CASE DIGEST LABSTAN 1st EXAM
PEREZ VS POMAR
Ponente: TORRES, J.:
Facts:
This case is about the interpreting services rendered where there
was no agreement as to compensation.
Issue:
Whether or not the respondent is oblige to pay the continued service
rendered by the petitioner.
Held:
Yes, because from the testimonies at trial, it appears that Perez
indeed rendered services as interpreter of English. He obtained
passes and accompanied Pomar in his journeys in Laguna. But, it
doesn’t appear on record whether Perez was at the disposal of
Pomar for 6 months. No contract was filed or any other innominate
contract, but there was tacit and mutual consent as to the rendition
of services.
Pomar accepted the service, and Perez rendered it expecting that
the benefit would be reciprocal. An obligation arises from this
scenario. There was an innominate contract facio ut des. No salary
was fixed for the services, so the court must determine its value, to
be determined by the custom and frequent use of the place in which
such services were rendered. The court ruled to Perez. Pomar
should pay 200 Mexican pesos, less 50 pesos as to the costs of the
suit.
STERLING PRODUCTS INTERNATIONAL INC. V SOL
Ponente: Labrador
Facts:
This was the case about the radio manitoring work performed
outside the premises of Sterling Products office.
Issues/Held: 1) WON Sol is a regular employee – YES
2) WON Petitioners are guilty of ULP – NO
Ratio:
1) Sol was directed to listen to certain broadcasts, directing her, in
the instructions given her, when to listen and what to listen,
petitioners herein naming the stations to be listened to, the hours of
broadcasts, and the days when listening was to be done. Sol had to
follow these directions. The mere fact that while performing the
duties assigned to her she was not under the supervision of the
petitioners does not render her a contractor, because what she has
to do, the hours that she has to work and the report that she has to
submit all — these are according to instructions given by the
employer.
Finally, the very act of respondent Sol in demanding vacation leave,
Christmas bonus and additional wages shows that she considered
herself an employee. A contractor is not entitled to a vacation leave
or to a bonus nor to a minimum wage.
2) Following the ruling in Royal Interocean Lines, et al. vs. Court of
Industrial Relations - as respondent Sol was merely an employee
and was not connected with any labor union, the company cannot be
considered as having committed acts constituting unfair labor
practice as defined in the Industrial Peace Act, Rep. Act 875.
The respondent Sol has never been found to commit any of the acts
mentioned in paragraph (a) of Sec. 4. Respondent Sol was not
connected with any labor organization, nor has she ever attempted
to join a labor organization, or to assist, or contribute to a labor
organization. The company cannot, therefore, be considered as
having committed an unfair labor practice.
Not relevant issue: there is an employment contract between
petitioners and respondent Sol in which it was expressly agreed that
Sol could be dismissed upon fifteen days' advance notice, if
petitioners herein desire. Respondent Sol was dismissed on January
1
13, 1959 and therefore the dismissal should be governed by the
provisions of Republic Act 1787
Sec. 1 of RA 1787 - . In cases of employment, without a definite
period, in a commercial, industrial, or agricultural establishment or
enterprise, the employer or the employee may terminate at any
time the employment with just cause; or without just cause in the
case of an employee by serving written notice on the employer at
least one month in advance, or in the case of an employer, by
serving such notice to the employee at least one month in advance
or one-half month for every year of service of the employee,
whichever is longer, a fraction of at least six months being
considered as one whole year.
XXX
Following are just causes for terminating an employment without a
definite period: a. The closing or cessation of operation of the
establishment or enterprise, unless the closing is for the purpose of
defeating the intention of this law.
The contract between the petitioners and the respondent Sol
providing that the respondent Sol can be dismissed upon fifteen
days' notice is therefore null and void. Pets are ordered to pay Sol
separation pay.
DY KEH BENG vs. INTERNATIONAL LABOR and MARINE
UNION OF THE PHILIPPINES, ET AL.
Ponente: DE CASTRO, J.:
FACTS:
A charge of unfair labor practice was filed against Dy Keh Beng,
proprietor of a basket factory, for discriminatory acts within the
meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act
No. 875, by dismissing Carlos N. Solano and Ricardo Tudla for
their union activities. After preliminary investigation was conducted,
a case was filed in the Court of Industrial Relations for in behalf of
the International Labor and Marine Union of the Philippines and two
of its members, Solano and Tudla.
What you focus on here is the payment of a piece rate basis.
ISSUE:
Whether there existed an employee employer relation between
petitioner Dy Keh Beng and the respondents Solano and Tudla .
RULING:
As to the contention that Solano was not an employee because he
worked on piece basis, this Court agrees with the Hearing
Examiner that circumstances must be construed to determine
indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. Units of time …
and units of work are in establishments like respondent (sic) just
yardsticks whereby to determine rate of compensation, to be
applied whenever agreed upon.
We cannot construe payment by the piece where work is done in
such an establishment so as to put the worker completely at liberty
to turn him out and take in another at pleasure.
At this juncture, it is worthy to note that Justice Perfecto, concurring
with Chief Justice Ricardo Paras who penned the decision in
"Sunrise Coconut Products Co. v. Court of Industrial Relations" (83
Phil..518, 523), opined that
judicial notice of the fact that the so-called "pakyaw" system
mentioned in this case as generally practiced in our country, is, in
fact, a labor contract -between employers and employees, between
capitalists and laborers.
Lecture: Mode of payment prescinds employer employee
relationship - it’s just neutral.
CASE DIGEST LABSTAN 1st EXAM
RJL MARTINEZ FISHING v. NLRC
RJL Martinez owns about 60 deep-sea fishing boats. An issue here
are the workers that unload the fishing boats. This was the time in
Novotas when the fish ports was not yet constructed. So the fishing
boats come in and they cannot really hit the shore because they will
already be ajar. So, these unskilled workers, they wade up to chest
height and they would unload the fish. The owner or the
representative sits ashore.
According to RJL Martinez, these people who load and unload the
fishing vessels, their engagement is on a per loading basis or per
unloading basis. Why? Because after they have unloaded all the
fishing boats of RJL Martinez, they would go to other fishing boats
that dock and load and unload them. That means that they are also
under the control of these people. How can we be exercising
control? In other words, their basic thesis is the power of control test,
if it is to be met, must be continuous, and unbroken. If there is an
intervention of another equivalent employer for whom you do work
then there is no more successful completion of the control test.
The Supreme Court did not accept the probative value of that
statement. The Supreme Court says, “RJL Martinez does not have
enough vessels that can occupy all these people who load and
unload the fishing vessel. Are you going to blame them if after
unloading the vessel, they still have time and they want it to be filled
and productive and be compensable for that time that they are free?
So if they go to other fishing vessels, it is so that they will have a full
days wage because you compensate them on a per loading and
unloading basis. The thing is they are loyal to you because when you
vessels come, they first serve your vessel before they can go to
other vessels. So they are your employees. And it is you who should
be blamed because you cannot provide full-time work.”
There is still control on their part and they are basically their
employees. That is why they are entitled to thirteenth moth,
overtime, etc. That is the ruling of the Supreme Court.
CARO V. RILLORAZA
We have Mr. Caro who is the administrator of his wife’s paraphernal
property for commercial lease along Recto Street in Manila. One
day, one of the ownings(?). Caro engaged the services of a master
carpenter. The master carpenter brought along 200 assistants so
they did the repair. In the course of the repair, one of the assistants
fell and injured himself.
So, is Caro liable for the injury? Because it occurred while the
assistant was at work and during work hours. We go into the issue of
Workmen’s Compensation which is the old law.
When the employer is required to obtain insurance to answer for
work-related sickness, injury, death. That used to be Workmen’s
Compensation but now it is Employee’s Compensation. It is the
government who is the insurer. You pay P20.00 for each employee.
You have no counterpart in the employee. And then if you meet the
work-related sickness, injury, death then it is the ECC; Employee’s
Compensation Commission that will pay. This is the new system.
But in the old system, it is the insurer of the employer.
ISSUE: Is the assistant an employee of Caro?
Caro’s Allegations: He is not an employee because I do not pay
carpenters everyday. My relationship with them is casual. He’s not
my employee because my engagement with them ends as soon as
the repair is done. He’s the employee of the master carpenter.
HELD: The Supreme Court said the assistant is an employee of
Caro. Because when you lease out commercial spaces you have the
obligation to make those spaces habitable and rentable. So you
need to have regular maintenance carpentry workforce.
So if mag pa rent kag bicycles It is usual and necessary to your
business to have bicycle repair if you rent out bicycles. If you rent
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houses for commercial purposes, you need carpenters who do
carpentry work because now and then there will be repairs.
So that is why the Supreme Court said there is employer-employee
relationship who is performing activities which are usual and
necessary to the trade or business.
UY CHAO V. AGUILAR AND RAMOS
Uy Chao is renting a commercial space. He is selling glass, sheet
of glass and all kinds of glass. It so happened that the
orbing/orning (?) of his entrance is was about to fall. So he
engaged the services of a master carpenter who had 2 assistants
to repair the orning. While they were repairing one of the assistants
fell. So same facts as the Caro case.
ISSUE: Who is liable for the work-related accident injury? Is Uy
Chao liable? He is if Aguilar is his employee.
HELD: Now if based on the Caro ruling, he is liable. But then the
Supreme Court said he is not liable. Because the relationship of Uy
Chao with Aguilar and Ramos is casual. Uy Chao’s business is
selling glass. A carpentry work is not usual and necessary to the
business of selling glass. The relationship is causal. It begins with
the repair work and ends at the time the repair work is completed.
It is because it is just an adjunct to the usual and necessary
business of Uy Chao which is selling glass.
CABE V. TUMANG
We have a couple. They have a plan for their dream house. They
engaged a master carpenter to execute the plan of their dream
house. The master carpenter gathered carpenters, masons,
plumbers, to do the necessary work for the dream house. But then
the couple suspects the master carpenter and finally decides to
terminate the services of the master carpenter. When they
announced that they no longer need the contractor and his
services are terminated, the contractor asked for reimbursement of
the payment of salaries of the carpenters. The spouses refused to
pay.
So he goes to the Regional Director of Labor. Files a complaint for
the wages of these employees that were seconded to the
construction site. He asks for reimbursement which did not reach a
thousand pesos.
The RD awarded the contractor with the reimbursement price. The
NLRC affirmed the decisions. When they reached the SC the SC
said neither the RD and NLRC had jurisdiction and there was no
explanation. Shortest case in the SCRA.
THE SC made it clear that it doesn’t give the reason why. The
Labor Code only deals with labor not with materials. The moment
you ask for reimbursement of materials it ceases to be a labor
issue. It becomes a civil contract issue. That is why the SC said it
is so clear that the labor region office of the NLRC has no
jurisdiction.
Snow White Ice Cream vs. Garcia
Facts: Snow White was engaged in the selling of ice cream
through push carts. (kinsay tag iya sa ice cream cart, sa ice, sa
asin, sa ice cream? si snow white!)
Garcia was a peddler. He was paid 2 centavos for every ice cream
he sold at 5 centavos each.
While preparing his pushcart, a block of ice dropped on Garcia’s
foot. After 1 week he returned to work. But while he was pushing
his cart along his usual route, the same foot was caught in a
barbed wire and became infected. His leg was amputated. Later on
Garcia died.
Snow White denied emploeyer-employee relationship under the
CASE DIGEST LABSTAN 1st EXAM
Workmens Compensation law. Ana sila, he was an independent
contractor. He buys it from them at 3 cents and sells it for 5.
Issue: can his wife collect workmen’s compensation from snow
white ice cream?
Ruling: SC said he is not an independent contractor. There is er-ee
relationship. Snow White supplied push carts, ice, ice cream, salt
and cap. There was no transfer of ownership of the ice cream
products because at the end of the day, he can return the ice drop so
ownership was not transferred to him.
Mafinco Trading vs. Ople
Facts: Truck carrying sarsaparilla. they had a fleet of trucks with
their own drivers subsequently the drivers agreed to resign as they
were given early retirement. Sarsaparilla put up mafinco which
employed these drivers and made them sign peddler’s contract.
Peddling Contract:
(a)There is an option that the peddler has a choice to can hire their
own driver and assistant helper and if he does not drive, he will be
the third member of the team that constitutes one truck.
(b)Peddler would buy and sell the softdrinks;
(c)Peddler would post a bond:
1. in favor of Mafinco for any damage to its trucks or unpaid
salaries of the peddler’s workers and
2.another bond for the social security benefits of the peddler’s
workers;
(d) Peddler would secure its own business permits and licenses;
(d)Mafinco would provide the trucks, fuel and maintenance; and
(e)Peddler would liquidate his accounts each day.
Mafinco drivers sought to form a union
Q: is there an employer and employee relationship?
A: There is NO employer employee relationship
The relationship is as it was defined in the contract. When the
terms of the agreement are reduced to writing, there is no other
evidence to define the relationship except the terms of the
agreement. This is a conclusive presumption following the PAROLE
EVIDENCE RULE.
Rationale: if you can still invoke other sources outside the contract,
what is the use of the contract?
In Snowhite Ice Cream vs Garcia, ice drop ang sulod sa cart pero sa
Mafinco Trading vs Ople, soft drinks. Pareho sila gadala sa ilang
gibaligya. Unlike in the case of Snowhite vs Garcia, in Mafinco
Trading vs Ople, the court ruled that there is no EE-ER relationship.
The relationship is as it is defined in the peddler’s contract. Why is
that the ruling? According to the Supreme Court, when the terms of
an agreement have been reduced into writing, there is no evidence
that will be accepted to define the relationship except what is found
in the terms of the contract (4 corners of the contract). The reason is
that if you can still invoke other circumstance outside of the contract,
then what is the use of the contract. That is now the conclusive
presumption under the Parol Evidence Rule.
The SC resorted to that conclusive presumption because there are 2
subsidiary contract found in the main contract — 1) the surety
contract, the peddler must provide for a bond to answer for his
liability if he does not deliver the proceeds of the soft drinks he
withdrew from Mafinco; 2) another bond to answer for underpayment
or nonpayment of wages. A surety is a nominate contract under the
civil code and the the jurisdiction of contracts under the Civil Code is
exclusive and original with the regular courts. The Department of
Labor only has jurisdiction over contracts involving only ER-EE
relationships. As to other contracts, it has no jurisdiction. It is not a
court of general jurisdiction; it is a special tribunal for the ER-EE
relationship.
ISMAEL VS CIR
3
PONENTE: CORONA
JURISDICTION OF THE OMBUDSMAN OVER GOCCS
IS CONFINED ONLY TO THOSE WITH ORIGINAL
CHARTERS
The 1987 Constitution states the powers and functions of the Office
of the Ombudsman. Specifically, Article XI, Section 13(2) provides:
Sec. 13. The Office of the Ombudsman shall have the following
powers, functions, and duties:
xxx xxx xxx
(2) Direct, upon complaint or at its own instance, any public official
or employee of the Government, or any subdivision, agency or
instrumentality thereof, as well as any government-owned or
controlled corporation with original charter, to perform and expedite
any act or duty required by law, or to stop, prevent, and correct any
abuse or impropriety in the performance of duties. (italics supplied)
xxx xxx xxx
Based on the foregoing provision, the Office of the Ombudsman
exercises jurisdiction over public officials/ employees of GOCCs
with original charters. This being so, it can only investigate and
prosecute acts or omissions of the officials/employees of
government corporations. Therefore, although the government later
on acquired the controlling interest in PAL, the fact remains that the
latter did not have an "original charter" and its officers/employees
could not be investigated and/or prosecuted by the Ombudsman.
In Juco v. National Labor Relations Commission,9 we ruled that the
phrase "with original charter" means "chartered by special law as
distinguished from corporations organized under the Corporation
Code." PAL, being originally a private corporation seeded by
private capital and created under the general corporation law, does
not fall within the jurisdictional powers of the Ombudsman under
Article XI, Section 13(2) of the Constitution. Consequently, the
latter is devoid of authority to investigate or prosecute petitioners.
INVESTMENT PLANNING CORPORATION OF THE
PHILIPPINES, petitioner-appellant,
vs.
SOCIAL SECURITY SYSTEM,
Ponente: MAKALINTAL, J.:
FACTS: Petitioner is a domestic corporation engaged in business
management and sale of securities. It has two classes of agents
who sell its investment plans: 1). Salaried employees who keep
definite hours and work under control and supervision of the
company, and 2). Registerd representatives who work on
commission basis. In 1960, the petitioner applied to the Social
Security System, the respondent, for exemption of the registered
representatives from the compulsory coverage of the Social
Security Act but later denied.
ISSUE: Whether or not the petitioner’s, registered representatives
are employees within the meaning of the Social Security Act?
RULING: NO. Wherefore the employee was defined by the Social
Security Act as: Any person who performs services for an employer
in which either or both mental and physical efforts are used and
who receives compensation for such services, where there is an
employer-employee relationship: Provided, That a self-employed
professional shall be both employee and employer at the same
time. (As amended by Sec. 4, R.A. 2658 and Sec. 2, P.D. No.
1636, S-1979)
The representatives are in reality commission agents. They cannot
be considered employees for they were just paid not by the
investor but in a form of a commission, their services may be
terminated at any certain time, and there is no element of control
CASE DIGEST LABSTAN 1st EXAM
for they do not devote their time exclusively to or solely for the
petitioner; the time and the effort they spend in their work depend
upon entirely upon their own will and initiative.
SARA VS. AGARRADO AND NLRC
Nature of the Case
A petition for certiorari challenging the jurisdiction of the labor
tribunal, claim for unpaid commissions, and reimbursement of sums
of money.
Facts
Agarrado was a former attendant in the clinic of Dr. Sara. Years later,
Agarrado, Dr. Sara and Arabia entered into a verbal agreement for
Agarado to buy and sell palay, paid on commission for every sack
mill rice sold and for every kilo of palay purchased.
Agarrado was to spend her own money to carry out the task, but
may borrow money subject to reimbursement by petitioners. Later,
private respondent filed a complaint before the NLRC Regional
Arbitration Branch for unpaid commissions and reimbursements.
Petitioners contend that the labor arbiter had no jurisdiction on the
premise that there was no employer-employee (E2e) relationship
between the private parties so that claims were cognizable by the
regular courts. The labor arbiter ordered petitioner to pay all claims.
On appeal, labor arbiters decision was affirmed.
Thus, this petition.
Issue(s)
(1). Does E2e relationship exist between the parties?
Held
(1). No.
In determining E2e, the four-fold test applis, to wit: [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. Indeed, the first requisite was present but the verbal
agreement negates the four others. Noticeably absent is the most
important test, the power of control, for the means and methods
carried out by Agarrado were totally independent of the petitioners.
Agarrado relied on her own resources to effectuate her obligations.
She was not subject to definite hours of work. She could delegate
her responsibilities to others and at the same time engage in other
means of livelihood. It can only be said that Agarrado was an
independent contractor. By virtue of which, Agarrado is not an
employee of the petitioners, and thus no E2e relationship exists
between the parties. The absence of which therefore deprives the
labor arbiter of any jurisdiction.
CARUNGCUNG VS NLRC | INSULAR LIFE VS NLRC
These two cases are centered around the insurance business.
For cost-cutting purpose, the insurance companies no longer took up
their own insurance branches; they do it through an insurance
system, through a very experienced person who has passed the
insurance commissioner’s exam and became a licensed insurance
agent. Do not confuse them with the insurance disers (housewives
or teachers) who sell insurance; they cannot sell insurance because
they cannot sign contracts. It is only the insurance agent who can
bind an insurance company. Kung naa gani makuha aning teachers
or housewives, dal on dayon na nila sa agent kay ang agent ang
mupirma sa insurance policy; then after the buyer signs, here is now
perfected contract of insurance.
Many of these insurance agent enters into contract with the
insurance company. Tagaan sila ug budget that are not sisiw
(millions) as training budget for sales men or sales personnel. He
has then a commission out of the policies that are sold.
In the case of Carungcong *father was not sure*, the agent was
given a budget and one of the items in the budget that she played
4
around with was the Christmas party budget. And then sales men,
who were on commission who were invited to the party, said that
according to the report of the office, the agent gave all these
different gifts to the sales people and there was this venue for the
Christmas dinner. So the the company finally severed its
relationship with the agent. She went then to the Labor arbiter and
filed a case for illegal dismissal. So the issue was whether or not
she was an employee. In one instance the SC says you cannot be
an employee because you are asking for too much (about 2 million
worth of unpaid commission). Naa bay emploeyado na ing-ana?
The SC says “This is the Labor Code; this is about daily paid
workers”. So the SC said that the contract was agency and the
agent was hired to represent the insurance company.
CITIZENS LEAGUE v. ABBAS
That is a Davao case. If you still see around those abbreviated
jeepneys, they were used to be called Acs (Auto-Calesa). Kanang
mga AC (e.g. Route 4 na mga jeep) nag form sila ug union. Pag
form nila ug union, gusto man sila mubo nga rental. So the
operators refused to grant their request. So, they declared a strike.
What did the operators do?
The operators went to the regular courts and asked for an
injunction to stop them from going on a strike, Who was the judge?
The judge was Macapanton Abbas. The father of the Abbas now
who is the lawyer of the MILF. I think the grandson of this Abbas is
the COMELEC Commissioner, the Chairperson of COMELEC.
Abbas issued the injunction. “You are leaseholders, you cannot go
on strike. You are lessees. Nagbayad gud mog abang”. Pag abot
sa Supreme Court, the Supreme Court said, “That is not lease!
That is employer-employee relationship”. Why is it employer-
employee relationship? It’s so obvious. Naa may rent-a-car dinha.
Ug nag lease ka anang rent-a-car, di ka suroy-suroy ka na sa
tibuok Region XI. Bisan asa ka suroy ka na kay gi abangan man
nimo.
Pero kanang abang na gi bayad nimo sa anang Boundary System,
you are confined to the franchise route of the operator. Ug Davao-
Calinan ra na, mao ra na imong agian. And, the lease price is
calculated that if you just drive for the period of the lease, let us say
12 hours, makuha nimo ang boundary ug naa pa kay sobra aron
ma gasolinahan na nimo and sakyanan unya naa pa gyud kay
mahabilin kanang murag imong sweldo for that day.
The lease price is calculated such as there is the equivalent of
your day’s pay. Only the terminology is different but the Supreme
Court says that we are not bound by the terminologies. The legal
characterization of the relationship is not altered by the use of the
regular pedestrian word lease. It is not lease. It is their payment to
the operator who is responsible for the franchise, for the
maintenance of this vehicle and for his share in providing the
vehicle to the driver who drives it.
CASE DIGEST LABSTAN 1st EXAM
ALIPIO R. RUGA vs.NATIONAL LABOR RELATIONS
COMMISSION and DE GUZMAN FISHING ENTERPRISES G.R.
No. L-72654-61, 22 January 1990
FACTS:
Petitioners were the fishermen-crew members of 7/B Sandyman II,
one of several fishing vessels owned and operated by private
respondent De Guzman Fishing Enterprises which is primarily
engaged in the fishing business.They were paid in percentage
commission basis in cash by one Mrs. Pilar de Guzman, cashier of
private respondent, 13% of the proceeds of the sale of the fish-catch
if the total proceeds exceeded the cost of crude oil consumed during
the fishing trip, otherwise, 10% of the total proceeds of the sale.
After some time, they were dismissed alleging that they sold some of
their fish-catch at midsea to the prejudice of private respondent.
Consequently, they filed illegal dismissal case to the DOLE
Arbitration Branch. De Guzman said that there was no employer-
employee relationship between them; rather it was a joint venture.
After the parties failed to reach an amicable settlement, the Labor
Arbiter heard the case and dismissed the cases filed by the
petitioners on finding that it was really a joint venture. NLRC
affirmed.
ISSUE:
Whether or not the fishermen-crew members of the trawl fishing
vessel 7/B Sandyman II are employees of its owner-operator, De
Guzman Fishing Enterprises, and if so, whether or not they were
illegally dismissed from their employment.
RULING:
Yes. From the four (4) elements of employer-employee relationship,
the Court has generally 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. According to the testimony of Alipio
Ruga, they are under the control and supervision of private
respondent’s operations manager. Matters dealing on the fixing of
the schedule of the fishing trip and the time to return to the fishing
port were shown to be the prerogative of private respondent. While
performing the fishing operations, petitioners received instructions
via a single-side band radio from private respondent’s operations
manager who called the patron/pilot in the morning.
Even on the assumption that petitioners indeed sold the fish-catch at
midsea the act of private respondent virtually resulting in their
dismissal evidently contradicts private respondent’s theory of “joint
fishing venture” between the parties herein. A joint venture, including
partnership, presupposes generally a parity of standing between the
joint co-venturers or partners, in which each party has an equal
proprietary interest in the capital or property contributed and where
each party exercises equal lights in the conduct of the business. It
would be inconsistent with the principle of parity of standing between
the joint co-venturers as regards the conduct of business, if private
respondent would outrightly exclude petitioners from the conduct of
the business without first resorting to other measures consistent with
the nature of a joint venture undertaking, Instead of arbitrary
unilateral action, private respondent should have discussed with an
open mind the advantages and disadvantages of petitioners’ action
with its joint co-venturers if indeed there is a “joint fishing venture”
between the parties.
VILLAMARIA VS. CA AND BUSTAMANTE
G.R. No. 165881, April 19, 2006
CALLEJO, SR., J.:
5
Facts:
Petitioner Villamaria and respondent Bustamante executed a
contract entitled “Kasunduan ng Bilihan ng Sasakyan sa
Pamamagitan ng Boundary-Hulog”
Under the “Kasunduan”, respondent was required to remit
P550 daily to petitioner, with the amount representing the
“boundary” and the partial payment for the purchase of the jeepney.
Any excess would be kept by the driver as his daily wage. Under
the “Kasunduan”, the petitioner retained ownership with the
material possession vested in the driver. Also in the “Kasunduan” if
the driver failed to remit P550 for a week, the agreement would be
of no force and effect with the driver to return the jeepney to the
owner. If still allowed to drive, owner and driver would revert to a
daily P550 Boundary only.
Sometime in 1999, petitioner issued a “Paalala” to all their
drivers reminding them about the “Kasunduan”
July 24, 2000, respondent Bustamante was barred by
petitioner to drive the vehicle that was already taken back.
Respondent filed an illegal dismissal complaint. Villamaria
countered that there was no dismissal because the “Kasunduan”
transformed the employer – employee relationship to that of a
buyer – seller.
The Labor Arbiter decided in favor of petitioner with the
reason that the “Kasunduan” was in effect between the parties and
with the “Paalala” it was shown that respondent had violated the
terms of the contract and is not entitled to damages.
Respondent appealed to NLRC which then was then
dismissed not because of the arbiter’s decision but because of
jurisdictional issues pertaining to the “Kasunduan” which gives way
to the juridical relationship as vendor – vendee meaning that the
Labor Arbiter had no jurisdiction over the case. Respondent’s
motion for reconsideration was also denied.
Issue:
Whether or not the employer – employee relationship exists
even with the “Kasunduan”?
Ruling:
The juridical relationship of employer – employee was not
negated by the “Kasunduan”, considering that the petitioner
retained control of respondent’s conduct as driver of the vehicle.
BESA VS TRAJANO
Facts:
Private respondent KAMPIL, a legitimate labor union, filed a
petition for Certification Election to which herein petitioner Besa
opposed on the ground that no employer-employee relationship
existed between him and the petition’s signatories. The Med-Arbiter
and BLR Director both ruled in favor of the union which granted the
holding of the certification election. Meanwhile, petitioner Besa filed
actions before the Court and with the Med-Arbiter contending that
the 17 shoeshiners who are members of the union cannot be
considered employees and thus has no standing to vote in the
certification election.
Issue:
Whether or not there is employer-employee relationship between
Besa and the 17 shoeshiners-union members.
Ruling: NO.
Respondent BESA does not exercise any degree of control or
supervision over their person and their work. All these are not
obtaining in the case of a piece worker as he is in fact an employee
in contemplation of law, distinct from the shoe shiner in this
CASE DIGEST LABSTAN 1st EXAM
instance who, in relation to respondent MAMERTO B. BESA, is a
partner in the trade.
These shoe shiners are not employees of the company, but are
partners instead. This is due to the fact that the owner/manager does
not exercise control and supervision over the shoe shiners. That the
shiners have their own customers from whom they charge the fee
and divide the proceeds equally with the owner, which make the
owner categorized them as on purely commission basis. The
attendant circumstances clearly show that there is no employer-
employee relationship existing.
RABAGO VS NLRC
We disagree.
As the Court sees it, the wage orders do not apply to the direct
employees of PTS who in fact are members of the Government
Service Insurance System. The complainants in G.R. No. 82868
unquestionably belong to the private sector and for this reason are
covered by the Social Security System. They are the indirect
employees of the PTS and as such are entitled to hold it liable,
solidarily with their direct employer, for their unpaid wage
differentials. In this sense, the PTS is correctly classified as an
employer coming under the private sector. The reference to it as
belonging to the public sector relates only to its direct employees "for
purposes of coverage under the Employees' Compensation
Commission," not to its indirect employees coming from the private
sector.
The issues regarding the separation pay and the service incentive
leave pay are factual. We have said often enough that the findings
of fact of quasi-judicial agencies which have acquired expertise on
the specific matters entrusted to their jurisdiction are accorded by
this Court not only respect but even finality if they are supported by
substantial evidence.[4]
We are satisfied that the complainants were able to establish by
Exhibit "B" their length of service to entitle them to service incentive
leave with pay. The argument that the affidavit is hearsay because
the affiants were not presented for cross-examination is not
persuasive because the rules of evidence are not strictly observed in
proceedings before administrative bodies like the NLRC, where
decisions may be reached on the basis of position papers only. It is
also worth noting that ABC has not presented any evidence of its
own to disprove the complainant's claim. As the Solicitor General
correctly points out, it would have been so easy to submit the
complainants' employment records, which were in the custody of
ABC, to show that they had served for less than one year.
A slight modification must be made, though, in the case of Norma
Moreno Mangabat, who was denied the service incentive leave with
pay, possibly through an oversight. Exhibit "B" shows that her
employment was from "7/79 to 12/81 and 3/84 to 7/84." Section 3 of
Rule V, Book III of the Omnibus Rules Implementing the Labor Code,
provides that the term "at least one year service" shall mean service
within 12 months, whether continuous or broken, reckoned from the
date the employee started working.
The submission that the five complainants awarded separation pay
were not entitled thereto because their terms expired with the
contract with PTS is also not acceptable. ABC never offered any
evidence that the employment of the claimants was co-terminal with
the janitorial contract. We agree that the termination of ABC's
contract with PTS resulted in a partial closure or cessation of
operations of ABC that called for the application (if only by analogy)
of Article 283 of the Labor Code providing in part as follows:
x x x In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one
(1) whole year.
6
Our conclusion is that Ace Building Care and the Philippine
Tuberculosis Society are solidarily liable to the complainants for
their differential pay under Wage Orders Nos. 5 and 6, PTS being
considered in the circumstances of this case to be the indirect
employer of workers in the private sector. ABC is liable for the
payment of the separation pay and incentive leave pay of the
complainants mentioned in the challenged decisions, with the
modification only that Norma Moreno Mangabat shall also be
entitled to service incentive leave with pay.
Kimberly Clark Independent Labor Union Vs. Drilon
This court take judicial notice of the general practice adopted in
several government and private institutions and industries of hiring
a janitorial service on an independent contractor basis.
NERI VS. NLRC
GR Nos. 97008-09, July 23, 1993
FACTS:
Petitioners Virginia Neri and Jose Cabelin were hired by
Building Care (BCC), a corporation engaged in providing technical,
maintenance, engineering, housekeeping, security and other
specific services to its clientele. They were assigned to respondent
Far East Bank and Trust Company (FEBTC), with Neri as a
radio/telex operator and Cabelin as janitor/messenger.
Petitioners then instituted an action with the Regional
Arbitration Branch No. 10 to compel FEBTC to recognize and
accept them as regular employees. The Labor Arbiter denied the
complaint for lack of merit, declaring that BCC was considered an
independent contractor because it proved it had substantial capital
of P1M. Neri and Cabelin, however, contend that BCC is engaged
in LOC because it failed to adduce evidence purporting to show
that it invested in the form of tools, equipment, machineries, work
premises and other materials which are necessary in the conduct
of its business. Moreover, they argued that they performed duties
which are directly related to the principal business of FEBTC.
ISSUE: Whether or not BCC is engaged in LOC.
HELD:
BCC is an independent contractor. One is not required to
possess both a) substantial capital and b) investment in the form of
tools, equipment, machinery, work premises, among others, to be
considered a job contractor. Possession of either attribute is
sufficient for the purposes of complying with one of the conditions
for the establishment of permissible job contracting. In this case,
BCC proved it had substantial capital of P1M.
On the issue of control, petitioners do not deny that they were
selected and hired by BCC before being deployed in FEBTC. BCC
likewise acknowledges that petitioners are its employees. The
record is replete with evidence disclosing the BCC maintained
supervision and control over petitioners through its Housekeeping
and Special Services Division. Petitioners reported for work
wearing the prescribed uniform of BCC: leaves for absence were
filed directly with the BCC and salaries were drawn only from BCC.
As a matter of fact, Neri even secured a certificate from BCC that
she was employed by the latter. More importantly, under the terms
and conditions of the contract, it was BCC alone which had the
power to reassign petitioners. These are indications that BCC
carries an independent business according to its own manner and
method, free from the control and supervision of its principal in all
matters except as to the results thereof.
The Court has already taken judicial notice of the general
practice adopted in several government and private institutions and
industries of hiring independent contractors to perform special
services ranging from janitorial, security and even technical or
other specific services such as those performed by Neri and
Cabelin. While these services may be considered directly related to
CASE DIGEST LABSTAN 1st EXAM
the principal business of the employer, nevertheless they are not
necessary in the conduct of the principal business of the employer.
VINOYA VS NLRC
FACTS: Petitioner Vinoya was hired by RFC as sales representative.
He avers that he was transferred by RFC to PMCI, an agency which
provides RFC with additional contractual workers. In PMCI, he was
reassigned to RFC as sales representative and then later informed
by the personnel manager of RFC that his services were terminated.
RFC maintains that no employer-employee relationship existed
between petitioner and itself. Petitioner filed complaint for illegal
dismissal. RFC alleges that PMCI is an independent contractor as
the latter is a highly capitalized venture.
ISSUE: Whether or not petitioner was an employee of RFC and
thereby, illegally dismissed.
HELD: Yes. PMCI was a labor-only contractor. Although the Neri
doctrine stated that it was enough that a contractor had substantial
capital to show it was an independent contractor, the case of Fuji
Xerox clarified the doctrine stating that an independent business
must undertake the performance of the contract according to its own
manner and method free from the control of the principal. In this
case, PMCI did not even have substantial capitalization as only a
small amount of its authorized capital stock was actually paid-in.
Also, PMCI did not carry on an independent business or undertake
the performance of its contract according to its own manner and
method. Furthermore, PMCI was not engaged to perform a specific
and special job or service, which is one of the strong indicators that
is an independent contractor. Lastly, in labor-only contracting, the
employees supplied by the contractor perform activities, which are
directly related to the main business of its principal. It is clear that in
this case, the work of petitioner as sales representative was directly
related to the business of RFC. Since due to petitioner’s length of
service, he attained the status of regular employee thus cannot be
terminated without just or valid cause. RFC failed to prove that his
dismissal was for cause and that he was afforded procedural due
process. Petitioner is thus entitled to reinstatement plus full
backwages from his dismissal up to actual reinstatement.
LAPANDAY VS CA
FACTS: Commando Security Service Agency provided security
guards to Lapanday Agricultural Development Corporation under a
contract of service. Subsequently, a wage order was issued, with the
stipulation that the increase in wages for security services would be
borne by the client/principal, in this case Lapanday. The latter
refused to amend the contract to conform to the wage order, and the
said contract ran through its natural life and expired, without the
required adjustments having been made. The security agency then
filed a case for the collection of a sum of money with the regional
Trial Court that had jurisdiction over the case. Lapanday opposed,
stating the NLRC was the proper forum for the case.
ISSUE: Where is the proper venue of the case, the RTC or the
NLRC?
HELD: The RTC. There was no employer-employee relationship in
this case, since Commando simply sought to collect a sum of money
and damages for breach of contract. The service contract had long
since expired. Hence, reference must be made to the Civil, not Labor
Code.
USA VS RODRIGO JOINTLY DECIDED IN USA VS GINTO
7
This is a case of Filipino cook hired in a US base in Camp John
Hay (CJH) in Baguio City, it has a golf course, a swimming pool,
restaurant, and those that frequent it are US embassy personnel
and US Armed forces officers and members. It is an R&R place.
Now this cook was terminated, he then files an illegal dismissal
complaint with money claims against Camp John Hay commander
who is an American. The commander calls in and engages ACCRA
as its lawyer. The ACCRA files immediately a motion to dismiss on
the ground of immunity from suit. He claims that the establishment
CJH is purposely put up to serve its armed forces member and
officers. R&R, or entertainment for the armed forces members is a
sovereign function. It is not just going up to war, it is also building
up morale that is part of sovereign function. So it claims immunity
from suit. But the Labor Arbiter did not accept that. The counsel of
CJH commander went to NLRC who also upheld the Labor Arbiter.
In the SC, the SC said that this court takes judicial notice that
although CJH is principally for the armed forces of US members
and officers, it is also open to general public. So it is engaging in a
proprietary not just a sovereign function. Why? Because the
summer residences of the justices of the SC is just up the hill, and
these justices go down the hill and eat steak in CJH that is why
they said it is a matter of judicial notice.
So when you go down to that level of an ordinary citizen by
entering into an employer-employee contract to pursue a
sovereign function at the same time partaking a proprietary
function, you cannot hide behind from the immunity from suit
doctrine.
Q: So, what is your remedy if immunity from suit of a sovereign is
applicable? Wa kay bayri ug minimum wage sa Indonesian
Ambassador. What is your remedy kay di man ka kaadto sa Labor
Arbiter?
A: Your remedy is diplomatic. You go to the Department of
Foreign Affairs. You explain your case to Sec. Locsin na wa kay
bayri. And the Secretary will write a letter and present the matter to
the Indonesian Ambassador.
They are not obliged to enroll their employees with the SSS, di man
sila mapugos. Although most embassies will enroll their employees
with the SSS to solve their problems because they go back to them
to ask for a loan if they have sickness and accidents. So they find it
beneficial to enroll but they are not obliged.
JUSMAG PHILIPPINES V. NLRC
GR NO. 108813, 15 DECEMBER 1994
DOCTRINES:
A suit against JUSMAG is one against the United States
Government, and in the absence of any waiver or consent of the
latter to the suit, the complaint against JUSMAG cannot prosper
Immunity of State from suit is one of the universally recognized
principles of international law that the Philippines recognizes and
adopts as part of the law of the land
FACTS:
Joint United States Military Assistance Group (JUSMAG) assails
the January 29, 1993 Resolution of the NATIONAL LABOR
RELATIONS COMMISSION (public respondent), in NLRC NCR
CASE NO. 00-03-02092-92, reversing the July 30, 1991 Order of
the Labor Arbiter, and ordering the latter to assume jurisdiction over
the complaint for illegal dismissal filed by FLORENCIO
SACRAMENTO (private respondent) against petitioner.
Private respondent was one of the seventy-four (74) security
assistance support personnel (SASP) working at JUSMAG-
Philippines. He had been with JUSMAG from December 18, 1969,
until his dismissal on April 27, 1992. When dismissed, he held the
position of Illustrator 2 and was the incumbent President of
JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES
ASSOCIATION (JPFCEA), a labor organization duly registered with
the Department of Labor and Employment. His services were
terminated allegedly due to the abolition of his position. He was
also advised that he was under administrative leave until April 27,
1992, although the same was not charged against his leave.
CASE DIGEST LABSTAN 1st EXAM
On March 31, 1992, private respondent filed a complaint with the
Department of Labor and Employment on the ground that he was
illegally suspended and dismissed from service by JUSMAG. He
asked for his reinstatement. JUSMAG then filed a Motion to Dismiss
invoking its immunity from suit as an agency of the United States. It
further alleged lack of employer-employee relationship and that it
has no juridical personality to sue and be sued.
ISSUE:
Whether JUSMAG was immune from suit as an agency of the United
States.
RATIO:
YES, from the foregoing, it is apparent that when JUSMAG took
the services of private respondent, it was performing a governmental
function on behalf of the United States pursuant to the Military
Assistance Agreement dated March 21, 1947. Hence, we agree with
petitioner that the suit is, in effect, one against the United States
Government, albeit it was not impleaded in the complaint.
Considering that the United States has not waived or consented to
the suit, the complaint against JUSMAG cannot prosper.
In this jurisdiction, we recognize and adopt the generally accepted
principles of international law as part of the law of the land. Immunity
of State from suit is one of these universally recognized principles. In
international law, “immunity” is commonly understood as the
exemption of the state and its organs from the judicial jurisdiction of
another state. This is anchored on the principle of the sovereign
equality of states under which one state cannot assert jurisdiction
over another in violation of the maxim par in parem non habet
imperium (an equal has no power over an equal)
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract
does not, per se, mean that sovereign states may, at all times, be
sued in local courts. The complexity of relationships between
sovereign states, brought about by their increasing commercial
activities, mothered a more restrictive application of the doctrine.
Thus, in United States of America vs. Ruiz, we clarified that our
pronouncement in Harry Lyons, supra, with respect to the waiver of
State immunity, was obiter and “has no value as an imperative
authority.” As it stands now, the application of the doctrine of
immunity from suit has been restricted to sovereign or governmental
activities (jure imperii). The mantle of state immunity cannot be
extended to commercial, private and proprietary acts (jure gestionis).
SEAFDEC AOC vs. NLRC
FACTS: SEAFDEC-AQD is a department of an international
organization, the Southeast Asian Fisheries Development Center,
organized through an agreement in 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam, Indonesia and the
Philippines with Japan as the sponsoring country.
Juvenal Lazaga was employed as a Research Associate on a
probationary basis by SEAFDEC-AQD. Lacanilao in his capacity as
Chief of SEAFDEC-AQD sent a notice of termination
to Lazaga informing him that due to the financial constraints being
experienced by the department, his services shall be terminated.
SEAFDEC-AQD's failure to pay Lazaga his separation pay forced
him to file a case with the NLRC. The Labor Arbiter and NLRC ruled
in favor of Lazaga. Thus SEAFDEC-AQD appealed, claiming that the
NLRC has no jurisdiction over the case since it is immune from suit
owing to its international character and the complaint is in effect a
suit against the State which cannot be maintained without its
consent.
ISSUES:
1. Does the NLRC have jurisdiction over SEAFDEC-AQD?
2. Is SEAFDEC-AQD estopped for its failure to raise the issue of
jurisdiction at the first instance?
8
HELD:
1. SEAFDEC-AQD is an international agency beyond the
jurisdiction of public respondent NLRC. Being an intergovernmental
organization, SEAFDEC including its Departments (AQD), enjoys
functional independence and freedom from control of the state in
whose territory its office is located.
Permanent international commissions and administrative bodies
have been created by the agreement of a considerable number of
States for a variety of international purposes, economic or social
and mainly non-political. In so far as they are autonomous and
beyond the control of any one State, they have a distinct juridical
personality independent of the municipal law of the State where
they are situated. As such, according to one leading authority "they
must be deemed to possess a species of international personality
of their own."
One of the basic immunities of an international organization is
immunity from local jurisdiction, i.e., that it is immune from the legal
writs and processes issued by the tribunals of the country where it
is found. The obvious reason for this is that the subjection of such
an organization to the authority of the local courts would afford a
convenient medium thru which the host government may interfere
in there operations or even influence or control its policies and
decisions of the organization; besides, such subjection to local
jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states.
BATANGAS I ELECTRIC COOPERATIVE V. YOUNG GR NO
62386
Topic: Workers-Members of a Cooperative
FACTS:
1. This is a petition for certiorari under Rule 65 of the Rules of
Court
2. On June 1, 1981, the Batangas-I Electric Cooperative Union
(hereinafter referred to as UNION) filed with the Regional Office
No. IV-A, Ministry of Labor and Employment (now Department of
Labor and Employment), at San Pablo City, a petition for
certification election.
3. The UNION alleged, inter alia, that it is a legitimate labor
organization; that the Batangas-I Electric Cooperative Inc.
BATELEC has 150 employees, more or less; that the UNION
desires to represent the regular rank and file employees of
BATELEC for purposes of collective bargaining; that there is no
other union existing in BATELEC except the UNION; that there is
no certified collective bargaining agreement in the said cooperative;
and that there has been no certification election conducted in
BATELEC during the last twelve (12) months preceding the filing of
the petition.
4. On August 20, 1981, Med-Arbiter Paterno D. Adap issued a
resolution (pp. 21-23, Rollo) which gave due course to the petition
and ordered the holding of a certification election. On August 31,
1981, BATELEC filed a motion for reconsideration (pp. 24-30,
Rollo) of the Med-Arbiter's resolution contending, inter alia, that
there was a legal impediment to the holding of a certification
election considering that the formation of a union in a cooperative
is illegal and invalid, the officers and members of the union being
the owners thereof. This motion was treated as an appeal from the
Med-Arbiter's resolution of August 20, 1981
5. On November 27, 1981, a resolution (pp. 38-40, Rollo) was
issued by Romeo A. Young, Officer in Charge, Bureau of Labor
Relations, granting the appeal and revoking the Med-Arbiter's order
mandating the holding of a certification election.
ISSUE:
1. whether or not employees of an electric cooperative who are at
the same time members of the cooperative, may be allowed to form
or join a labor union in the electric cooperative for purposes of
collective bargaining.
RULING:
CASE DIGEST LABSTAN 1st EXAM
1. No. A cursory analysis of Section 35, Presidential Decree 269, as
amended, readily shows that employees of an electric cooperative
who are themselves members of the cooperative have no right to
form or join a labor organization for purposes of collective
bargaining.
In the first instance, a cooperative is established primarily for the
mutual aid and protection of the members thereof. It was never
intended to operate like an ordinary company or corporation. A
cooperative is a non-profit organization, so that if ever there are
gains, income or benefits derived therefrom, the same are equally
divided among its members. For all legal intents and purposes,
therefore, members of a cooperative are part-owners thereof.
In the instant case, petitioner strongly contended that they are not
co-owners of the cooperative because the only benefits that they
derive therefrom are in the form of electrical services and that they
never exercise the attributes of ownership recognized under Article
428 of the New Civil Code. We do not concur. The fact that these
employees/members enjoy free electrical services which are not
available to non-members is a clear indication that these employees
are co-owners of the cooperative. Petitioner must be reminded that
benefits from cooperative accruing to co-owners may not come only
in the form of monetary benefits but also in the form of services.
DISPOSITIVE: BATANGAS-I ELECTRIC COOPERATIVE, INC won.
The petition is DISMISSED and the challenged decision dated
November 27, 1981 of respondent Romeo A. Young, OIC of the
Bureau of Labor Relations is AFFIRMED.
DOCTRINE:
“employees who at the same time are members of an electric
cooperative are not entitled to form or join unions for purposes of
collective bargaining agreement, for certainly an owner cannot
bargain with himself or his co-owners.”
SUMIFRU Corp. vs NAMASUFA-NAFLU-KMU
There is this case called SUMIFRU Corp. vs NAMASUFA-
NAFLU-KMU. It is in line with contracting and subcontracting. This is
the decision which gives you the reason why in Compostela, there
was a big strike of the banana workers.
The business of cavendish bananas for export is a large scale
farm operation, but since the advent of agrarian reform, after the
leeway of 10 years + 10 years, finally, the DAR implemented
agrarian reform.
The big estates like Hijo Plantation, they were divided up, the
landowners became small landowners because the original workers
became beneficiaries because many of them were left less - 3
hectares per beneficiaries.
But in the banana companies (Del Monte, Lapanday, Unifrutti),
Sumifru is a late comer wherein it inherited the Soriano farms. They
were preparing for the implementation of the Agrarian Reform, their
solution was in aid to the beneficiaries who agreed to the growership
agreement. In other words, the small farms entered into a contract
with the banana company wherein the contract is denominated with
several name (grower’s contract, exclusive seller’s contract) but the
whole idea is the banana company will support the inputs to the
growers as long as the growers will sell exclusively to the banana
companies their produce. That went on for 10 or 15 years but the
growers said “we cannot manage the workforce” so it was still the
workforce of the banana corporation that did the critical phases like
harvesting. So, that became problematic.
The banana corporation were still accumulating a lot of
manpower (high-skilled, semi-skilled), the ratio of workers to
cultivated plant was 1 worker per hectare. So if there is 35,000
hectares, there must be at least 35, 000 workers. Now that being the
case, naglisod na man, naay nakahunahuna (magsubil?) sa banana
company. Ingon sa consultant sa banana company kay magbuhat
ug cooperative. Ang workers iparesign then himoag members sa
cooperative. Unya in a cooperative, mao muservice sa growers,
tawgon sila sa mga growers tagaan nilag schedule ang mga growers
depende sa ilahang pahinganglan. Unya ang growers, mudeduct
gikan sa banana corporation kay naa pa silay dawatunon tagaan
9
man nilag saging. Mudeduct sila para panweldo sa mga workers na
provided by the cooperative. Ostensibly, the employers are the
growers. So daghan mga employers ang cooperative. Tan awa ra
gud murag manpower agency.
Karon nigawas na man ang decision, SC says the banana
company is the employer. The SC affirms the decision of the arbiter
that the control test is met. “In affirming the arbiter, the DOLE
Secretary relied on the document sent by the parties and
ascertained that Sumifru indeed exercised control over the
workers. The DOLE Secretary found that the element of control is
present because Sumifru required monitoring sheets and imposed
disciplinary action for noncompliance such as the no helmet rule,
the no id rule etc. Gikan man ang rules sa banana corporation and
dili gikan sa growers. After this decision came out, the workers
demanded from the Sumifru magbargaining pero dili man musugot
ang Sumifru. Sira ang Sumi, then ang Japan kay nagwithdraw na
lang kay samok na kaayo. This decision has wide ranging effects
since Lapanday, Unifrutti, etc employs cooperative. Since
cooperative is their way to circumvent or prevent the unionization of
the workers. (826 SCRA 438)
Tabas vs. California Manufacturing
This is a case 25 years ago where the SC came up with the
ruling that merchandisers cannot be contracted out. When a
product is launched, extra new personnel are need to do the
launching. If there is a special offer, there is an agency na mag-
specialize and do house-to-house offers. They are not regular
force. They are from a manpower agency. The question arise
because the special campaign to launch them product goes for
about 1 year but the probationary period is only 6 months lang
man. Can they be contracted out? In the case, they entered into a
manpower supply agreement and in the agreement it was
specified, that the real employer is the manpower agency and the
agency holds the principal free and without liability as to any claims
the may rise from this contract to supply manpower.
Q: What is the validity of that agreement that ER-EE relationship is
already owned by the manpower agency and that the indirect
employer is relieved all obligation and responsibilities of the
manpower agency or employer?
A: That particular provision in the contract, the SC says, is void
because it involves third parties that are not privy to the contract.
EE-ER relation according to the SC in that case is a question of law
and not a question of fact. And yet when you go to LVN Musicians
Guild case, the SC said that EE-ER relationship is a question of
facts. So what is correct?
RULE:
When there is only 1 putative employer, it is a question of fact.
However, once you have contracting and subcontracting, and there
are a possibility of multiple employers, then it becomes a questions
of law.
What if the indirect employer is the government?
What if muingon ang indirect employer na “Government man
ko (NFA for example)” They have a security guard and then here’s
a wage order that was issued which says that the increase here
must be borne by the principal and not the manpower agency. NFA
says “Human na among budget. Usaon nato pag-increase na ang
magbuot man sa budget kay ang Congress. Dili mi kabayad.
Besides we are not covered by the labor code because this is
private and we are government.”
The SC says that they are covered and liable. The employee
after securing a favorable decision may go to Congress and
request for a law appropriating money to fulfill this final and
executory decision. The court says that the government cannot be
saved because it is the law that imposes ER-ER relation in this
instance.
FONTERRA BRANDS PHILS.,
INC., Petitioner, v. LEONARDO1 LARGADO AND TEOTIMO
ESTRELLADO, Respondents.
G.R. No. 205300, March 18, 2015
CASE DIGEST LABSTAN 1st EXAM
Facts:
Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted
the services of Zytron Marketing and Promotions Corp. (Zytron) for
the marketing and promotion of its milk and dairy products. Pursuant
to the contract, Zytron provided Fonterra with trade merchandising
representatives (TMRs), including respondents Leonardo Largado
(Largado) and Teotimo Estrellado (Estrellado). The engagement of
their services began on September 15, 2003 and May 27, 2002,
respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its
promotions contract, effective June 5, 2006. Fonterra then entered
into an agreement for manpower supply with A.C. Sicat Marketing
and Promotional Services (A.C. Sicat). Desirous of continuing their
work as TMRs, respondents submitted their job applications with
A.C. Sicat, which hired them for a term of five (5) months, beginning
June 7, 2006 up to November 6, 2006.
When respondents’ 5-month contracts with A.C. Sicat were
about to expire, they allegedly sought renewal thereof, but were
allegedly refused. This prompted respondents to file complaints for
illegal dismissal, regularization, non-payment of service incentive
leave and 13th month pay, and actual and moral damages, against
petitioner, Zytron, and A.C. Sicat.
The Labor Arbiter dismissed the complaint and ruled that: (1)
respondents were not illegally dismissed. As a matter of fact, they
were the ones who refused to renew their contract and that they
voluntarily complied with the requirements for them to claim their
corresponding monetary benefits in relation thereto; and (2) they
were consecutively employed by Zytron and A.C. Sicat, not by
Fonterra. The dispositive portion of the
Issue/s:
(1) Whether or not respondents were illegally dismissed.
(2) Whether or not Zytron and A.C. Sicat are labor-only contractors,
making Fonterra the employer of herein respondents.
Held:
(1)
No. Respondents voluntarily terminated their employment with
Zytron, contrary to their allegation that their employment with Zytron
was illegally terminated.
As correctly held by the Labor Arbiter and the NLRC, the
termination of respondents’ employment with Zytron was brought
about by the cessation of their contracts with the latter.
As regards to the Labor Arbiter’s conclusion that respondents
were the ones who refused to renew their contracts with Zytron, and
the NLRC’s finding that they themselves acquiesced to their transfer
to A.C. Sicat.
By refusing to renew their contracts with Zytron, respondents
effectively resigned from the latter. Resignation is the voluntary act of
RVM VS. NLRC
This memorandum leaves no room for doubt that CDSPB, as
represented by the director, exercised absolute control and
supervision over the school's administration. Under it, the authority to
hire, discipline and terminate the employment of personnel is vested
in the director, as academic and administrative head of the school.
CDSPB contends, however, that ¾
...[T]he designation of the parish priest as director was not unilateral
but by mutual agreement between the diocese of Malolos and
[petitioner]. This being the case, the parish priest's designation as
such director merely makes him, in effect, a member of the school
10
employees who are compelled by personal reasons to dissociate
themselves from their employment, done with the intention of
relinquishing an office, accompanied by the act of abandonment.
According to the SC, it is obvious that respondents were no
longer interested in continuing their employment with Zytron. Their
voluntary refusal to renew their contracts was brought about by
their desire to continue their assignment in Fonterra which could
not happen in view of the conclusion of Zytron’s contract with
Fonterra. Hence, to be able to continue with their assignment, they
applied for work with A.C. Sicat with the hope that they will be able
to continue rendering services as TMRs at Fonterra since A.C.
Sicat is Fonterra’s new manpower supplier. This fact is even
acknowledged by the CA in the assailed Decision where it
recognized the reason why respondents applied for work at A.C.
Sicat. The CA stated that “[t]o continuously work as merchandisers
of Fonterra products, [respondents] submitted their job applications
to A.C. Sicat xxx.”6 This is further bolstered by the fact that
respondents voluntarily complied with the requirements for them to
claim their corresponding monetary benefits in relation to the
cessation of their employment contract with Zytron.
(2)
No. Zytron and A.C. Sicat were not labor-only contractors.
Respondents were fixed-term employees. As previously held
by this Court, fixed-term employment contracts are not limited, as
they are under the present Labor Code, to those by nature
seasonal or for specific projects with predetermined dates of
completion; they also include those to which the parties by free
choice have assigned a specific date of termination.11 The
determining factor of such contracts is not the duty of the employee
but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.
In the case at bar, it is clear that respondents were employed
by A.C. Sicat as project employees. In their employment contract
with the latter, it is clearly stated that “[A.C. Sicat is] temporarily
employing [respondents] as TMR[s] effective June 6[, 2006] under
the following terms and conditions: The need for your service being
only for a specific project, your temporary employment will be for
the duration only of said project of our client, namely to promote
FONTERRA BRANDS products xxx which is expected to be
finished on or before Nov. 06, 2006.”
Respondents, by accepting the conditions of the contract with
A.C. Sicat, were well aware of and even acceded to the condition
that their employment thereat will end on said pre-determined date
of termination. They cannot now argue that they were illegally
dismissed by the latter when it refused to renew their contracts
after its expiration. This is so since the non-renewal of their
contracts by A.C. Sicat is a management prerogative, and failure of
respondents to prove that such was done in bad faith militates
against their contention that they were illegally dismissed. The
expiration of their contract with A.C. Sicat simply caused the natural
cessation of their fixed-term employment there at.
administration which is under the actual and direct control and
supervision of the congregation.[16]
The argument has no merit. As this Court has consistently ruled,
the power of control is the most decisive factor[17] in determining
the existence of an employer-employee relationship. In
Encyclopedia Britannica (Phils.), Inc. v. NLRC,[18] we held:
In determining the existence of an employer-employee relationship
the following elements must be present: (1) selection and
engagement of the employee; (2) payment of wages; (3) power of
dismissal; and (4) the power to control the employee's conduct. Of
the above, control of employee's conduct is commonly regarded as
the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship. Under the control
CASE DIGEST LABSTAN 1st EXAM
test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not
only the end to be achieved, but also the manner and means to be
used in reaching that end.
In this case, CDSPB reserved the right to control and supervise the
operations of the Girls' Department. As noted by the labor arbiter
himself and affirmed by the NLRC, although CDSPB "actually
exercised minimal supervision over petitioner, [it] could exercise
substantial supervision and control as it did when [it] preterminated
the Agreement." There was, therefore, no basis in finding that
petitioner had a "greater degree of autonomy and independence in
running the affairs" of the school. The presence of the school
director, whose vast powers have already been noted, negates any
suggestion or semblance of autonomy.
Nor is there any merit in the claim that "actual and effective control"
was exercised by petitioner since the designation of the parish priest
as director was "a mere formality, as he did perform functions which
are purely ministerial and figurative in nature."[19] Time and again
we have held that "the 'control test' only requires the existence of the
right to control the manner of doing the work not necessarily the
actual exercise of the power by him, which he can delegate."[20]
Indeed, although the letters of appointment were signed by the
principal/representative of petitioner, they bore the name/letterhead
of CDSPB and clearly indicated therein that the employees were
hired as teachers/personnel by CDSPB, and not by RVM. Moreover,
CDSPB itself admits that its name not petitioner's appears in the
employees' payroll ledger cards.[21]
One other crucial fact to consider is that private respondents-
complainants continued to render services beyond April 10, 1987,
the termination date of the Agreement. If they were employees of
petitioner and not of CDSPB, their services should have been
terminated the moment the Agreement was no longer in effect.
Instead, CDSPB continued to honor their respective employment
contracts/appointment papers and avail of their services even after
petitioner turned over the school's administration to CDSPB. Indeed,
it does not appear that there was a break or change in the
employment status of private respondents-complainants, neither are
they claiming separation pay from petitioner, unlike in cases where
there is a supposed change in employers.[22]
Based on the Agreement and other evidence on record, it thus
appears that petitioner was merely the agent or administrator of
CDSPB, and that private respondents are its employees. In Ponce v.
NLRC,[23] this Court held:
Under Section 8, Rule VIII, Book III, of the Omnibus Rules
Implementing the Labor Code, an independent contractor is one who
undertakes "job contracting," i.e., a person who (a) carries on an
independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work
except as to the results thereof, and (b) has substantial capital or
investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of
the business. Jurisprudential holdings are to the effect that in
determining the existence of an independent contractor relationship,
several factors might be considered such as, but not necessarily
confined to, whether or not the contractor is carrying on an
independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign
the performance of specified pieces of work, the control and
supervision of the work to another; the employer's power with
respect to the hiring, firing and payment of the contractor's workers;
the control of the premises; the duty to supply premises, tools,
appliances, materials and labor; and the mode, manner and terms of
payment.
As above stated, petitioner was subject to the control and
supervision of CDSPB in running the Girls' Department. Petitioner
has not been shown to have substantial capital or investment
necessary in the conduct of the business. Under the Agreement, the
ownership of the parcel of land and the building thereon remained
11
with CDSPB. Tested by the standards announced in Ponce,
petitioner cannot be considered an independent contractor.
CDSPB nonetheless argues that petitioner should be made liable
to pay the salaries for the month of May 1987 since petitioner
collected the revenues for school year 1986-1987 from which said
salaries should be sourced.[24] Petitioner, on the other hand,
claims that it has been its "uniform and traditional practice in its
administration of various schools throughout the Philippines to fix
the school budget from May 1 to April 30."[25]
It is unnecessary to pass upon this claim. The fact that CDSPB is
the direct and only employer of private respondents makes it solely
liable to pay the salaries for the month of May 1987 to the
concerned employees. Whether or not said salaries should come
from the fees collected by its agent (petitioner) for the previous
year is a matter to be litigated between CDSPB and RVM. Here,
the only issue is who is the employer of private respondents.
Filipinas Synthetic Fiber Corporation vs. NLRC, et al.
G.R. No. 113347
June 14, 1996
BELLOSILLO, J.:
Facts:
On 4 April 1991 FILSYN, a domestic corporation engaged in the
manufacture of polyester fiber, contracted with De Lima Trading
andGeneral Services (DE LIMA) for the performance of specific
janitorial services Pursuant to the agreement Felipe Loterte, among
others, was deployed at FILSYN to take care of the plants and
maintain general cleanliness around the premises.On 24 February
1992 Loterte sued FILSYN and DE LIMA as alternative
defendants for illegal dismissal, underpayment of wages,non-
payment of legal holiday pay, service incentive leave pay and 13th
month pay alleging that he was first assigned to perform janitorial
work at FILSYN in 1981 by the La Saga General Services; that the
La Saga was changed to DE LIMA on August 1991; that when a
movement todemand increased wages and 13th month pay arose
among the workers on December 1991 he was accused by a
certain Dodie La Flores of havingposted in the bulletin board at
FILSYN an article attributing to management a secret
understanding to block the demand; and, for denyingresponsibility,
his gate pass was unceremoniously cancelled on 6 February 1992
and he was subsequently dismissed.
Loterte was classified by the Labor Arbiter as a regular employee
on the ground that he performed tasks usually necessary or
desirablein the main business of FILSYN for more than ten (10)
years or since 1981. FILSYN was declared to be the real employer
of Loterte and DELIMA as a mere labor contractor. Hence,
FILSYN was adjudged liable for Loterte's reinstatement, payment
of salary differentials and back wages and other benefits. Hence,
this petition for certiorari by FILSYN.
Issue:
Whether or not there exists an employer-employee relationship
between FILSYN and private respondent Felipe Loterte.
Decision:
DE LIMA is an independent job contractor, therefore no direct
employer-employee relationship exists between petitioner
FILSYN andprivate respondent Felipe Loterte. The relationship
between petitioner Filipinas Synthetic Fiber Corporation and private
respondent DeLima Trading and General Services (DE LIMA) is
one of job contractorship.Under the Labor Code, two (2) elements
must exist for a finding of labor-only contracting: (a) the person
supplying workers to anemployer does not have substantial capital
or investment in the form of tools, equipment, machineries, work
premises, among others, and (b) theworkers recruited and placed
by such persons are performing activities directly related to the
principal business of such employer.These two (2) elements do not
CASE DIGEST LABSTAN 1st EXAM
exist in the instant case. As pointed out by petitioner, private
respondent DE LIMA is a going concernduly registered with the
Securities and Exchange Commission with substantial capitalization
of P1,600,000.00, P400,000.00 of which is actuallysubscribed.
Hence, it cannot be considered as engaged in labor-only contracting
being a highly capitalized venture. Moreover, while the janitorial
services performed by Felipe Loterte pursuant to the agreement
between FILSYN and DE LIMA may be considered directly related to
the principal business of FILSYN which is the manufacture of
polyester fiber, nevertheless, they are not necessary in its
operation. On the contrary,they are merely incidental thereto, as
opposed to being integral, without which production and company
sales will not suffer. Judicial notice hasalready been taken of the
general practice in private as well as in government institutions and
industries of hiring janitorial services on anindependent contractor
basis.Respondent De Lima Trading and General Services (DE LIMA)
are ordered to reinstate private respondent FELIPE LOTERTE to
hisformer position or its equivalent without loss of seniority rights.
And private respondent De Lima Trading and General Services (DE
LIMA) isordered jointly and severally with petitioner Filipinas
Synthetic Fiber Corporation to pay private respondent FELIPE
LOTERTE his salary differentials, 13th month pay, service incentive
leave pay, and backwages without prejudice to FILSYNseeking
reimbursement from DELIMA for whatever amount the former may
pay or have paid the latter.
DY KEH BENG (piece rate)
According to Dy Keh Beng, however, Solano was not his employee
for the following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the order
given him by Dy;
(3) When there were no orders needing his services there was
nothing for him to do;
(4) When orders came to the shop that his regular workers could not
fill it was then that Dy went to his address in Caloocan and fetched
him for these orders; and
(5) Solano's work with Dy's establishment was not continuous. ,
According to petitioner, these facts show that respondents Solano
and Tudla are only piece workers, not employees under Republic Act
875, where an employee 8 is referred to as shall include any
employee and shag not be limited to the employee of a particular
employer unless the Act explicitly states otherwise and shall include
any individual whose work has ceased as a consequence of, or in
connection with any current labor dispute or because of any unfair
labor practice and who has not obtained any other substantially
equivalent and regular employment.
while an employer includes any person acting in the interest of an
employer, directly or indirectly but shall not include any labor
organization (otherwise than when acting as an employer) or anyone
acting in the capacity of officer or agent of such labor organization.
Petitioner really anchors his contention of the non-existence of
employee-employer relationship on the control test. He points to the
case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et
al., L-13130, October 31, 1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is
whether there is an understanding between the parties that one is to
render personal services to or for the benefit of the other and
recognition by them of the right of one to order and control the other
in the performance of the work and to direct the manner and method
of its performance.
ISSUE:
1.Whether there existed an employee employer relation between
petitioner Dy Keh Beng and the respondents Solano and Tudla .
RULING:
While this Court upholds the control test under which an employer-
employee relationship exists "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, " it
finds no merit with petitioner's arguments as stated above. It should
be borne in mind that the control test calls merely for the existence of
the right to control the manner of doing the work, not the actual
exercise of the right. Considering the finding by the Hearing
Examiner that the establishment of Dy Keh Beng is "engaged in the
12
manufacture of baskets known as kaing, it is natural to expect that
those working under Dy would have to observe, among others,
Dy's requirements of size and quality of the kaing. Some control
would necessarily be exercised by Dy as the making of the kaing
would be subject to Dy's specifications. Parenthetically, since the
work on the baskets is done at Dy's establishments, it can be
inferred that the proprietor Dy could easily exercise control on the
men he employed.
Nevertheless, considering that about eighteen (18) years have
already elapsed from the time the complainants were dismissed,
and that the decision being appealed ordered the payment of
backwages to the employees from their respective dates of
dismissal until finally reinstated, it is fitting to apply in this
connection the formula for backwages worked out by Justice
Claudio Teehankee in "cases not terminated sooner." The formula
cans for fixing the award of backwages without qualification and
deduction to three years, "subject to deduction where there are
mitigating circumstances in favor of the employer but subject to
increase by way of exemplary damages where there are
aggravating circumstances. Considering there are no such
circumstances in this case, there is no reason why the Court
should not apply the abovementioned formula in this instance.
COCA COLA BOTTLERS PHILS., INC., Petitioners, v.
NATIONAL LABOR RELATIONS COMMISSION and RAMON B.
CANONICATO, Respondents.
DECISION
BELLOSILLO, J.:
On 7 April 1986 COCA COLA entered into a contract of janitorial
services with Bacolod Janitorial Services (BJS) stipulating 3 among
others —
That the First Party (COCA COLA) desires to engage the services
of the Second Party (BJS), as an Independent Contractor, to
perform and provide for the maintenance, sanitation and cleaning
services for the areas hereinbelow mentioned, all located within the
aforesaid building of the First Party . . .
1. The scope of work of the Second Party includes all floors,
walls, doors, vertical and horizontal areas, ceiling, all windows,
glass surfaces, partitions, furniture, fixtures and other interiors
within the aforestated covered areas.
In addition, the Second Party will also do the following once a
week, to wit: 1) Cleaning, waxing and polishing of lobbies and
offices; 2) Washing of windows, glasses that require cleaning; 3)
Thorough disinfecting and cleaning of toilets and washrooms.
Every year thereafter a service contract was entered into between
the parties under similar terms and conditions until about May
1994. 4
On 26 October 1989 COCA COLA hired private respondent Ramon
Canonicato as a casual employee and assigned him to the bottling
crew as a substitute for absent employees. In April 1990 COCA
COLA terminated Canonicato’s casual employment. Later that year
COCA COLA availed of Canonicato’s services, this time as a
painter in contractual projects which lasted from fifteen (15) to thirty
(30) days.
On 1 April 1991 Canonicato was hired as a janitor by BJS 6 which
assigned him to COCA COLA considering his familiarity with its
premises. On 5 and 7 March 1992 Canonicato started painting the
facilities of COCA COLA and continued doing so several months
thereafter or so for a few days every time until 6 to 25 June 1993. 7
Goaded by information that COCA COLA employed previous BJS
employees who filed a complaint against the company for
regularization pursuant to a compromise agreement, 8 Canonicato
CASE DIGEST LABSTAN 1st EXAM
submitted a similar complaint against COCA COLA to the Labor
Arbiter on 8 June 1993. 9 The complaint was docketed as RAB Case
No. 06-06-10337-93.chanrobles law library
Without notifying BJS, Canonicato no longer reported to his COCA
COLA assignment starting 29 June 1993. On 15 July 1993 he sent
his sister Rowena to collect his salary from BJS. 10 BJS released his
salary but advised Rowena to tell Canonicato to report for work.
Claiming that he was barred from entering the premises of COCA
COLA on either 14 or 15 July 1993, Canonicato met with the
proprietress of BJS, Gloria Lacson, who offered him assignments in
other firms which he however refused. 11
On 23 July 1993 Canonicato amended his complaint against COCA
COLA by citing instead as grounds therefor illegal dismissal and
underpayment of wages. He included BJS therein as a co-
respondent. 12 On 28 September 1993 BJS sent him a letter
advising him to report for work within three (3) days from receipt,
otherwise, he would be considered to have abandoned his job.
RULING:
We perceive at the outset the disposition of the NLRC that janitorial
services are necessary and desirable to the trade or business of
petitioner COCA COLA. But this is inconsistent with our
pronouncement in Kimberly Independent Labor Union v. Drilon 18
where the Court took judicial notice of the practice adopted in
several government and private institutions and industries of hiring
janitorial services on an "independent contractor basis." In this
respect, although janitorial services may be considered directly
related to the principal business of an employer, as with every
business, we deemed them unnecessary in the conduct of the
employer’s principal business. 19
This judicial notice, of course, rests on the assumption that the
independent contractor is a legitimate job contractor so that there
can be no doubt as to the existence of an employer-employee
relationship between the contractor and the worker. In this situation,
the only pertinent question that may arise will no longer deal with
whether there exists an employment bond but whether the employee
may be considered regular or casual as to deserve the application of
Art. 280 of the Labor Code.chanroblesvirtuallawlibrary:red
It is an altogether different matter when the very existence of an
employment relationship is in question. This was the issue generated
by Canonicato’s application for regularization of his employment with
COCA COLA and the subsequent denial by the latter of an employer-
employee relationship with the applicant. It was error therefore for
the NLRC to apply Art. 280 of the Labor Code in determining the
existence of an employment relationship of the parties herein,
especially in light of our explicit holding in Singer Sewing Machine
Company v. Drilon 20 that —
. . . [t]he definition that regular employees are those who perform
activities which are desirable and necessary for the business of the
employer is not determinative in this case. Any agreement may
provide that one party shall render services for and in behalf of
another for a consideration (no matter how necessary for the latter’s
business) even without being hired as an employee. This is precisely
true in the case of an independent contractorship as well as in an
agency agreement. The Court agrees with the petitioner’s argument
that Article 280 is not the yardstick for determining the existence of
an employment relationship because it merely distinguishes between
two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to
certain benefits, to join or form a union, or to security of tenure.
Article 280 does not apply where the existence of an employment
relationship is in dispute.
In determining the existence of an employer-employee relationship it
is necessary to determine whether the following factors are present:
(a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power to dismiss; and, (d) the power to control the
employee’s conduct. 21 Notably, these are all found in the
relationship between BJS and Canonicato and not between
13
Canonicato and petitioner COCA COLA. As the Solicitor-General
manifested 22 —
In the instant case, the selection and engagement of the janitors for
petitioner were done by BJS. The application form and letter
submitted by private respondent (Canonicato) to BJS show that he
acknowledged the fact that it was BJS who did the hiring and not
petitioner . . .
BJS paid the wages of private respondent, as evidenced by the fact
that on July 15, 1993, private respondent sent his sister to BJS with
a note authorizing her to receive his pay.
Power of dismissal is also exercised by BJS and not petitioner. BJS
is the one that assigns the janitors to its clients and transfers them
when it sees fit. Since BJS is the one who engages their services,
then it only follows that it also has the power to dismiss them when
justified under the circumstances.
Lastly, BJS has the power to control the conduct of the janitors. The
supervisors of petitioner, being interested in the result of the work
of the janitors, also give suggestions as to the performance of the
janitors, but this does not mean that BJS has no control over them.
The interest of petitioner is only with respect to the result of their
work. On the other hand, BJS oversees the totality of their
performance.
The power of the employer to control the work of the employee is
said to be the most significant determinant. Canonicato disputed
this power of BJS over him by asserting that his employment with
COCA COLA was not interrupted by his application with BJS since
his duties before and after he applied for regularization were the
same, involving as they did, working in the maintenance
department and doing painting tasks within its facilities. Canonicato
cited the Labor Utilization Reports of COCA COLA showing his
painting assignments. These reports, however, are not expressive
of the true nature of the relationship between Canonicato and
COCA COLA; neither do they detract from the fact that BJS
exercised real authority over Canonicato as its employee.
Moreover, a closer scrutiny of the reports reveals that the painting
jobs were performed by Canonicato sporadically, either in a few
days within a month and only for a few months in a year. 23 This
infrequency or irregularity of assignments countervails
Canonicato’s submission that he was assigned specifically to
undertake the task of painting the whole year round. If anything, it
hews closely to the assertion of BJS that it assigned Canonicato to
these jobs to maintain and sanitize the premises of petitioner
COCA COLA pursuant to its contract of services with the company.
24
It is clear from these established circumstances that NLRC should
have recognized BJS as the employer of Canonicato and not
COCA COLA. This is demanded by the fact that it did not disturb,
and therefore it upheld, the finding of the Labor Arbiter that BJS
was truly a legitimate job-contractor and could by itself hire its own
employees. The Commission could not have reached any other
legitimate conclusion considering that BJS satisfied all the
requirements of a job-contractor under the law, namely, (a) the
ability to carry on an independent business and undertake the
contract work on its own account under its own responsibility
according to its own manner and method, free from the control and
direction of its principal or client in all matters connected with the
performance of the work except as to the results thereof; and, (b)
the substantial capital or investment in the form of tools,
equipment, machinery, work premises, and other materials which
are necessary in the conduct of its business.25cralaw:red
It is to be noted that COCA COLA is not the only client of BJS
which has its roster of clients like San Miguel Corporation,
Distilleria Bago Incorporated, University of Negros Occidental-
Recolletos, University of St. La Salle, Riverside College, College
Assurance Plan Phil., Inc., and Negros Consolidated Farmers
Association, Inc. 26 This is proof enough that BJS has the
CASE DIGEST LABSTAN 1st EXAM
capability to carry on its business of janitorial services with big
establishments aside from petitioner and has sufficient capital or
materials necessary therefor. 27 All told, there being no employer-
employee relationship between Canonicato and COCA COLA, the
latter cannot be validly ordered to reinstate the former and pay him
back wages.
BAUTISTA VS INCIONG
Petitioner was employed by Associated Labor Unions(ALU) as
organizer. Bautista went on leave and when he went back to work,
he was informed that he was already terminated. The Director ruled
in favor of Bautista. The Deputy Minister of Labor, however, set aside
the order of the Director finding that his membership coverage with
the SSS which shows that respondent ALU is the one paying the
employer’s share in the premiums is not conclusive proof that
respondent is the petitioner’s employer because such payments
were performed by the respondent as a favor for all those who were
performing full time union activities with it to entitle them to SSS
benefits. He then ruled that there was no emplore-employee
relationship between ALU and Bautista by the fact that ALU is not an
entity for profit but a duly registered labor union whose sole purpose
is the representation of its bonafide organization units.
ISSUE:
Whether or not there can be employer-employee relationship
between a labor union and its member.
HELD:
Yes, the mere fact that the respondent is a labor union does not
mean that it cannot be considered an employer of the persons who
work for it.
Moreover, the four elements in determining the existence of an
employer-employee relationship was present in the case at bar. The
Regional Director correctly found that the petitioner was an
employee of the respondent union as reflected in the latter’s
individual payroll sheets and shown by the petitioner’s membership
with the Social Security System (SSS) and the respondent union’s
share of remittances in the petitioner’s favor. Bautista was selected
and hired by the union. ALU had the power to dismiss him as indeed
it dismissed him. And definitely, the Union tightly controlled the work
of Bautista as one of its organizers.
CENTRAL NEGROS ELECTRIC COOPERATIVE VS DOLE
Facts:
On August 15, 1987, CENECO entered into a collective bargaining
agreement with CURE, a labor union representing its rank-and-file
employees, providing for a term of three years retroactive to April 1,
1987 and extending up to March 31, 1990. On December 28, 1989,
CURE wrote CENECO proposing that negotiations be conducted for
a new collective bargaining agreement (CBA).
On January 18, 1990, CENECO denied CURE’s request on the
ground that, under applicable decisions of the Supreme Court,
employees who at the same time are members of an electric
cooperative are not entitled to form or join a union.
Prior to the submission of the proposal for CBA renegotiation, CURE
members, in a general assembly held on December 9, 1989,
approved Resolution No. 35 whereby it was agreed that ‘tall union
members shall withdraw, retract, or recall the union members’
membership from Central Negros Electric Cooperative, Inc. in order
to avail (of) the full benefits under the existing Collective Bargaining
Agreement entered into by and between CENECO and CURE, and
the supposed benefits that our union may avail of under the renewed
CBA.
14
However, the withdrawal from membership was denied by
CENECO on February 27, 1990 under Resolution No. 90.
Issue: WON the employees of CENECO who withdrew their
membership from the cooperative are entitled to form or join CURE
for purposes of the negotiations for a collective bargaining
agreement proposed by the latter.
Held:
The right of the employees to self-organization is a compelling
reason why their withdrawal from the cooperative must be allowed.
As pointed out by CURE, the resignation of the member-
employees is an expression of their preference for union
membership over that of membership in the cooperative. The
avowed policy of the State to afford fall protection to labor and to
promote the primacy of free collective bargaining mandates that the
employees’ right to form and join unions for purposes of collective
bargaining be accorded the highest consideration.
Thus, member employees of a cooperative may withdraw as
members of the cooperative in order to join labor union.
Membership in a cooperative is voluntary; inherent in it is the right
not to join.
NOTES: (San Jose Electric Service Cooperative vs. Ministry of
Labor)
1. A cooperative, therefore, is by its nature different from an
ordinary business concern being run either, by persons,
partnerships or corporations. Its owners and/or members are the
ones who run and operate the business while the others are its
employees.
2. An employee therefore of such a cooperative who is a member
and co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his
co-owners. Employees of cooperatives who are themselves
members of the cooperative have no right to form or join labor
organizations for purposes of collective bargaining for being
themselves co-owners of the cooperative.
3. However, in so far as it involves cooperatives with employees
who are not members or co-owners thereof, certainly such
employees are entitled to exercise the rights of all workers to
organization, collective bargaining, negotiations and others as are
enshrined in the Constitution and existing laws of the country.
AIR SERVICES COOP VS CA
It is a well settled legal principle that in the interpretation of a
contract, the entirety thereof must be taken into consideration to
ascertain the meaning of its provisions.12 The various stipulations
in the contract must be read together to give effect to all.13 After a
careful examination of the records, the Court finds merit in the
contention of Orient Air that the Agreement, when interpreted in
accordance with the foregoing principles, entitles it to the 3%
overriding commission based on total revenue, or as referred to by
the parties, "total flown revenue."
As the designated exclusive General Sales Agent of American Air,
Orient Air was responsible for the promotion and marketing of
American Air's services for air passenger transportation, and the
solicitation of sales therefor. In return for such efforts and services,
Orient Air was to be paid commissions of two (2) kinds: first, a
sales agency commission, ranging from 7-8% of tariff fares and
charges from sales by Orient Air when made on American Air ticket
stock; and second, an overriding commission of 3% of tariff fares
and charges for all sales of passenger transportation over
American Air services. It is immediately observed that the
precondition attached to the first type of commission does not
obtain for the second type of commissions. The latter type of
commissions would accrue for sales of American Air services made
not on its ticket stock but on the ticket stock of other air carriers
sold by such carriers or other authorized ticketing facilities or travel
CASE DIGEST LABSTAN 1st EXAM
agents. To rule otherwise, i.e., to limit the basis of such overriding
commissions to sales from American Air ticket stock would erase any
distinction between the two (2) types of commissions and would lead
to the absurd conclusion that the parties had entered into a contract
with meaningless provisions. Such an interpretation must at all times
be avoided with every effort exerted to harmonize the entire
Agreement.
An additional point before finally disposing of this issue. It is clear
from the records that American Air was the party responsible for the
preparation of the Agreement. Consequently, any ambiguity in this
"contract of adhesion" is to be taken "contra proferentem", i.e.,
construed against the party who caused the ambiguity and could
have avoided it by the exercise of a little more care. Thus, Article
1377 of the Civil Code provides that the interpretation of obscure
words or stipulations in a contract shall not favor the party who
caused the obscurity.14 To put it differently, when several
interpretations of a provision are otherwise equally proper, that
interpretation or construction is to be adopted which is most
favorable to the party in whose favor the provision was made and
who did not cause the ambiguity.15 We therefore agree with the
respondent appellate court's declaration that:
Any ambiguity in a contract, whose terms are susceptible of different
interpretations, must be read against the party who drafted it.16
We now turn to the propriety of American Air's termination of the
Agreement. The respondent appellate court, on this issue, ruled
thus:
It is not denied that Orient withheld remittances but such action finds
justification from paragraph 4 of the Agreement, Exh. F, which
provides for remittances to American less commissions to which
Orient is entitled, and from paragraph 5(d) which specifically allows
Orient to retain the full amount of its commissions. Since, as stated
ante, Orient is entitled to the 3% override. American's premise,
therefore, for the cancellation of the Agreement did not exist. . . ."
We agree with the findings of the respondent appellate court. As
earlier established, Orient Air was entitled to an overriding
commission based on total flown revenue. American Air's perception
that Orient Air was remiss or in default of its obligations under the
Agreement was, in fact, a situation where the latter acted in
accordance with the Agreement—that of retaining from the sales
proceeds its accrued commissions before remitting the balance to
American Air. Since the latter was still obligated to Orient Air by way
of such commissions. Orient Air was clearly justified in retaining and
refusing to remit the sums claimed by American Air. The latter's
termination of the Agreement was, therefore, without cause and
basis, for which it should be held liable to Orient Air.
On the matter of damages, the respondent appellate court modified
by reduction the trial court's award of exemplary damages and
attorney's fees. This Court sees no error in such modification and,
thus, affirms the same.
It is believed, however, that respondent appellate court erred in
affirming the rest of the decision of the trial court.1âwphi1 We refer
particularly to the lower court's decision ordering American Air to
"reinstate defendant as its general sales agent for passenger
transportation in the Philippines in accordance with said GSA
Agreement."
By affirming this ruling of the trial court, respondent appellate court,
in effect, compels American Air to extend its personality to Orient Air.
Such would be violative of the principles and essence of agency,
defined by law as a contract whereby "a person binds himself to
render some service or to do something in representation or on
behalf of another, WITH THE CONSENT OR AUTHORITY OF THE
LATTER .17 (emphasis supplied) In an agent-principal relationship,
the personality of the principal is extended through the facility of the
agent. In so doing, the agent, by legal fiction, becomes the principal,
authorized to perform all acts which the latter would have him do.
Such a relationship can only be effected with the consent of the
principal, which must not, in any way, be compelled by law or by any
court. The Agreement itself between the parties states that "either
15
party may terminate the Agreement without cause by giving the
other 30 days' notice by letter, telegram or cable." (emphasis
supplied) We, therefore, set aside the portion of the ruling of the
respondent appellate court reinstating Orient Air as general sales
agent of American Air.
CASE: PNB VS. CABANSAG
Ponente: J. Panganiban
Facts:
Florence Cabansag went to Singapore as a tourist. While she was
there, she looked for a job and eventually applied with the
Singapore Branch of the Philippine National Bank. PNB is a private
banking corporation organized and existing under Philippine laws.
She was eventually employed and was issued an employment
pass. In her job offer, it was stated, among others, that she was to
be put on probation for 3 months and termination of her
employment may be made by either party after 1 day notice while
on probation, and 1 month notice or 1 month pay in lieu of notice
upon confirmation. She accepted the terms and was issued an
OEC by the POEA. She was commended for her good work.
However, she was informed by Ruben Tobias, the bank president,
that she would have to resign in line with some cost cutting and
realignment measures of the company. She refused but was
informed by Tobias that if she does not resign, he will terminate her
instead.
Issues:
W/N the arbitration branch of the NLRC has jurisdiction
W/N the arbitration of the NLRC in the NCR is the proper venue
W/N Cabansag was illegally dismissed
Ruling:
Labor arbiters have original and exclusive jurisdiction over claims
arising from employer-employee relations including termination
disputes involving all workers, including OFWs. Here, Cabansag
applied for and secured an OEC from the POEA through the
Philippine Embassy. The OEC authorized her working status in a
foreign country and entitled her to all benefits and processes under
our statutes. Although she may been a direct hire at the
commencement of her employment, she became an OFW who was
covered by Philippine labor laws and policies upon certification by
the POEA. When she was illegally terminated, she already
possessed the POEA employment certificate.
A migrant worker “refers to a person who is to be engaged, is
engaged or has been engaged in a remunerated activity in a state
of which he or she is not a legal resident; to be used
interchangeably with overseas Filipino worker.” Here, Cabansag
was a Filipino, not a legal resident of Singapore, and employed by
petitioner in its branch office in Singapore. She is clearly an
OFW/migrant worker. Thus, she has the option where to file her
Complaint for illegal dismissal. She can either file at the Regional
Arbitration Branch where she resides or the RAB where the
employer is situated. Thus, in filing her Complaint before the RAB
office in Quezon City, she has made a valid choice of proper venue.
CASE DIGEST LABSTAN 1st EXAM
The appellate court was correct in holding that respondent was
already a regular employee at the time of her dismissal, because her
three-month probationary period of employment had already ended.
This ruling is in accordance with Article 281 of the Labor Code: “An
employee who is allowed to work after a probationary period shall be
considered a regular employee.” Indeed, petitioner recognized
respondent as such at the time it dismissed her, by giving her one
month’s salary in lieu of a one-month notice, consistent with
provision No. 6 of her employment Contract.
RAVAGO vs ESSO EASTERN MARINE Case Digest
[G.R. No. 158324. March 14, 2005]
ROBERTO RAVAGO, petitioner, vs. ESSO EASTERN MARINE,
LTD. and TRANS-GLOBAL MARITIME AGENCY, INC.,
respondents.
FACTS: The respondent Esso is a foreign company based in
Singapore and engaged in maritime commerce. It is represented in
the Philippines by its manning agent and co-respondent Trans-
Global, a corporation organized under the Philippine laws. Roberto
Ravago was hired by Trans-Global to work as a seaman on board
various Esso vessels. On February 13, 1970, Ravago commenced
his duty as S/N wiper on board the Esso Bataan under a contract
that lasted until February 10, 1971. Thereafter, he was assigned to
work in different Esso vessels where he was designated diverse
tasks, such as oiler, then assistant engineer. He was employed
under a total of 34 separate and unconnected contracts, each for a
fixed period, by three different companies, namely, Esso Tankers,
Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd.
(EIS), Singapore Branch. Ravago worked with Esso vessels until
August 22, 1992, a period spanning more than 22 years.
Shortly after completing his latest contract with Esso, Ravago was
granted a vacation leave with pay. Preparatory to his embarkation
under a new contract, he was ordered to report for a Medical Pre-
Employment Examination, which, according to the records, he
passed. He, likewise, attended a Pre-Departure Orientation Seminar
conducted by the Capt. I.P. Estaniel Training Center, a division of
Trans-Global.
One night, a stray bullet hit Ravago on the left leg while he was
waiting for a bus ride in Cubao, Quezon City. He fractured his left
proximal tibia and was hospitalized at the Philippine Orthopedic
Hospital. Ravago’s wife, Lolita, informed the petitioners of the
incident for purposes of availing medical benefits. As a result of his
injury, Ravago’s doctor opined that he would not be able to cope with
the job of a seaman and suggested that he be given a desk job. For
this reason, the company physician found him to have lost his
dexterity, making him unfit to work once again as a seaman.
Consequently, instead of rehiring Ravago, Esso paid him his Career
Employment Incentive Plan (CEIP) as of and his final tax refund.
However, Ravago filed a complaint for illegal dismissal with prayer
for reinstatement, backwages, damages and attorney’s fees against
Trans-Global and Esso with the POEA Adjudication Office.
Respondents denied that Ravago was dismissed without notice and
just cause. Rather, his services were no longer engaged in view of
the disability he suffered which rendered him unfit to work as a
seafarer. This fact was further validated by the company doctor and
Ravago’s attending physician. They averred that Ravago was a
contractual employee and was hired under 34 separate contracts by
different companies.
Ravago insisted that he was fit to resume pre-injury activities and
that he was not a mere contractual employee because the
respondents regularly and continuously rehired him for 23 years and,
for his continuous service, was awarded a CEIP payment upon his
termination from employment.
ISSUE: Whether or not petitioner Ravago is a regular employee of
respondent Esso.
HELD: The SC held that seafarers are contractual, not regular,
employees. Seamen and overseas contract workers are not covered
16
by the term “regular employment” as defined in Article 280 of the
Labor Code.
Petition is denied.
NFA VS MASADA
The contention is meritorious.
In construing the word "wage" in Section 6 of RA 6727, reference
must be had to Section 4 (a) of the same Act. It states:
SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum
wage rates for all workers and employees in the private sector,
whether agricultural or non-agricultural, shall be increased by
twenty-five pesos (P25) per day … (Emphasis supplied)
The term "wage" as used in Section 6 of RA 6727 pertains to no
other than the "statutory minimum wage" which is defined under
the Rules Implementing RA 6727 as the lowest wage rate fixed by
law that an employer can pay his worker.26 The basis thereof
under Section 7 of the same Rules is the normal working hours,
which shall not exceed eight hours a day. Hence, the prescribed
increases or the additional liability to be borne by the principal
under Section 6 of RA 6727 is the increment or amount added to
the remuneration of an employee for an 8-hour work.
Expresio unius est exclusio alterius. Where a statute, by its terms,
is expressly limited to certain matters, it may not, by interpretation
or construction, be extended to others.27 Since the increase in
wage referred to in Section 6 pertains to the "statutory minimum
wage" as defined herein, principals in service contracts cannot be
made to pay the corresponding wage increase in the overtime pay,
night shift differential, holiday and rest day pay, premium pay and
other benefits granted to workers. While basis of said remuneration
and benefits is the statutory minimum wage, the law cannot be
unduly expanded as to include those not stated in the subject
provision.
The settled rule in statutory construction is that if the statute is
clear, plain and free from ambiguity, it must be given its literal
meaning and applied without interpretation. This plain meaning rule
or verba legis derived from the maxim index animi sermo est
(speech is the index of intention) rests on the valid presumption
that the words employed by the legislature in a statute correctly
express its intention or will and preclude the court from construing it
differently. The legislature is presumed to know the meaning of the
words, to have used words advisedly, and to have expressed its
intent by use of such words as are found in the statute. Verba legis
non est recedendum, or from the words of a statute there should be
no departure.28
The presumption therefore is that lawmakers are well aware that
the word "wage" as used in Section 6 means the statutory
minimum wage. If their intention was to extend the obligation of
principals in service contracts to the payment of the increment in
the other benefits and remuneration of workers, it would have so
expressly specified. In not so doing, the only logical conclusion is
that the legislature intended to limit the additional obligation
imposed on principals in service contracts to the payment of the
increment in the statutory minimum wage.
The general rule is that construction of a statute by an
administrative agency charged with the task of interpreting or
applying the same is entitled to great weight and respect. The
Court, however, is not bound to apply said rule where such
executive interpretation, is clearly erroneous, or when there is no
ambiguity in the law interpreted, or when the language of the words
used is clear and plain, as in the case at bar. Besides,
administrative interpretations are at best advisory for it is the Court
that finally determines what the law means.29 Hence, the
interpretation given by the labor agencies in the instant case which
went as far as supplementing what is otherwise not stated in the
law cannot bind this Court.
CASE DIGEST LABSTAN 1st EXAM
It is not within the province of this Court to inquire into the wisdom of
the law for indeed, we are bound by the words of the statute.30 The
law is applied as it is. At any rate, the interest of the employees will
not be adversely affected if the obligation of principals under the
subject provision will be limited to the increase in the statutory
minimum wage. This is so because all remuneration and benefits
other than the increased statutory minimum wage would be
shouldered and paid by the employer or service contractor to the
workers concerned. Thus, in the end, all allowances and benefits as
computed under the increased rate mandated by RA 6727 and the
wage orders will be received by the workers.
Moreover, the law secures the welfare of the workers by imposing a
solidary liability on principals and the service contractors. Under the
second sentence of Section 6 of RA 6727, in the event that the
principal or client fails to pay the prescribed wage rates, the service
contractor shall be held solidarily liable with the former. Likewise,
Articles 106, 107 and 109 of the Labor Code provides:
ART. 106. Contractor or Subcontractor. – Whenever an employer
enters into contract with another person for the performance of the
former’s work, the employees of the contractor and of the latter’s
subcontractor, if any, shall be paid in accordance with the provisions
of this Code.
In the event that the contractor or subcontractor fails to pay the wage
of his employees in accordance with this Code, the employer shall
be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the
contract, in the same manner and extent that he is liable to
employees directly employed by him.
… "x x x an employee is defined as a 'person who performs services
ART. 107. Indirect Employer. – The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts
with an independent contractor for the performance of any work,
task, job or project.
ART. 109. Solidary Liability. – The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer shall
be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter, they shall be
considered as direct employers.
Based on the foregoing interpretation of Section 6 of RA 6727, the
parties may enter into stipulations increasing the liability of the
principal. So long as the minimum obligation of the principal, i.e.,
payment of the increased statutory minimum wage is complied with,
the Wage Rationalization Act is not violated.
In the instant case, Article IV.4 of the service contract provides:
IV.4. In the event of a legislated increase in the minimum wage of
security guards and/or in the PADPAO rate, the AGENCY may
negotiate for an adjustment in the contract price. Any adjustment
shall be applicable only to the increment, based on published and
circulated rates and not on mere certification.31
In the same vein, paragraph 3 of NFA Memorandum AO-98-03-
states:
3. For purposes of wage adjustments, consider only the rate based
on the wage Order issued by the Regional Tripartite Wage
Productivity Board (RTWPB). Unless otherwise provided in the Wage
Order issued by the RTWPB, the wage adjustment shall be limited to
the increment in the legislated minimum wage;32
The parties therefore acknowledged the application to their contract
of the wage orders issued by the RTWPB pursuant to RA 6727.
There being no assumption by NFA of a greater liability than that
mandated by Section 6 of the Act, its obligation is limited to the
payment of the increased statutory minimum wage rates which, as
admitted by respondent, had already been satisfied by NFA.33
17
Under Article 1231 of the Civil Code, one of the modes of
extinguishing an obligation is by payment. Having discharged its
obligation to respondent, NFA no longer have a duty that will give
rise to a correlative legal right of respondent. The latter’s complaint
for collection of remuneration and benefits other than the increased
minimum wage rate, should therefore be dismissed for lack of
cause of action.
The same goes for respondent’s claim for administrative cost and
margin. Considering that respondent failed to establish a clear
obligation on the part of NFA to pay the same as well as to
substantiate the amount thereof with documentary evidence, the
claim should be denied.
VILLAVILLA VS CA
It is thus clear that the arrangement between the boat owner and
the crew members, one of whom was petitioners' son, partook of
the nature of a joint venture: the crew members did not receive
fixed compensation as they only shared in their catch; they
ventured to the sea irrespective of the instructions of the boat
owners, i.e., upon their own best judgment as to when, how long,
and where to go fishing; the boat owners did not hire them but
simply joined the fishing expedition upon invitation of the ship
master, even without the knowledge of the boat owner. In short,
there was neither right of control nor actual exercise of such right
on the part of the boat owner over his crew members.
Consequently, respondent Court of Appeals is correct in upholding
the application by respondent Social Security Commission of the
ruling in Pajarillo v. Social Security System[18] where We held:
for an employer in which either or both mental and physical efforts
are used and who receives compensation for such services, where
there is an employer-employee relationship' (Sec. 8[d], Rep. Act
1161 as amended by Rep. Act 2658). In the present case, neither
the pilots nor the crew-members receive compensation from boat-
owners. They only share in their own catch produced by their own
efforts. There is no showing that outside of their one third share,
the boat-owners have anything to do with the distribution of the rest
of the catch among the pilots and the crew-members. The latter
perform no service for the boat-owners, but mainly for their own
benefit.
"In the undertaking in question, the boat-owners obviously are not
responsible for the wage, salary, or fee of the pilot and crew-
members. Their sole participation in the venture is the furnishing or
delivery of the equipment used for fishing, after which, they merely
wait for the boat's return and receive their share in the catch, if
there is any. For his part, a person who joins the outfit is entitled to
a share or participation in the fruit of the fishing trip. If it gives no
return, the men get nothing. It appears to us therefore that the
undertaking is in the nature of a joint venture, with the boat-owner
supplying the boat and its equipments (sic), and the pilot and crew-
members contributing the necessary labor, and the parties getting
specific shares for their respective contributions.
xxxx
"Add to this extreme difficulty, if not impossibility of determining the
monthly wage or earning of these fishermen for the purpose of
fixing the amount of their and the supposed-employer's
contributions (See Secs. 18 and 19, Ibid.), and there in every
reason to exempt the parties to this kind of undertaking from
compulsory registration with the Social Security System."
Certainly, petitioners' reliance on Negre v. Workmen's
Compensation Commission, supra, and RJL Fishing Corp. v.
NLRC, supra, is misplaced. The observations of respondent Social
Security Commission are more persuasive and correct. Thus -
"The case of Jose Negre vs. Workmen's Compensation, et. al., 135
SCRA 651, invoked by the petitioners-appellants in support of their
claim that there existed an employer-employee relationship
between their son Arturo Villavilla and private respondent Reynaldo
Mercado cannot be applied to the instant case for the simple
reason that the facts in the aforesaid case are different from those
in the case at bar. A look at the Jose Negre case will show that it
CASE DIGEST LABSTAN 1st EXAM 18
made referral to the case of Abong vs. Workmen's Compensation
Commission, 54 SCRA 379, wherein this Honorable Court stated,
and we beg to quote:
xxxx
'In Abong vs, Workmen's Compensation Commission (54 SCRA 379)
we held that fisherman crew-members Manuel and Miguel are
employees and not industrial partners.'

xxxx
"It isto be noted, however, that inthe case of Abong vs. Workmen's
Compensation Commission, this Honorable Court stated and we
again beg to quote:
xxxx
'As pointed by the Commissions finding, the fundamental bases
showing that petitioner Dr. Agustin R. Abong is the employer, are
present, namely, the selection and engagement of the employee; the
payment of wages; the power of dismissal and the employer's a
power to control the employees conduct. These powers were lodged
in petitioner Abong, thru his agent, Simplicio Panganiban, whom he
alleges to be his partner. On this score alone, the petition for review
must fail. It is well-settled that employer-employee relationship
involves findings of facts which are conclusive and binding and not
subject to review by this Court. (underscoring supplied).'

xxxx
"Interestingly, the aforementioned fundamental bases for the
existence of employer-employee relationship are not present in the
case at bar. As mentioned earlier, private respondent Reynaldo
Mercado had no connection with the selection and engagement of
Arturo Villavilla (pp. 38-39, T.S.N. 12-6-83); exercised no power of
dismissal over Arturo Villavilla; neither had he any power of control
or had reserved the right to control Arturo Villavilla as to the result of
the work to be done as well as the means and methods by which the
same is to be accomplished, and there was no such uniform salary
involved (pp. 41-43, T.S.N. 12-6-83)."
In the case before Us, it is clear that there was no employer-
employee relationship between petitioners's son Arturo and private
respondent Mercado, much less private respondent Cosuco. As
such, Arturo could not be made subject of compulsory coverage
under the Social Security Act; hence, private respondents cannot be
said to have violated said law when they did not register him with the
Social Security System. A fortiori, respondents as well as intervenor
are not answerable to petitioners for any death benefits under the
law.

Culled from the foregoing, the inexorable conclusion is that

respondent Court of Appeals did not err in sustaining the judgment of
respondent Social Security Commission.

It may not be amiss to mention that while petitioners merely raise

factual questions which are not proper under Rule 45 of the Rules of
Court, We nevertheless went to great lengths in dissecting the facts
of this case if only to convince Us that petitioners, who are pauper
litigants and seeking claims under a social legislation, have not been
denied its benefits. For, We are not unaware that in this jurisdiction
all doubts in the implementation and interpretation of provisions of
social legislations should be resolved in favor of the working class.
But, alas, justice is not fully served by sustaining the contention of
the poor simply because he is poor. Justice is done by properly
applying the law regardless of the station in life of the contending
parties.

WHEREFORE, finding no reversible error in the questioned

judgment of the appellate court, the same is AFFIRMED. No costs.

SO ORDERED.