 Agreement
and stock option plan, and not on the Labor Code. Clearly, the present case does not
call for an application of the Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement. In effect, SONZA’s cause of action is for
breach of contract which is intrinsically a civil dispute cognizable by the regular
courts.58
G.R. No. L-69870 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,
vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO,
respondents.
G.R. No. 112630 September 5, 1997
CORAZON JAMER and CRISTINA AMORTIZADO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ISETANN DEPARTMENT STORE
and/or JOHN GO, respondents.
FACTS: Complainant, Corazon Jamer was employed on February 10, 1976 as a Cashier
at "Joy Mart," a sister company of Isetann. After two (2) years, she was later on
promoted to the position of counter supervisor. She was transferred to Isetann,
Carriedo Branch, as a money changer. In 1982 she was transferred to the Cubao
Branch of Isetann, as a money changer, till her dismissal on August 31, 1990.
Complainant Cristina Amortizado, on the other hand, was employed also at "Joy
Mart" in May, 1977 as a sales clerk. In 1980 she was promoted to the position as
counter cashier. Thereafter, she was transferred to "Young Un Department Store" as
an assistant to the money changer. Later on, or in 1985, she was transferred to
Isetann, Cubao Branch where she worked as a Store Cashier till her dismissal on
August 31, 1990.
This complaint arose from the dismissal of the complainants by the respondents.
They were both dismissed on August 31, 1990 on the alleged ground of dishonesty in
their work as Store Cashiers.
On July 16, 1990, complainants discovered a shortage of P15,353.78. It was
complainant Corazon Jamer who first discovered the shortage. In fact at first, she
thought that it was merely a P1,000.00 shortage but when she reconciled the cash
receipts, from the cash register counters, with the tally sheets and the actual money
on hand, the shortage amounted to P15,353.78. She informed her co-store cashier,
complainant Cristina Amortizado, about the shortage. Cristina Amortizado also
reconciled and re-counted the sale previous to July 16, 1990 and she also confirmed
that there was a discrepancy or a shortage of P15,353.78. They did not, (sic)
immediately report the shortage to management hoping to find the cause of the
shortage but to no avail they failed to reconcile the same. Hence, they had no other
alternative but to report the same to the management on July 17, 1990.
Respondents placed both complainants and their co-store cashier Lutgarda Inducta
under preventive suspension for the alleged shortages. Thereafter, respondents
conducted an administrative investigation. Finding the explanation of the
complainants to be unsatisfactory, respondent dismissed the complainants from the
service on August 31, 1990. Aggrieved and not satisfied with the decision of
management terminating their services, complainants instituted this present action
on September 26, 1990 for illegal dismissal praying for reinstatement with payment
of backwages and other benefits.7
Aside from the foregoing persons, Alex Mejia had and was allowed by management
to have uncontrolled access to the said room including the vault. Ostensibly, the
purpose was to assist in the bringing in or taking out of coin bags, monies, etc.
There were therefore, at a minimum at least six (6) persons who could have had
access to the company funds. To ascribe liability to the store cashiers alone, in the
absence of a clear proof of any wrongdoing is not only unfair and discriminatory but
is likewise illegal.

Parenthetically, and within the parameters of their assigned tasks, herein
complainants could not be faulted in any way for the said shortage as there is no
showing that the loss occurred at the time they were in control of the funds
concerned.
On July 23, 1991, Labor Arbiter Nieves V. de Castro, to whom the instant controversy
was originally assigned, rendered a decision9 in favor of herein petitioners, finding
that petitioners had been illegally dismissed, the dispositive portion of which reads:
dismissal. This fact has been established by the respondents-appellants in the
findings of the Committee on Discipline on Exhibits "3", 3-A" to "3-D", as follows:
The NLRC, therefore, did not act with grave abuse of discretion in declaring that
petitioners were legally dismissed from employment. The failure of petitioners to
report to management the aforementioned irregularities constitute "fraud or willful
breach of the trust reposed in them by their employer or duly authorized
representative" — one of the just causes in terminating employment as provided for
by paragraph (c), Article 282 of the Labor Code, as amended.

Consequently, the present case was then re-raffled to Labor Arbiter Pablo C. Espiritu,
Jr. After a full-blown trial, the said Labor Arbiter found for the petitioners and
declared that there was no justification, whether in fact or in law, for their
dismissal. The decretal part of the decision 13 dated March 31, 1993, states:

Dissatisfied over the decision of the Labor Arbiter which struck private respondents
as grossly contrary to the evidence presented, the herein private respondents once
again appealed to the NLRC. And, as earlier stated, the NLRC rendered the challenged
decision 15 on November 12, 1993, vacating the decision of the Labor Arbiter and
entering a new one dismissing the petitioners' complaint.

ISSUE: WON petitioners were illegally dismissed.

HELD: NO. On the merits, we find and so hold that substantial evidence exists to
warrant the finding that petitioners were validly dismissed for just cause and after
observance of due process.

Under the Labor Code, as amended, the requirements for the lawful dismissal of an
employee by his employer are two-fold: the substantive and the procedural. Not
only must the dismissal be for a valid or authorized cause as provided by law (Articles
282, 283 and 284, of the Labor Code, as amended), but the rudimentary requirements
of due process, basic of which are the opportunity to be heard and to defend himself,
must be observed before an employee may be dismissed. 23

In the instant case, we find no difficulty in agreeing with the findings of the public
respondent that the herein petitioners were guilty of acts of dishonesty by incurring
several occurrences of shortages in the amounts of P15,353.78, P1,000.00, P450.00
and P70.00 which they failed to turnover and account for/and in behalf of respondent
Isetann. Fittingly, the findings of the NLRC are worth stressing at this point, to wit:

With regard to the several occurrences of shortages of the amounts of P15,353.78,

P1,000.00 and P70.00, the Labor Arbiter has failed to consider the fact that
complainants-appellees were accorded the chance to explain their side as to the
shortages and that they have utterly failed to do so providing basis for their valid