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This is a labor standards case, and is governed by Art. December 18, 1987, petitioner and respondent
128-b of the Labor Code, as amendedvby E.O. No. 111. PIMASUFA entered into a new CBA (1987 CBA)
Under the present rules, a Regional Director exercises whereby the supervisors were granted an increase of
both visitorial and enforcement power over labor P625.00 per month and the foremen, P475.00 per month.
The increases were made retroactive to May 12, 1987, or CBA increased the monthly salaries of the supervisors
prior to the passage of R.A. No. 6640, and every year by P625.00 and the foremen, by P475.00, effective May
thereafter until July 26, 1989. 12, 1987. These increases re-
established and broadened the gap, not only between
January 26, 1989, respondents PIMASUFA and
the supervisors and the foremen, but also between them
NLU filed a complaint with NLRC charging petitioner
and the rank-and-file employees. Significantly, the 1987
with violation of R.A. No. 6640. Respondents attached to
CBA wage increases almost doubled that of the P10.00
their complaint a numerical illustration of wage distortion
increase under R.A. No. 6640.
resulting from the implementation of R.A. No. 6640.
The P625.00/month means P24.03 increase per day for
LA favored respondents ordering Petitioner to give
the supervisors, while
members of respondent PIMASUFA wage increases
the P475.00/month means P18.26 increase per day for
equivalent to 13.5% of their basic pay they were
the foremen. Such gap as re-established by virtue of the
receiving prior to December 14, 1987. On appeal by
CBA is more than a substantial compliance with R.A. No.
petitioner, the NLRC affirmed LA’s judgment. Petitioner
6640. CA erred in not taking into account the provisions
filed a petition for certiorari with SCourt. However, SC
of the CBA. The provisions of the CBA should be read in
referred the petition to CA. CA affirmed the Decision of
harmony with the wage orders, whose benefits should be
the NLRC with modification by raising the 13.5% wage
given only to those employees covered thereby.
increase to 18.5%. M.R. was denied. Petitioner went to
SC but it favored respondents. Hence this MR. To require petitioner to pay all the members of respondent
PIMASUFA a wage increase of 18.5%, over and above
ISSUES: the negotiated wage increases provided under the 1987
1. Whether the implementation of R.A. No. 6640 CBA, is highly unfair and oppressive to the former. It was
resulted in a wage distortion not the intention of R.A. No. 6640 to grant an across-the-
board increase in pay to all the employees of petitioner.
2. Whether such distortion was cured or remedied Only those receiving wages P100.00 and below are
by the 1987 CBA. entitled to the P10.00 wage increase. The apparent
RULING: intention of the law is only to upgrade the salaries or
wages of the employees specified therein. Almost all of
1. Yes. R.A. No. 6727, otherwise known as the members of respondent PIMASUFA have been
the Wage Rationalization Act, explicitly receiving wage rates above P100.00 and, therefore, not
defines“wage distortion”as: “a situation where entitled to the P10.00 increase. Only 3 of them are
an increase in prescribed wage rates results in receiving wage rates below P100.00, thus, entitled to such
the elimination or severe contraction of increase.
intentional quantitative differences in wage or
salary rates between and among employee TO compel employers simply to add on legislative
groups in an establishment as to effectively increases in salaries or allowances without regard to what
obliterate the distinctions embodied in such wage is already being paid, would be to penalize employers
structure based on skills, length of service, or who grant their workers more than the statutory
other logical bases of differentiation.” prescribed minimum rates of increases. Clearly, this
would be counter-productive so far as securing the
Otherwise stated, wage distortion means interests of labor is concerned.
the disappearance or virtual disappearance of pay
differentials between lower and higher positions in an It must be stressed that a CBA constitutes the law between
enterprise because of compliance with a wage order. The the parties when freely and voluntarily entered into. Iit
increase in the wage rates by virtue of R.A. No. 6640 has not been shown that respondent PIMASUFA
resulted in wage distortion or the elimination of was coerced or forced by petitioner to sign the 1987
the intentional quantitative differences in the wage CBA. All of its 13 officers signed the CBA with the
rates of the supervisor employees of petitioner. assistance of respondent NLU. They signed it fully aware
of the passage of R.A. No. 6640. The duty to bargain
requires that the parties deal with each other with open
II. Yes. Wage distortions were cured or remedied when and fair minds. Respondents cannot invoke the beneficial
respondent PIMASUFA entered into the 1987 CBA with provisions of the 1987 CBA but disregard the concessions
petitioner after the effectivity of R.A. No. 6640. The 1987 it voluntary extended to petitioner. The goal of collective
bargaining is the making of agreements that will stabilize 4. They apply equally to al members of the same class
business conditions and fix fair standards of working
In the case at bar, the classifications made, rest on
conditions. Respondents’ posture contravenes this goal.
substantial distinctions.
WHEREFORE, we GRANT petitioner’s MR.
Dept. Order No. 1 does not impair the right to travel. The
consequence of the deployment ban has on the right to
travel does not impair the right, as the right to travel is
3. PHILIPPINE ASSOCIATION OF SERVICE subjects among other things, to the requirements of
EXPORTERS VS. DRILON “public safety” as may be provided by law. Deployment
Facts: ban of female domestic helper is a valid exercise of police
power. Police power as been defined as the state authority
Petitioner, Phil association of Service Exporters, Inc., is to enact legislation that may interfere with personal
engaged principally in the recruitment of Filipino liberty or property in order to promote general welfare.
workers, male and female of overseas employment. It Neither is there merit in the contention that Department
challenges the constitutional validity of Dept. Order No. Order No. 1 constitutes an invalid exercise of legislative
1 (1998) of DOLE entitled “Guidelines Governing the power as the labor code vest the DOLE with rule making
Temporary Suspension of Deployment of Filipino powers.
Domestic and Household Workers.” It claims that such
order is a discrimination against males and females. The
Order does not apply to all Filipino workers but only to
4. SOSITO VS. AGUINALDO
domestic helpers and females with similar skills, and that
DEVELOPMENT CORPORATION
it is in violation of the right to travel, it also being an
invalid exercise of the lawmaking power. Further, PASEI FACTS:
invokes Sec 3 of Art 13 of the Constitution, providing for
Petitioner Manuel Sosito was employed in 1964 by
worker participation in policy and decision-making
private respondent, being in charge of logging
processes affecting their rights and benefits as may be
importation. On Jan. 16,
provided by law. Thereafter the Solicitor General on
1976, petitioner went on indefinite leave with consent of
behalf of DOLE submitting to the validity of the
the employer. On July 20, 1976, private respondent
challenged guidelines involving the police power of the
through its president announced a retrenchment program
State and informed the court that the respondent have
and offered separation pay to employees in the active
lifted the deployment ban in some states where there
service as of June 30, 1976 who would tender their
exists bilateral agreement with the Philippines and
resignations not later than July 31, 1976 due to financial
existing mechanism providing for sufficient safeguards to
losses suffered by the company in the past two years.
ensure the welfare and protection of the Filipino workers.
Petitioner decided to accept this offer and filed a
Issue: Whether or not there has been a valid classification resignation letter on July 29, 1976 but the same was not
in the challenged Department Order No. 1. acted upon and he did not receive the separation pay.
Petitioner complained to the Department of Labor who
Held: SC in dismissing the petition ruled that there has
ordered the company to pay petitioner his salary for 6 and
been valid classification, the Filipino female domestics
a half months. On appeal with the NLRC, decision was
working abroad were in a class by themselves, because of
reversed and held petitioner was not covered by the
the special risk to which their class was exposed. There is
retrenchment program.
no question that Order No.1 applies only to female
contract workers but it does not thereby make an undue ISSUE: Is petitioner covered by the retrenchment
discrimination between sexes. It is well settled hat program?
equality before the law under the constitution does not
RULING:
import a perfect identity of rights among all men and
women. It admits of classification, provided that: No, it is clear from the Memorandum private respondent
released on July 20, 1976 that only those who are in active
1. Such classification rests on substantial distinctions
service as of June30, 1976 are eligible for the
2. That they are germane to the purpose of the law retrenchment program, and petitioner, being on indefinite
leave since Jan. 16, 1976, is thereby not qualified to avail
3. They are not confined to existing conditions
of the same. It is noteworthy that although Art. 272 (a) of
the Labor Code, then inforce, did not grant separation pay Held:
if a company reduces its labor force due to financial
The Petition has no merit.
reverses, herein respondent did in fact offer a separation
pay. However, being that petitioner was on indefinite Constructive dismissal is defined as an involuntary
leave, and could therefore choose to come back or not, at resignation resorted to when continued employment is
his discretion, is lopsided in favor of petitioner in that he rendered impossible, unreasonable or unlikely; when
could choose the best of both worlds, seek another there is a demotion in rank or a diminution of pay; or
employment and yet avail of the benefits given by herein when a clear discrimination, insensibility or disdain by an
respondent. To grant petitioner’s request would not be in employer becomes unbearable to the employee.
the interest of fair play and would in fact violate the rights Jurisprudence recognizes the exercise of management
of the employer. prerogatives. For this reason, courts often decline to
interfere in legitimate business decisions of employers.
Indeed, labor laws discourage interference in employers'
5. MENDOZA VS. RURAL BANK OF judgments concerning the conduct of their business. The
LUCBAN law must protect not only the welfare of employees, but
also the right of employers.
Facts:
In the pursuit of its legitimate business interest,
On April 25, 1999, the Board of Directors of the Rural
management has the prerogative to transfer or assign
Bank of Lucban, Inc., issued Board Resolution Nos. 99-
employees from one office or area of operation to another
52 and 99-53, “that in line with the policy of the bank to
-- provided there is no demotion in rank or diminution of
familiarize bank employees with the various phases of
salary, benefits, and other privileges; and the action is not
bank operations and further strengthen the existing
motivated by discrimination, made in bad faith, or
internal control system[,] all officers and employees are
effected as a form of punishment or demotion without
subject to reshuffle of assignments. Moreover, this
sufficient cause. This privilege is inherent in the right of
resolution does not preclude the transfer of assignment of
employers to control and manage their enterprise
bank officers and employees from the branch office to the
effectively. The right of employees to security of tenure
head office and vice-versa."
does not give them vested rights to their positions to the
Petitioner filed a Complaint before Arbitration Branch extent of depriving management of its prerogative to
No. IV of the National Labor Relations Commission change their assignments or to transfer them.
(NLRC). The Complaint -- for illegal dismissal,
underpayment, separation pay and damages. Petitioner
argues that he was compelled to file an action for The law protects both the welfare of employees and the
constructive dismissal, because he had been demoted prerogatives of management. Courts will not interfere
from appraiser to clerk and not given any work to do, with business judgments of employers, provided they do
while his table had been placed near the toilet and not violate the law, collective bargaining agreements, and
eventually removed. general principles of fair play and justice. The transfer of
personnel from one area of operation to another is
He adds that the reshuffling of employees was done in bad
inherently a managerial prerogative that shall be upheld if
faith, because it was designed primarily to force him to
exercised in good faith -- for the purpose of advancing
resign.
business interests, not of defeating or circumventing the
After the NLRC denied his Motion for Reconsideration, rights of employees.
petitioner brought before the CA a Petition for Certiorari
"The reshuffling of its employees was done in good faith
assailing the foregoing Resolution. The Court of appeals
and cannot be made the basis of a finding of constructive
Find that no grave abuse of discretion could be attributed
dismissal.
to the NLRC.
WHEREFORE, this Petition is DENIED, and the June 14,
Hence, this Petition.
2002 Decision and the September 25, 2002 Resolution of
Issue: the Court of Appeals are AFFIRMED. Costs against
petitioner.
Whether the petitioner was constructively dismissed from
his employment?
6. CHINA BANKING CORPORATION VS. The bank filed a motion for reconsidered but denied the
BORROMEO same. Hence, this petition.
Facts: Issue:
Respondent Mariano Borromeo was Assistant Vice- Whether or not the bank has the prerogative/right to
President of the Branch Banking Group of China Banking impose on the respondent what it considered the
Corporation for the Mindanao Area. appropriate penalty under the circumstances pursuant to
its company rules and regulations.
Without authority from the Executive Committee or
Board of Directors of the bank, he approved several Held:
DAUD/BP (Drawn Against Uncollected Deposits/Bills
The petition is meritorious.
Purhcased) accommodations amounting to P2,441,375 in
favour of Joel Maniwan. Such checks, which are not The bank was left with no other course but to impose the
sufficiently funded by cash, are generally not honoured by ancillary penalty of restitution. It was certainly within the
banks. This came to the knowledge of the bank bank’s prerogative to impose on the respondent what it
authorities. A memorandum was issued to the Mariano considered the appropriate penalty under the
seeking clarification relative to the matter. The circumstances pursuant to its company rules and
respondent accepted full responsibility for committing an regulations.
error in judgment and abuse of discretion.
Mariano resigned from the Bank and apologized “for all
the trouble I have caused because of the Maniwan case.” The petitioner’s bank business is essentially imbued with
The respondent, however, vehemently denied benefitting public interest and owes great fidelity to the public it deals
therefrom. with. It is expected to exercise the highest degree of
diligence in the selection and supervision of their
employees. As a corollary, and like all other business
enterprises, its prerogative to discipline its employees and
His acts having constituted violation of the Bank’s Code
to impose appropriate penalties on erring workers
of Ethics, the respondent was directed to restitute the
pursuant to company rules and regulations must be
amount of P1,507,736.79 representing 90% of the total
respected. The law, in protecting the rights of labor,
loss of P1,675,263.10 incurred by the Bank. However, in
authorized neither oppression nor self-destruction of an
view of his resignation and considering the years of
employer company which itself is possessed of rights that
service in the Bank, the management earmarked only
must be entitled to recognition and respect.
P836,637.08 from the respondent’s total separation
benefits or pay. The said amount would be released upon Significantly, the respondent is not wholly deprived of his
recovery of the sums demanded from Maniwan in a civil separation benefits. As the Labor Arbiter stressed in his
case filed against him by the bank with the RTC in decision, “the separation benefits due the complainant
Cagayan de Oro City. were merely withheld. Even the petitioner bank itself
gives “the assurance that as soon as the bank has satisfied
The respondent made a demand on the bank for the
a judgment in the civil case, the earmarked portion of his
payment of his separation pay and other benefits, but the
benefits will be released without delay.
bank maintained its position to withhold the sum of
P836,637.08. Thus, Mariano filed with the NLRC a WHEREFORE, the petition is granted. The decision of
complaint for payment of separation pay, mid-year bonus, the CA is reversed and set aside. The Resolution of the
profit share and damages against the bank. NLRC is reinstated.
The Labor Arbiter ruled in favour of the bank.
Respondent appealed to the NLRC but it affirmed in toto
the findings of the Labor Arbiter. The CA, however, 7. SSS EMPLOYEES ASSOCIATION VS. CA
alleging that respondent was denied his right to due Facts:
process, set aside the NLRC decision and ordered that the
records of the case be remanded to the Labor Arbiter for On June 11, 1987, the SSS filed with the Regional Trial
further hearings on the factual issues involved. Court of Quezon City a complaint for damages with a
prayer for a writ of preliminary injunction against
petitioners, alleging that on June 9, 1987, the officers and
members of SSSEA staged an illegal strike and baricaded including government-owned or controlled corporations
the entrances to the SSS Building, preventing non-striking with original charters" [Art. IX(B), Sec. .2(l) see also Sec.
employees from reporting for work and SSS members 1 of E.O. No. 180 where the employees in the civil service
from transacting business with the SSS; that the strike was are denominated as "government employees"] and that the
reported to the Public Sector Labor - Management SSS is one such government-controlled corporation with
Council, which ordered the strikers to return to work; that an original charter, having been created under R.A. No.
the strikers refused to return to work; and that the SSS 1161, its employees are part of the civil service
suffered damages as a result of the strike. The complaint [NASECO v. NLRC, G.R. Nos. 69870 & 70295,
prayed that a writ of preliminary injunction be issued to November 24,1988] and are covered by the Civil Service
enjoin the strike and that the strikers be ordered to return Commission's memorandum prohibiting strikes. This
to work; that the defendants (petitioners herein) be being the case, the strike staged by the employees of the
ordered to pay damages; and that the strike be declared SSS was illegal.
illegal.
It appears that the SSSEA went on strike after the SSS
failed to act on the union's demands, which included:
implementation of the provisions of the old SSS-SSSEA
collective bargaining agreement (CBA) on check-off of
union dues; payment of accrued overtime pay, night
differential pay and holiday pay; conversion of temporary
or contractual employees with six (6) months or more of
service into regular and permanent employees and their
entitlement to the same salaries, allowances and benefits
given to other regular employees of the SSS; and payment
of the children's allowance of P30.00, and after the SSS
deducted certain amounts from the salaries of the
employees and allegedly committed acts of
discrimination and unfair labor practices.
Issue:
Whether or not employees of the Social Security System
(SSS) have the right to strike.
Held
The 1987 Constitution, in the Article on Social Justice and
Human Rights, provides that the State "shall guarantee the
rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with
law" [Art. XIII, Sec. 31].
Resort to the intent of the framers of the organic law
becomes helpful in understanding the meaning of these
provisions. A reading of the proceedings of the
Constitutional Commission that drafted the 1987
Constitution would show that in recognizing the right of
government employees to organize, the commissioners
intended to limit the right to the formation of unions or
associations only, without including the right to strike.
Considering that under the 1987 Constitution "the civil
service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government,
BASIC PRINCIPLES · Control Test- the employer’s power to control the
employee with respect to the means and methods by
8. BROTHERHOOD LABOR UNITY which work is to be accomplished
MOVEMENT VS. ZAMORA
In the case, the records fail to show that San Miguel
Facts: entered into mere oral agreements of employment with
The petitioners are workers who have been employed at the workers. Considering the length of time that the
the San Miguel Parola Glass Factory as “pahinantes” or petitioners have worked with the company, there is
“kargadors” for almost seven years. They worked justification to conclude that they were engaged to
exclusively at the SMC plant, never having been assigned perform activities necessary in the usual business or trade.
to other companies or departments of San Miguel Corp, Despite past shutdowns of the glass plant, the workers
even when the volume of work was at its minimum. Their promptly returned to their jobs. The term of the
work was neither regular nor continuous, depending on petitioner’s employment appears indefinite and the
the volume of bottles to be loaded and unloaded, as well continuity and habituality of the petitioner’s work bolsters
as the business activity of the company. However, work the claim of an employee status.
exceeded the eight-hour day and sometimes, necessitated
As for the payment of the workers’ wages, the contention
work on Sundays and holidays. -for this, they were neither
that the independent contractors were paid a lump sum
paid overtime nor compensation.
representing only the salaries the workers where entitled
Sometime in 1969, the workers organized and affiliated to have no merit. The amount paid by San Miguel to the
themselves with Brotherhood Labor Unity Movement contracting firm is no business expense or capital outlay
(BLUM). They wanted to be paid to overtime and holiday of the latter. What the contractor receives is a percentage
pay. They pressed the SMC management to hear their from the total earnings of all the workers plus an
grievances. BLUM filed a notice of strike with the Bureau additional amount from the earnings of each individual
of Labor Relations in connection with the dismissal of worker.
some of its members. San Miguel refused to bargain with
The power of dismissal by the employer was evident
the union alleging that the workers are not their
when the petitioners had already been refused entry to the
employees but the employees of an independent labor
premises. It is apparent that the closure of the warehouse
contracting firm, Guaranteed Labor Contractor.
was a ploy to get rid of the petitioners, who were then
The workers were then dismissed from their jobs and agitating the company for reforms and benefits.
denied entrance to the glass factory despite their regularly
The inter-office memoranda submitted in evidence prove
reporting for work. A complaint was filed for illegal
the company’s control over the workers. That San Miguel
dismissal and unfair labor practices.
has the power to recommend penalties or dismissal is the
strongest indication of the company’s right of control over
the workers as direct employer
*SC ordered San Miguel to reinstate the petitioners with
Issue: 3 years backwages.
Whether or not there was employer-employee (ER-
EE)relationship between the workers and San Miguel
Corp. 9. TABAS VS. CMC
Held: Facts:
YES. In determining if there is an existence of the (ER- Petitioners filed a petition in the NLRC for reinstatement
EE) relationship, the four-fold test was used by the and payment of various benefits against California
Supreme Court. These are: Manufacturing Company. The respondent company then
denied the existence of an employer-employee
· The selection and engagement of the employee relationship between the company and the petitioners.
· Payment of wages Pursuant to a manpower supply agreement, it appears that
· Power of dismissal the petitioners prior their involvement with California
Manufacturing Company were employees of Livi
Manpower service, an independent contractor, which respondent Pedro Gerado and ordering him reinstated.
assigned them to work as “promotional merchandisers.” NLRC reversed the decision of Labor Arbiter finding
The agreement provides that: Gerado to be an employee of another firm (Skillpower).
California “has no control or supervisions whatsoever May 1977, Fuji entered into an agreement under
over [Livi’s] workers with respect to how they Skillpower to operate copier machines of Fuji in its sales
accomplish their work or perform [Californias] offices where Gerado was assigned as key operator.
obligation” It was further expressly stipulated that the
February 1983, Gerado went on leave and his place was
assignment of workers to California shall be on a
taken by a substitute. He returned March and discovered
“seasonal and contractual basis”; that “[c]ost of living
that there was a apoilage of over 600 copies. He tried to
allowance and the 10 legal holidays will be charged
talk to the service techinician of Fuji to stop the meter of
directly to [California] at cost “; and that “[p]ayroll for the
the machine but was refused. Fuji then knew about the
preceding [sic] week [shall] be delivered by [Livi] at
incident and reported to Skillpower. Skillpower wrote a
[California’s] premises.”
letter to Gerado asking for explaination and suspended
Issue: WON principal employer is liable. him from work. Gerado then filed for illegal dismissal.
Held:
Yes. The existence of an employer-employee relation Labor Arbiter found that Gerado applied for work to
cannot be made the subject of an agreement. Skillpower and was made to sign a contract. Although he
receives his salaries from Fuji, Skillpower exercises
Based on Article 106, “labor-only” contractor is
control and supervision over his wrk. Labor arbiter then
considered merely as an agent of the employer, and the
held the decision that Gerado was an employee of
liability must be shouldered by either one or shared by
Skillpower
both.
NLRC found Gerado to be an employee of Fuji and was
illegally dismissed. NLRC found that Skillpower acted on
There is no doubt that in the case at bar, Livi performs behalf of Fuji in supervising his work, and that FUji paid
“manpower services”, meaning to say, it contracts out his salaries and Skillpower was just a paymaster-agent.
labor in favor of clients. We hold that it is one
Here, Fuji petitions that Skillpower is an independent
notwithstanding its vehement claims to the contrary, and
contractor and Gerado is its employee: (1) Gerado was
notwithstanding the provision of the contract that it is “an
recruited by Skillpower, (2) work done by Gerado was not
independent contractor.” The nature of one’s business is
necessary to the conduct of business of Fuji, (3) Gerado's
not determined by self-serving appellations one attaches
salaries and benefits were paid directly by Skillpower, (4)
thereto but by the tests provided by statute and prevailing
Gerado worked under the control of Skillpower and (5)
case law. The bare fact that Livi maintains a separate line
Skillpower is a highly-capitalized business venture.
of business does not extinguish the equal fact that it has
provided California with workers to pursue the latter’s Issue: (1) Whether Gerado is an employee of Fuji or of
own business. In this connection, we do not agree that the Skillpower.
petitioners had been made to perform activities ‘which are
Ruling: Contentions are without merit. Gerado is en
not directly related to the general business of
employee of Fuji.
manufacturing,” California’s purported “principal
operation activity.” Livi, as a placement agency, had (1) Gerado was recruited by Skillpower to be assigned at
simply supplied California with the manpower necessary Fuji. With a contract between Gerado and Fuji as basis.
to carry out its (California’s) merchandising activities,
using its (California’s) premises and equipment. (2) The job of Gerado may not generate income directly
to Fuji but it is necessary in their products and promotion
of the company's public image.
10. PHILIPPINE FUJI XEROX VS. NLRC (3) The letters of the legal and industrial relations officer
of Fuji and the union president played the dismissal of the
Facts:
employee, the order of dismissal was issued as a mere
This is a petition for certiorari to set aside the decision of obedience to the decision of petitioner.
NLRC finding Fuji guilty of illegally dismissing privated
(4) The service being rendered by privated respondent Ruling:
was not a specific or special skill that Skillpower was in
The private respondent Fermin Llamar, is not an
the business of providing. Skillpower is classified under
employee of petitioner Manila Golf and Country Club and
Article 106 of the Labor Code; where there is "labor only"
that petitioner is under no obligation to report him for
where the person supplying workers to an employer does
compulsory coverage to the Social Security System. No
not have suubstantial capital or investment in the forms of
pronouncement as to costs. The caddies were paid by the
tools, equipment, etc. and workers recruited and placed
players, not by the Club, and that they observed no
are performing activities directly related to the principal
definite working hours and earned no fixed income.
employer. Skillpower merely supplied workers to Fuji.
The Court does not agree that the facts necessarily or
(5) There is an agreement between Fuji and Skillpower
logically point to such an employer-employee
that Skillpower has no control over the workers they
relationship, and to the exclusion of any form of
supplied with Fuji.
arrangements, other than of employment that would make
the Llamar’s services available to the members and guest
of the Manila Golf Club. In the very nature of things,
11. MANILA GOLF AND COUNTRY CLUB VS. caddies must submit to some supervision of their conduct
IAC while enjoying the privilege of pursuing their occupation
Facts: within the premises and grounds of whatever club they do
their work in. For all that is made to appear, they work for
Three separate proceedings, all initiated by Llamar and the club to which they attach themselves on sufference
his fellow caddies gave rise to the present petition for but, on the other hand, also without having to observe any
review which was originally filed with the Social Security working hours, free to leave anytime they please, to stay
Commission (SSC) via petition of 17 persons who styled away for as long they like.
themselves "Caddies of Manila Golf and Country Club-
PTCCEA" for coverage and availment of benefits under It is not pretended that if found remiss in the observance
the Social Security Act as amended, "PTCCEA" being the of said rules, any discipline may be meted them beyond
acronym of a labor organization, the "Philippine barring them from the premises which, it may be
Technical, Clerical, Commercial Employees supposed, the Club may do in any case even absent any
Association," with which the petitioners claimed to be breach of the rules, and without violating any right to
affiliated. The petition alleged in essence that although the work on their part. All these considerations clash frontally
petitioners were employees of the Manila Golf and with the concept of employment. The IAC would point to
Country Club, a domestic corporation, the latter had not the fact that the Club suggests the rate of fees payable by
registered them as such with the SSS. At about the same the players to the caddies as still another indication of the
time, two other proceedings bearing on the same question latter's status as employees. It seems to the Court,
were filed or were pending. however, that the intendment of such fact is to the
contrary, showing that the Club has not the measure of
The respondent Club filed answer praying for the control over the incidents of the caddies' work and
dismissal of the petition, alleging in substance that the compensation that an employer would possess. The Court
petitioners, caddies by occupation, were allowed into the agrees with petitioner that the group rotation system so-
Club premises to render services as such to the individual called, is less a measure of employer control than an
members and guests playing the Club's golf course and assurance that the work is fairly distributed, a caddy who
who themselves paid for such services; that as such is absent when his turn number is called simply losing his
caddies, the petitioners were not subject to the direction turn to serve and being assigned instead the last number
and control of the Club as regards the manner in which for the day.
they performed their work; and hence, they were not the
Club's employees.
Issue: 12. SEVILLA VS. CA
• Moral and exemplary damages and attorney's He was burdened with the job of collection and to make
fees. regular weekly report thereto for which an anemic
performance would mean dismissal.
Grepalife admits that Judico entered into an agreement of
agency with them to become a debit agent attached in He earned out of his faithful and productive service, a
Cebu City. promotion to Zone Supervisor with additional
supervisor's allowance, (a definite or fixed amount of
Grepalife defines a debit agent as "an insurance agent P110.00) that he was dismissed primarily because of
selling/servicing industrial life plans and policy holders. anemic performance and not because of the termination
of the contract of agency substantiate the fact that he was
As a debit agent, Judico had definite work assignments
indeed an employee of the petitioner and not an insurance
including but not limited to collection of premiums from
agent in the ordinary meaning of the term.
policyholders and selling insurance to prospective clients.
Both parties appealed to the NLRC and decision was
Public respondent NLRC also found out that complainant
rendered by the Labor Arbiter dismissing the complaint
was initially paid P 200. 00 as allowance for thirteen (13)
on the ground that:
weeks regardless of production and later a certain
percentage denominated as sales reserve of his total • The employer-employee relations did not exist
collections but not lesser than P 200.00. between the parties.
Judicowas promoted to the position of Zone Supervisor • But ordered Grepalife to pay complainant the
and was given additional (supervisor's) allowance fixed at sum of Pl,000.00 by reason of Christian Charity.
P110.00 per week.
On appeal, decision was reversed by the NLRC ruling
During the third week of November 1981, he was reverted that:
to his former position as debit agent but, for unknown
reasons, not paid so-called weekly sales reserve of at least • Complainant is a regular employee as defined
P 200.00. under Art. 281 of the Labor Code.
Finally on June 28, 1982, complainant was dismissed by • Declaring the appeal of Grepalife questioning the
way of termination of his agency contract. legality of the payment of Pl,000.00 to complainant moot
and academic.
Petitioner assails and argues that the respondent is not an
employee and that his compensation was not based on any Petitioner company moved to reconsider, which was
fixed number of hours he was required to devote to the denied, hence this petition.
service of company but rather it was the production or
ISSUE: Ratio:
• Whether or not employer-employee relationship Undoubtedly, private respondent, by nature of his
existed between petitioner and private respondent. position and work, had been a regular employee of
petitioner and is therefore entitled to the protection of the
HELD: law and could not just be terminated without valid and
That Judico was an agent of the petitioner is justifiable cause.
unquestionable.
Premises considered, the appealed decision is hereby
As held in (Investment Planning Corp. vs. SSS, 21 SCRA AFFIRMED
294), an insurance company may have two classes of
agents who sell its insurance policies:
18. VILLAMARIA VS. CA
Salaried employees who keep definite hours and work
under the control and supervision of the company. FACTS:
Registered representatives who work on commission - Oscar Villamaria, Jr. was the owner of Villamaria
basis. Motors, a sole proprietorship engaged in assembling
passenger jeepneys with a public utility franchise to
The test therefore is whether the "employer" controls or
operate along the Baclaran-Sucat route. By 1995,
has reserved the right to control the "employee" not only
Villamaria stopped assembling jeepneys and retained
as to the result of the work to be done but also as to the
only nine, four of which operated by employing drivers
means and methods by which the same is to be
on a “boundary basis.” One of those drivers was
accomplished.
respondent Bustamante.
Applying the test to the case at bar, We can readily see
- Bustamante remitted 450 a day to Villamaria as
that the element of control by the petitioner on Judico was
boundary and kept the residue of his daily earnings as
very much present.
compensation for driving the vehicle. In August 1997,
The record shows that: Villamaria verbally agreed to sell the jeepney to
Bustamante under a “boundary-hulog scheme”, where
Petitioner Judico received a definite minimum amount per Bustamante would remit to Villamaria P550 a day for a
week as his wage known as "sales reserve". period of 4 years; Bustamane would then become the
He was assigned a definite place in the office to work on owner of the vehicle and continue to drive the same under
when he is not in the field. Villamaria’s franchise, but with Php 10,000
downpayment.
In addition to his canvassing work he was burdened with
the job of collection. - August 7, 1997, Villamaria executed a contract entitled
“Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Both cases he was required to make regular report to the Boundary Hulog”. The parties agreed that if Bustamante
company regarding these duties, and for which an anemic failed to pay the boundary- hulog for 3 days, Villamaria
performance would mean a dismissal. Motors would hold on to the vehicle until Bustamante
paid his arrears, including a penalty of 50 a day; in case
Conversely faithful and productive service earned him a
Bustamante failed to remit the daily boundary-hulog for a
promotion and additional supervisor's allowance, a
period of one week, the Kasunduan would cease to have
definite amount of P110.00 aside from the regular P
the legal effect and Bustamante would have to return the
200.00 weekly "allowance".
vehicle to Villamaria motors.
His contract of services with petitioner is not for a piece
- In 1999, Bustamante and other drivers who also had the
of work nor for a definite period.
same arrangement failed to pay their respective boundary-
In the instant case the facts show that: hulog. The prompted Villamaria to serve a “Paalala”. On
July 24, 2000. Villamaria took back the jeepney driven by
• He was controlled by petitioner insurance Bustamante and barred the latter from driving the vehicle.
company not only as to the kind of work.
- Bustamante filed a complaint for Illegal Dismissal.
• The amount of results, the kind of performance
but also the power of dismissal.
DECISION OF LOWER COURTS: or absence of control over the means and method of the
work. The amount earned in excess of the “boundary
*Labor Arbiter: petition dismissed.
hulog” is equivalent to wages and the fact that the power
*NLRC: dismissed appeal. of dismissal was not mentioned in the Kasunduan did not
mean that private respondent never exercised such power,
*CA: reversed NLRC, awarded Bustamante separation or could not exercise such power.
pay and backwages.
(2) YES. The Labor Arbiter and the NLRC has
Hence, this petition for review on certiorari. jurisdiction under Article 217 of the Labor Code is limited
ISSUES: to disputes arising from an employer-employee
relationship which can only be resolved by reference to
(1) WON the existence of a boundary-hulog agreement the Labor Code, other labor statues of their collective
negates the employer-employee relationship between the bargaining agreement.
vendor and vendee
OTHER NOTES:
(2) WON the Labor Arbiter has jurisdiction over a
complaint for illegal dismissal in such a case. (1) The rule is that the nature of an action and subject
matter thereof, as well as, which court or agency of the
HELD: government has jurisdiction and the character of the
reliefs prayed for, whether or not the
(1) NO. Under the boundary-hulog scheme, a dual
complainant/plaintiff is entitled to any or all of such
juridical relationship is created; that of employer-
reliefs.
employee and vendor-vendee. The Kasanduan did not
extinguish the employer employee relationship of the (2) Not every dispute between an employer and employee
parties existing before the execution of said deed. involves matters that only the Labor Arbiter and the
NLRC can resolve in the exercise of their adjudicatory or
a. Under this system the owner/operator exercises control
quasi-judicial powers. Actions between employers and
and supervision over the driver. It is unlike in lease of
employees where the employer-employee relationship is
chattels where the lessor loses complete control over the
merely incidental is within the exclusive original
chattel leased but the lessee is still ultimately responsible
jurisdiction of the regular courts.
for the consequences of its use. The management of the
business is still in the hands of the owner/operator, who,
being the holder of the certificate of public convenience,
must see to it that the driver follows the route prescribed 19. SY VS. CA
by the franchising and regulatory authority, and the rules Facts:
promulgated with regard to the business operations.
Throughout all the changes in (corporate) names and for
b. The driver performs activities which are usually 36 years, private respondent Sahot continuously served
necessary or desirable in the usual business or trade of the the trucking business of petitioners. When he turned 59
owner/operator. Under the Kasunduan, respondent was years old, he incurred absences as he was suffering from
required to remit Php 550 daily to petitioner, an amount various ailments and greatly affected the performance of
which represented the boundary of petitioner as well as his task as a driver.
respondent’s partial payment (hulog) of the purchase
price of the jeepney. Thus, the daily remittances also had Sahot had filed a week-long leave in May and then
a dual purpose: that of petitioner’s boundary applied for extension of his leave for the whole month of
June. Petitioners allegedly threatened to terminate his
and respondent’s partial payment (hulog) for the vehicle. employment should he refuse to go back to work.
c. The obligation is not novated by an instrument that Petitioners carried out their threat and dismissed him from
expressly recognizes the old one, changes only the terms work, effective June 30, 1994. He ended up sick, jobless
of payment and adds other obligations not incompatible and penniless.
with the old provisions or where the contract merely Sahot filed with the NLRC a complaint for illegal. He
supplements the previous one. prayed for the recovery of separation pay and attorney’s
d. The existence of an employment relation is not fees against the petitioners.
dependent on how the worker is paid but on the presence
Petitioners admitted having trucking business in the Ruling:
1950s but denied employing helpers and drivers; that
(1) YES. A computation of the age of Sahot shows that he
private respondent was not illegally dismissed as a driver
was only twenty-three (23) years when he started working
because he was in fact petitioner’s industrial partner; that
with respondent as truck helper. How can we entertain in
SBT Trucking Corporation was established only in 1994
our mind that a twenty-three (23) year old man, working
and only then did Sahot become an employee of the
as a truck helper, be considered an industrial partner.
company.
Hence we rule that Sahot was only an employee, not a
Petitioners further claimed that sometime prior to June, partner of respondents from the time Sahot started
Sahot went on leave and was not able to report for work working for respondent.
for almost seven days. Sahot asked permission to extend
Sahot denies that he was ever an industrial partner of
his leave of absence until end of June. It appeared that
petitioners. There was no written agreement, no proof that
from the expiration of his leave, private respondent never
he received a share in petitioners’ profits, nor was there
reported back to work nor did he file an extension of his
anything to show he had any participation with respect to
leave. Instead, he filed the complaint for illegal dismissal
the running of the business.
against the trucking company and its owners.
Records of the case show that Sahot actually engaged in
Petitioners add that due to Sahot’s refusal to work after
work as an employee. During the entire course of his
the expiration of his authorized leave of absence, he
employment he did not have the freedom to determine
should be deemed to have voluntarily resigned from his
where he would go, what he would do, and how he would
work. They contended that Sahot had all the time to
do it. He merely followed instructions of petitioners and
extend his leave or at least inform petitioners of his health
was content to do so, as long as he was paid his wages.
condition.
Indeed, said the CA, private respondent had worked as a
NLRC through Labor Arbiter Santos ruled that there was truck helper and driver of petitioners not for his own
no illegal dismissal; that Sahot had failed to report to pleasure but under the latter’s control.
work; that petitioners and Sahot were industrial partners
(2) NO. While it was very obvious that complainant did
before January 1994; and ordered petitioners to pay
not have any intention to report back to work due to his
"financial assistance" of P15,000 to Sahot for having
illness which incapacitated him to perform his job, such
served the company as a regular employee since January
intention cannot be construed to be abandonment. Instead,
1994 only.
the same should have been considered as one of those
On appeal, NLRC modified the judgment of the LA and falling under the just causes of terminating an
ruled that Sahot was an employee, not an industrial employment.
partner, since the start; that Sahot did not abandon his job
Article 277(b) of the Labor Code puts the burden of
but his employment was terminated on account of his
proving that the dismissal of an employee was for a valid
illness (Art. 284 of the Labor Code); and ordered
or authorized cause on the employer, without distinction
petitioners to pay private respondent separation pay in the
whether the employer admits or does not admit the
amount of P60,320.00, at the rate of P2,080.00 per year
dismissal. For an employee’s dismissal to be valid, (a) the
for 29 years of service.
dismissal must be for a valid cause and (b) the employee
Petitioners assailed the decision of the NLRC before the must be afforded due process.
Court of Appeals. The appellate court affirmed with
In order to validly terminate employment on the ground
modification the judgment of the NLRC. It held that
of disease, the Omnibus Implementing Rules of the Labor
private respondent was indeed an employee of petitioners
Code requires a certification by competent public health
since 1958. It also increased the amount of separation pay
authority that the disease is of such nature or at such a
awarded to private respondent to P74,880, computed at
stage that it cannot be cured within a period of six (6)
the rate of P2,080 per year for 36 years of service from
months even with proper medical treatment.
1958 to 1994.
Triple Eight Integrated Services, Inc. vs. NLRC, the
Issues: (1) Whether or not an employer-employee
requirement for a medical certificate under Article 284 of
relationship existed between petitioners and respondent
the Labor Code cannot be dispensed with; otherwise, it
Sahot; (2) Whether or not there was valid dismissal; and
would sanction the unilateral and arbitrary determination
(3) Whether or not respondent Sahot is entitled to
by the employer of the gravity or extent of the employee’s
separation pay.
illness and thus defeat the public policy in the protection • The Sandigan ng Manggagawang Pilipino filed a
of labor. complaint for underpayment of the basic wages,
underpayment of living allowance, nonpayment of
In the case at bar, the employer clearly did not comply
overtime work, nonpayment of holiday pay, and other
with the medical certificate requirement before Sahot’s
money claims.
dismissal was effected.
• The Labor Arbiter rendered judgment in favor of
From the records, it clearly appears that procedural due
complainants which the NLRC affirmed but limited back
process was not observed in the separation of Sahot by the
wages to one year.
management of the trucking company. The employer is
required to furnish an employee with two written notices • Petitioner urged that the NLRC erred in concluding that
before the latter is dismissed: (1) the notice to apprise the an employer-employee relationship existed between the
employee of the particular acts or omissions for which his petitioner and the workers.
dismissal is sought, which is the equivalent of a charge;
and (2) the notice informing the employee of his Issue:
dismissal, to be issued after the employee has been given 1. WON employees paid on piece-rate basis are entitled
reasonable opportunity to answer and to be heard on his to service incentive pay?
defense. These, the petitioners failed to do, even only for
record purposes. 2. WON there is an Employer-Employee Relationship?
(3) YES. The law is clear on the matter. An employee who Held:
is terminated because of disease is entitled to "separation 1. NO, fall under exceptions set forth in the implementing
pay equivalent to at least one month salary or to one-half rules (this will be reexamined under Article 101).
month salary for every year of service, whichever is
greater xxx." Following the formula set in Art. 284, his 2. Yes, evident in a Memorandum issued by the Assistant
separation pay was computed by the appellate court at Manager.
P2,080 times 36 years (1958 to 1994) or P74,880. We
Ratio:
agree with the computation, after noting that his last
monthly salary was P4,160.00 so that one-half thereof is
P2,080.00.
1. As to the service incentive leave pay: as piece-rate
workers being paid at a fixed amount for performing work
irrespective of time consumed in the performance thereof,
20. MAKATI HABERDACHERY VS. NLRC
they fall under the exceptions stated in Sec1(d), Rule V,
G.R. No. 83380-81 – 15 November 1989 IRR, Book III, Labor Code
Nature: Petition for certiorari to review the decision of the SECTION 1. Coverage. — This rule shall apply to all
NLRC which affirmed the decision of the Labor Arbiter employees except:
who jointly heard and decided two cases filed by the
(d) Field personnel and other employees whose
Union in behalf of the private respondents
performance is unsupervised by the employer including
MAIN FACTS: those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount
• Individual complainants are working for Makati for performing work irrespective of the time consumed in
Haberdashery Inc as tailors, seamstress, sewers, basters, the performance thereof;
and “plantsadoras” and are paid on a piece-rate basis
(except two petitioners who are paid on a monthly basis) 2. Employer-Employee Relationship
• In addition, they are given a daily allowance of P 3.00 There is such relationship because in the application of
provided they report before 9:30 a.m. everyday. the four-fold test, it was found that petitioners had control
over the respondents not only as to the result but also as
•Work schedule: 9:30-6 or 7 p.m., Mondays to Saturdays to the means and method by which the same is to be
and even on Sundays and holidays during peak periods. accomplished. Such control is proven by a memorandum
which enumerates procedures and instructions regarding
job orders, alterations, and their behavior inside the shop •Illegal dismissal complaint on the second case filed
issued by the Assistant Manager which reads in part: before the Labor Arbiter Diosana (THIS IS THE 3rd
ISSUE IN THE FULL CASE).
"Effective immediately, new procedures shall be
followed: •LA declared petitioners guilty of illegal dismissal and
ordered to reinstate Pelobello and Zapata and found
a. To follow instruction and orders from the
petitioners violating decrees of Cost-Of-Living
undersigned…
Allowance (COLA), service incentive and 13th month
b. Before accepting the job orders, tailors must pay. Commission analyst was directed to compute the
check the materials, job orders, due dates, and other things monetary awards which retroacts to three years prior to
to maximize efficiency… filing of case.