labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Labor Standards
It is that part of labor legislation that provides for the minimum
statutory, monetary, and other benefits of the worker that is in
an employer-employee relationship between the employer*.
We are talking here about labor. Labor that you knew, work and
others, that for whom you do the work - it is the employer. The
employer can be a natural person or a juridical person like a
corporation.
Not all service or work done for another is necessarily
compensable, paid, compensated.
Let me bring back to you your learnings in the study of
obligations and contracts. You remember the principles of
contracts. Five principles. The first principle is the principle of
autonomy. Remember that? Parties are free whether or not to
enter into contract. Parties are free to make such speculations,
terms and conditions in a contract so long as it is not contrary
to law, good customs, morals, and convention.
References
Now, very easy for you to know what those standards are. The
official version of the standards is this book – handbook of
workers statutory and monetary benefits 2019 edition abridged
by the department of labor. In the complaints, types of work,
needs, the different components of pay, that is what is
contained here. From there we go to the decided cases in order
to learn about the rules of labor standards.
Why the standards?
You cannot enter into a contract for labor, employer-employee
relationship for wages lower than that which is provided for in
the labor code.
Now, this book I have here is just the bare law 2016. Now you
might ask what is the recommended textbook. My
recommendation is the textbook of mr. Chan.
History of Labor Legislation
Alright, your (11:55-11:59) of labor legislation is not as long as
criminal law, not as long as civil law. It is shorter. Why? Because
labor legislation did not begin the moment man got to render
service to another. Labor legislation is technical in nature.
When did it begin?
It began with the industrial revolution. It is the beginning of
labor legislation.
Why the industrial revolution?
Because that was the time when the working class emerge from
society.
1 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
What is so peculiar about the working
class?
Before the industrial revolution, there was no working class.
There were peasants but there were no working class.
The peasants in relation to the landlord
Their relationship was tenurial in nature (based on the land). The
lord of a castle in the middle ages after the roman empire was
demolished. There was no more central authority. There were
lords and vassals around. The lord was entitled to a share of
whatever the peasant did in the land of the lord. In return, the
lord is obligated to protect the peasant from the robbers, (sic),
hostile blunder robbers. So there was a relationship out of that.
What happened to the peasants?
The peasants somehow of poor family and most likely
involuntarily were driven off their land.
Why are they driven off the land?
Because of technology. You know when the steaming engine
was invented, so that the making of the bread became more
productive because of the steaming engine. The landlord found
out that he would earn more by raising more sheep to earn
more wool. So, there began this movement (sic) it tends more
and more land and drove off peasants. And when they did that,
where did the peasants go? They went to the cities.
And when they go the city, what are they going to do? Late 17th
century, 18th century…they sold themselves out and became
workers – they sold their labor.
So in the 19th century, 1800s… there were 2 philosophers. There
was Karl Marx and Adam Smith. Adam Smith is the father of
modern-day economics (sic).
Karl Marx saw (this) and he said “it is so demeaning of man to
sell his labor. It is prostituting. The resources in the world should
not be owned privately. Man’s work is what gives value to his
life (sic). It’s man’s work.
Why is it that the workers and slave is
paid pittance for his labor?
He is no better than a prostitute; sells his virtue xxx Marx says
the only solution is to remove conditions creating alienation.
(sic)
“workers of the world unite, you have nothing to lose but your
chains”. That is his communist manifesto.
That is the export of the entire gamut of labor you have:
1. Social legislation,
2. Employees’ compensation,
3. Social security law, gsis law,
4. Agrarian reform, etc.,
That is social legislation, an area in labor legislation.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Second is labor standards for the commercial and industrial
worker and the agricultural worker – there are basic minimum
requirements below which an employer cannot stipulate in an
er-ee relationship. You cannot go lower than that. Even the
worker cannot waive it.
Ex. You are with somebody who goes to you and says “i have
been going around davao for 3 days. I have not found work.
Accept me. I do not have to be paid. You can make me do
anything – sweep the floor, whatever.”
So you accept him. You have a small factory and shop, so you
let him sleep there. You feed him. You let him clean. But you
don’t include him in your payroll. Eventually, you lose some
things in your shop. So you tell him to go back to their province.
So he leaves…(but goes to the labor arbiter)
He went to the labor arbiter. He told his story to the labor
arbiter and then labor arbiter said sign this and he notarized it
and the next thing you know you can be summoned by the labor
arbiter for illegal termination. So you go to labor arbiter and say
he is not my employee. I just took him out of pity. He did not
ask for any wage. We did not agree on any wage.
Q: is that a defense?
Too bad! It is not a defense. Why? Because under the labor
code he has suffered or permitted to work. Put that in your
head!
Suffered or permitted to work
That is an exception of the principle of consensuality.
What is the principle of consensuality?
GR: contracts are perfected by mere consent,
XPN: unless the law requires a specific form for its validity.
Contracts that cover real property must be with an intervention
of a notary. It must be in a pubic instrument. But other than that
mere consent, the moment there is meeting of minds there is a
contract regardless of there is written evidence of it or there is
just verbal agreement. Because, the essence a contract is the
meeting of minds. The meeting of minds is represented and
evidenced by consent.
Q: was there consent to this individual who
asked for food who stayed with you for
free?
There was no consent. But is there an employer-employee
relationship under the labor code? Yes, there is! Because you
tolerated this worker. Silhig silhig siya dinha.
Sometimes even if there is no consent, the law imposes a
contract for the protection of the employee. Because, time and
2 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
again the supreme court has said especially in the language of
Chief Justice Ramon c. Aquino
“the worker does not stand on equal footing with the
employer.”
Many times he has no choice but to enter into a contract. He
has nothing else. He has no wealth. He has no land. He has no
other resource except his strength. So in order to live and
continue to function, he sells his labor to another. That is his
only way to earn and live.
Now, according to the supreme court, that is a property right.
For someone to work, for someone to be hired, that is a
property right. It preserves, according to sec. 1 art 3 of the
constitution:
Article III section 1. No person shall be deprived of life, liberty,
or property without due process of law nor shall any person be
denied the equal protection. That section 1 has two rights.
There is the due process right and there is the equal protection
clause.
Due process, you jump to art. 13, sec. 3 of the constitution and
what does it say there?
Article XIII section 3. The state shall afford full protection to
labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and
benefits as may be provided by law.
The state shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster
industrial peace.
The state shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.
So there is that word again, protection to labor. Sec. 1 article 3,
there is also that word protection, life liberty and property. The
right to work is property being protected by the constitution sec
1 article 3. It is also protected under art. 13 sec. 3 of the
constitution…
How many times is labor protected?
It is protected under the equal protection clause and under the
protection to labor clause
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Equal protection
The law will treat you in the same way. The law is symbolized by
the goddess of justice that is blindfolded so that she does not
have to see the personal circumstances that has nothing to do
with your controversy.
What is the duty of the law?
The goddess of justice is blindfolded so that she does not see
whether you are young or old, you are beautiful or ugly, whether
you are rich or you're poor but is only sensitive to the
proposition of balance and equality.
What is protection to labor in article 13?
The state shall afford protection to labor local and overseas,
organized and unorganized, and promote full employment and
equality of employment xxx
Social Justice
That is the protection that emanates from social justice because
the constitution recognizes that our society is fatally flawed
there is so much imbalance in our society.
So many have very little and a few have so much… our society
might be a failed society. Sige ra tag pinatyanay. To work that,
social justice is instituted in the constitution.
What is social justice?
To grant more in law to those who have less in life… so that this
imbalance in society may be cured.
That is why it has to be remedied. That is why we have social
justice. The constitution grants powers in the executive,
legislative and judiciary it also limits their powers … the grant is
at the same time the limit so that we will have balance.
And then you have social justice, social justice has the very least
3 parts: first congress passes laws favorable to the working class
and all other sectors of our society that are disenfranchised
So what sectors of society are those
• Workers
• Laborers
• Subsistent fishermen
• Cultural minority
• Working women
While the congress authors the law then there is an arm in the
executive branch that tries to enforce the law. Congress created
a separate procedure to process labor cases.
3 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Why is it separate?
To make it speedy, inexpensive and available to the lowest (…).
There is a separate procedural system for labor that is free,
speedy and court available.
In regular courts when you have controversies with properties,
damages etc., you pay filing fee but in labor arbiter there is no
filing fee and there is a definite term, that is by way of
protection, and finally that judiciary is also dictated upon by the
law itself but the judiciary is mandated by law to rule in favor
labor in cases of doubt.
When there is doubt to of the law, when there is doubt as to the
actual configuration that is presented in the trier of facts, if there
is doubt then the doubt must be resolved in favor labor that is
all for protection.
The protection of labor is basically an implementation of social
justice, social justice is not the implementation of labor laws. It
is the labor laws (…) social justice is nothing more but a
pronounce stand, thrust to do something about our society,
What is that thrust?
to make sure those marginalized will be brought in, will be given
more, in order to save society.
So when the Constitution says art 13., sec. 3 “the state shall
afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of
employment opportunities for all. Xxx”
Let me ask you why is there inequality in
society?
If you listen to Karl Marx and those inspired by him, in society
there are those people at the bottom because there are those
at the top. In society there are those oppress because there are
oppressors that is why there is class, more of classes.
Time would come Karl Marx said “a classless society”, after the
revolution (…) a dictatorship (...) An economist bicycle (…)
would tell you equality, absolute equality, full employment,
equality of employment opportunities can never be
Why? Because when you begin in this life all are not
equal, natao ka sa kalibutan, bright ka o bulok ka, mas bright
nimo, not all can enter law school, not everybody can even
finish high school and yet that is basic education, natao ka naka
ginikanan ka pobre o ginikanan ka adunahan then you can go
to the best schools, the starting line is already not equal, that is
why, that is the basic reason why society is not equal (...) That is
what the economist said (…) but even without them the society
cannot be equal.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Si Michael Jordan, dato man na siya kay naa siya abilidad. If
wala ka abilidad like Michael Jordan, way mohatag nimu kwarta.
Sala ba na niya nga talented siya og basketball? Too bad for
people who wants a first-class basketball player. But the starting
point is to understand this inequality in the society. But can
social justice remedy, let say you fall short of your height?
Limit of Social Justice
Now, i tell you the limit of social justice. Section 3 says "
promote full employment, xxx". And theoretically full
employment cannot be achieved.
Why? Because there is such a thing as frictional unemployment.
Frictional Unemployment
It is the result of an economy moving by reason of changes in
technology. Because the economy moves, what happens is that
there is always somebody whose skills will become obsolete.
And the example given in the notes is the receptacle for
cooking rice.
Originally, before Magellan came, they were already using an
old, indigenous, receptacle for cooking rice – the earthen pot.
Now here comes the kaldero, the pig iron pot. So those who
were making earthen pots, their skills became obsolete. Now,
when the rice cooker came in, the makers of the pig iron pot
lost their relevance. They are unemployed.
Now, you have this pyrex – combination where you can just
cook your rice and you can also put it on the table without
apologies, because it’s good enough for the table. That’s the
end also of the ordinary rice cooker.
It’s always moving, and because it moves, there are people who
have no work.
So if all work, and there’s nobody who is
not out of work, is the economy moving?
This implies that because the economy moves, there are
segments of society that are unemployed. And that’s just
frictional unemployment.
Now, if are an unskilled worker, where do you normally find a
job? Let say, you wanted to work as a carpenter, you must have
the necessary skills such as the proper measurement. If dili ka
kabalo, adto nalang ka sa agriculture.
Now, what is the standard of agriculture
internationally?
Take a look for example in the U.S., with 350 million
populations, how many are directly involved in agriculture?
What percentage of their people is involved in agriculture?
4 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
It used to be 3% five years ago before labor statistic found out
that only 2% is involved in agriculture. Where are the others?
What are they doing? What are they working on? The U.S. has
already become the “service tech?”
Difference between service industry and
agriculture
Those are all industries with inelastic demand. Bisag pila pay
baka imong buhatan og babies your population will not be
going to change so much. The demand of this is inelastic, di
man ka mukaon og daghan karne tungod kay daghan naman
karne dinha, bisag unsa paman dinha mao man jud na.
And when you go to service, for instance entertainment, making
of movies that is a service industry and tourism. Is your number
of good movies that you want to see limited? You can watch as
many movies as there are.
In service industry, the demand is elastic there are as many
services that you will choose as they are available. These are
service industry. Now, labor’s member is basically to the lowest
kind of work. A worker that is involved in minimum skills.
So we have said that social justice is necessarily an
interventionist legislation... It’s not like civil law. Civil law
assumes that all bodies are co-equal with each other. There is
no social justice in civil law. But civil law only admits of
exceptions that are natural exceptions.
What are those?
• Orphans,
• widows,
• those that are mentally challenged,
• those who are insane.
Concept of Parens Patriae under the Civil
Code
That is why, in the Constitution, these orphans, widows,
mentally challenged are not mentioned as part of society that is
marginalized and requires more in law to those who have less
in life. They are not counted. Why are they not counted?
Because in civil law, they are already taken care of.
How are they taken care of?
By that particular, overarching concept in civil law as parens
patriae. The fundamental fatherhood of the State that comes to
the rescue when all or one of its citizens loses their parents. So,
the orphans, they lose their parents, the State will come in by
virtue of parens patriae – which is different from patria
protestas.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
What is patria protestas?
If you remember your civil law, what is the difference between
parens patriae and patria protestas? Review lng ni ginagmay.
Patria protestas, remember, is parental authority. Parental
authority is shed off the moment you reach the age of majority
which is 18 years. By the time you reach 18 years of age,
technically it is of legal age. You can no longer disobey your
parents because you are of age. Your parents no longer have
patria protestas over you.
So, it is important therefore, that we have a good understanding
of the difference between parens patriae and social justice. How
do we distinguish the two? We distinguish the two as to the
following criteria:
First: Historical Origin. Parens patriae originates from the
Middle Ages when it was the duty of the crown, the duty of the
lord to protect his subjects against marauding brigands.
Social justice has its origin from the industrial revolution when
so many poor people have found themselves in the city in need
of work. It came into existence at the time of the industrial
revolution.
What are the assumptions behind parens
patriae?
The assumption in parens patriae is everyone in society stands
on equal footing with everyone else. No one is compelled to
enter into a contract or not. That’s the principle of autonomy.
And the parties themselves agree to what should be agreed
upon – it’s not the State.
But in social justice, society is assumed as fatally flawed. Too
many have too little, and a few have too much breeding a
dangerous environment.
Third aspect, The state action in parens patriae. The state acts
by way of exception. As to the generality of its citizens, the state
does not have to do anything in this regard. Why? Because they
are alright. They have parents who take care of them. It is their
responsibility to secure that their children are educated, they
are fed, etc. The state only comes in by way of exception. If you
lose your parent, they will bring you to DSWD and the DSWD
will look an orphanage for you because you are a minor.
What is the state action in Social Justice?
The state action in Social Justice is not by way of exception. It
is a permanent posture and sustained effort granting (more in
law----) It is ongoing. The state does not act by way of exception
that is the normal stance of the society when too many have too
little and too few have too much. And then, the remedy if the
state fails to act. If the state fails to act to help orphan.
What is your remedy?
5 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
To go to court. Makakita kay bata, ibutang lang ug basket naa
dinha walay pagkaon. Ikaw kuhaon nimo. And then you can go
to court and petition the court to accept this abandon baby and
then the DSWD will come and look for (????) for this particular
orphan, child.
What is the remedy if the State fails to
pass laws in favor of labor? What is the
remedy?
You cannot go to court and ask for an order to compel congress
to pass laws in favor of the unemployed, in favor of at dispute,
in favor of women workers, the resistance farmers. They cannot
go to court. The court cannot order the legislature because they
are co-equal branches of the government.
So, your remedy is not judicial. you elect people who will
implement social justice congressmen and senators. You should
put them if you are convinced that you can benefit.
In civil law, there is this concept personal obligations cannot be
enforced by a suit for a specific performance. Do you remember
that in your obligations and contracts? Panahon pa sa covid
gusto ka na ang barbero muadto nimo aron mu tupi nimo oh
diba for 3 days your hair dresser will come to your house and fix
your hair. So, bayaran lang nimo siya atung butngan ug cash.
You come to my house, you fix my hair and make yourself look
new. That day, she does not show up. You call her to come and
she says “No, I will not come” without giving any reason.
Can you go straight for a preliminary
injunction to order that woman to come to
you to fix your hair, since you have
already paid?
NO. Personal obligations cannot be remedied by an order from
court telling the obligor to perform such personal obligation.
What can you do?
2 remedies; either:
1. Go to another hairdresser, have her fix your hair, and charge
it to the first hairdresser who refused to fix your hair; or
2. You can file suit for damages asking the first hairdresser to
pay for the injury or loss that is sustained because she failed to
do your hair as agreed upon.
Constitution: NO involuntary servitude in any forms shall
exist except:
1. As a punishment for a crime where the person has been duly
convicted.
So if you are convicted you can be forced to get the mines, or
do work in the banana industry. It is part of your punishment.
2. You can also be forced to do civil or military service to serve
your country.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Civil service – if you are a conscientious objector (?), meaning
you cannot kill someone. So you will be tasked to work behind
the lines, i.e. in the supplies
3. If you have a governmental function that requires your
service.
Ex. Stenographer. You retire and receive the retirement
benefits, but you did not finish transcribing the stenographic
notes. The other stenographers might not be able to
understand these notes. The parties now need the TSNs.
Held by SC:
Judge issued an order to complete the TSNs, even if she was
already retired from the service. It does NOT constitute
involuntary servitude.
…Upheld by the Supreme Court constituting involuntary
servitude. So involuntary servitude.
Caunca vs Salazar (82 phil 851)
Facts:
Estelita Flores was brought from the province to Manila and
stayed in the house of respondent who was running an
employment agency. Estelita was prevented from going with
her cousin, the Petitioner, unless the money advanced for her
fare and other transportation expenses be paid first.
Issue: WON an employment agency has the right to
restrain/detain a maid until the latter has returned the payment
advanced to her?
Held:
No. An employment agency, regardless of the amount
advanced to a prospective employee has absolutely no power
to curtail the freedom of movement of said EE.
The fact that power to control said freedom may be an effective
means of avoiding monetary losses to the agency is not reason
for jeopardizing a fundamental human right. The fortunes of
business cannot be controlled by controlling fundamental
human freedom. Human dignity is not a merchandise
appropriate for commercial barters or business bargains.
Fundamental freedoms are beyond the province of commerce
or any other business enterprise.
Even if the employer will say they have already left with her
parents one year-worth of wages. The maid cannot be
compelled to serve. That is what you call indentured slavery.
Parehas niadto, naa ka sa England then gusto ka muadto ug
US, tapos wa kay trabaho. Then nay mo ingon sa imo na bayran
nako imong pasahe, bayran nako imong pagkaon pero pag
abot sa US… trabaho ka nako hantod sa mabayran nimo akong
6 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
nagastos na pasahe ug pagkaon nimo. That is indentured
slavery. That is now prohibited in the constitution.
You cannot be forced to work. But you received the money!
What happens? It is a money obligation. You are bound to
repay it and you are not bound to work. Bayran na nimo
whenever you are able!
Principle of Mutuality
Parties to the contract are mutually bound to fulfil their
obligations.
In other words that is only not one party. All parties to the
contract are bound by the contract because under the
obligatory principle, the contract is the law. You are bound.
Now, the employer-employee contract is not the same.
Typically speaking it is the same.
But because of the prohibition against involuntary servitude
found in the Constitution, an employee can always walkout from
his employer-employee contract. Gipaskwela man kas imong
employer mahal kaayo ang gasto. That’s why we have that case
of…
Singapore Airlines v. Echiverri
(Editor’s Note: I tried my best to find the case online, but to no
avail. Based sa lecture lang ni na FIR)
Contract says “you will serve the airline for at least five years
after your training and so if you leave earlier than one year, then
you will have to pay 500,000.00 pesos. (talks about cost of
training). If you leave the second year, 400,000. If you leave in
the third year, 300,000, leave the fourth year, 200,000. If you
leave in the fifth year, 100,000. In other words it is a liquidated
damages agreement…Now this guy jumped singapore airlines
Lawyer of PET: move to dismiss. Judge does not have
jurisdiction because it is Ee-Er relationship. It should be the
Labor Arbiter. he cannot be compelled to work. It is a violation
of the involuntary servitude clause.
Judge Echiverri: this is no longer ee-er relationship contact. It is
now a contract for DAMAGES. And besides that, there is a
subsidiary contract for surety. He has a co-signer with him. The
co-signer was the mayor of Pasay city.
If the contract were for EE-ER relationship, you cannot enforce
him. So, this is no longer an ee-er contact. It is therefore a
Contract for damages whereby you are not compelled to serve,
you are compelled to PAY the expenses.
that’s why companies who have spent on the training, they
require you to have a surety who would sign with you, and they
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
would stipulate so called “liquidated damages in case of
breach.”
Why? Because you cannot tell the employee to serve.
5-year contract pirma. One year pa lang, sibat ka. And the
company compels you to serve the remaining 4 years as you
have agreed. No, you cannot. CANNOT. That’s why they put
the liquidated damages.
Now is the employer equally bound in (ee-
er contract)? Can ER terminate the contract
any time since pwede man makasibat si Ee?
No. Employer is bound by law to EMPLOY you indefinitely.
Subject to the condition of just or authorized causes.
Just Cause
kanang nanangawat siya, he becomes ineffecient and destroys
the machinery imo na siya i-terminate and because it his fault
no benefits.
Authorized cause
cause not attributable to the employee or employer, ang covid
walay trabaho, sira ang factory ingnon nimo “dili tika
sweldohan, dili man naku sala naay covid” - pwede na, but if it
is on the own volition of the employer he says “no more, I cut
off employer-employee relaltionship” he cannot do that.
So where is the mutuality principle that parties to the contract
are equally bound to the contract when it is not fulfilled (…) free
to end the contract contrary to what is stipulated in the contract,
why? Because there is no such thing as involuntary servitude,
involuntary servitude is prohibited.
The Non-Impairment Clause
Article 3, sec. 10 of the Consitution “No law impairing the
obligation of contracts shall be passed”
The exception to the non-impairment clause are
1. police power and
2. legislation.
If it is legislation or police power then obligations in contract
may be impaired,
e.g. I am the employer you are the employee we agreed that
your daily wage is 300 pesos a day so I give you your
appointment, you signed, there is a contract.
While you are working there is a new wage order by the regional
tripartite wages and productivity board the minimum of 300 is
now adjusted. There is an increase of 60, the new minimum now
is 360.
What happens to your old agreeement? Is it
not impaired?
7 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Yes, your wage now is 360, the contract is impaired because
there is law that change it. Labor legislation is not bound by the
obligatory principle – what the parties agreeed upon is the law
between the parties.
If there is new law that intervenes and outputs a different term
and conditions from which was agreed upon, what will prevail?
It is the law that changes the terms and conditions (…).
Now if I may explain, think about of a spectrum.
To the left of the spectrum is a list of contracts by which service
is rendered to another without compensation. e.g. wife's
services to her husband, children to their parents. Your mother
cooks for you. The laundry, the cleaning, those are services that
are not compensable, right? You did not pay for it. Then,
religious sectors rendering service to the public. That's another
instance for a service to another without
compensation. Convicts doing hard work, etc.
Now, in the middle, you have gov't employees. Why are the
gov't employees included? Govt employment is not based on
labor code.
What is the basis of engagement of the
government to its employees?
The basis is law. You are either appointed by the appointing
authority vested by law with the power to appoint or you are
elected. There were only two ways by which you can become a
government employee.
You cannot be a government employee by prescription. Napulo
naka katuig cge timpla kape and it does not ripen for you to
become a government employee. and you will say, SO
UNJUST!
… The government is unjustly enriching itself by service without
pay. Why is that the rule? That is the rule because of another
overarching rule that the government is not bound by the
mistakes.
The officers might have made a mistake of enriching you
without an appointment or without an election, nasayop ang
mga officers. But the government is not bound by that mistake
because if it were then sayon ra kayo mahapay, because all the
officers will make that mistake, your engagement with the
government will ripen into regular employment at the cost of
the taxpayer not at the government. So government is not
bound by the mistakes, there must be either appointment
or election (sic).
Now we go to the right side, the right side start with an
independent contractor under the civil code, shared tenancy,
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
RA 6657. Tenant ka sa landlord, you bring service to the
landlord that is not labor code, that is under RA 6657.
Third, you have housemaids- personal service of another,
domestics. That is why domestics are not covered by the labor
code they have a separate law which is the Kasambahay Law
because they are the product of the industrial revolution.
Even before the industrial revolution, they already exist. Baller,
chauffer, buttler- they have their own protocols.
And then you have quasi-contracts. What is a quasi-contract?
You have a junkshop repairing motorcycles and then the owner
just disappeared without a cause, he leaves behind his shop.
Somebody takes over and he maintains it and the owner comes
back, he says oh I will take over my shop since I own this, its on
my land and its on my property. So he tells him to go home?
Does he owe him money? Based on quasi-contract, he owes it
by virtue of 2144 because if he will not give you money he will
unjustly enrich himself.
That is why that is the source of his obligation to recompense
the one who took over his duty when he was not around. That
is quasi-contract that is not the labor code.
Finally, you have employer-employee relationship. What is
that? That is a contract that is complying the requisites laid
down in the landmark case of
Employer-Employee Relationship
DEFINITION:
LVN vs Philippine Musicians Guild
Facts:
Philippine Musicians Guild is a duly registered legitimate labor
organization. LVN Pictures, Inc., Sampaguita Pictures, Inc., and
Premiere Productions, Inc. are corporations, duly organized
under the Philippine laws, engaged in the making of motion
pictures and in the processing and distribution thereof; that said
companies employ musicians for the purpose of making music
recordings for title music, background music, musical numbers,
finale music and other incidental music. Ninety-five (95%)
percent of all the musicians playing for the musical recordings
of said companies are members of the Philippine Musicians
Guild.
The Guild prayed that it be certified as the sole and exclusive
bargaining agency for all musicians working in the
aforementioned companies. In their respective answers, the
latter denied that they have any musicians as employees, and
alleged that the musical numbers in the filing of the companies
are furnished by independent contractors.
8 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
The lower court sustained the theory of the Guild. A
reconsideration of the order complained of having been denied
by the Court en banc, LVN Pictures, inc., and Sampaguita
Pictures, Inc., filed these petitions for review for certiorari.
Issue:
Whether or not the musicians are employees of the companies?
Ruling:
Yes. It is well settled that “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 . . . .”
In other words, to determine whether a person who performs
work for another is the latter’s employee or an independent
contractor, the National Labor Relations relies on ‘the right to
control’ test. Under this test an employer-employee relationship
exist where the person for whom the services are performed
reserves the right to control not only the end to be achieved,
but also the manner and means to be used in reaching the end.
In this case, the work of the musical director and musicians is a
functional and integral part of the enterprise performed at the
same studio substantially under the direction and control of the
company.
Furthermore, the film companies summon the musicians to
work, through the musical directors. The film companies,
through the musical directors, fix the date, the time and the
place of work. The film companies, not the musical directors,
provide the transportation to and from the studio. The film
companies furnish meal at dinner time.
The motion picture director — not the musical director —
“solely directs and performance of the musicians before the
camera“. The motion picture director “supervises the
performance of all the actors, including the musicians who
appear in the scenes, so that in the actual performance to be
shown in the screen, the musical director’s intervention has
stopped.” Or, as testified to in the lower court, “the movie
director tells the musical director what to do; tells the music to
be cut or tells additional music in this part or he eliminates the
entire music he does not (want) or he may want more drums or
move violin or piano, as the case may be”. The movie director
“directly controls the activities of the musicians.” He “says he
wants more drums and the drummer plays more” or “if he wants
more violin or he does not like that.”
Read that case that is the only case you read on labor, that is
the most important case in labor law.
How do you know that is employer-employee relationship, it
must comply with the requisites laid down by the SC in this case
decided by Justice Roberto Concepcion.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
When is it covered by the labor code?
We have to differentiate employer-employee relationship from
independent contracting, agency, agricultural tenancy, lease
contract, industrial partnership. These are all similar contractual
relationships that must be differentiated from employer-
employee relationship.
What else do you have to remember about
employer employee relationship?
Employer-employee relationship did not exist until the
industrial revolution. Before that there was no employer
employee relationship. This has less than 250 years of
existence. The Civil Code must have an existence of over a
thousand years because it dates back to before the Roman
Empire. This employer-employee relationship only came about
with the industrial revolution.
Suppose you render service to somebody and there is no
agreement at all as to payment, how much it is that you are to
be paid, or whether or not you are to be paid. Can the one who
rendered service later on demand payment when there is an
absence of a contract? Is compensation owing to the one who
rendered service?
This question is answered in the case of Perez vs Pomar 2 Phil
682 (1903) barely four years from the arrival of the Americans to
the Philippines. This case was decided by the Philippine
Supreme Court.
Perez v. Pomar
(LA TSN 2019 Edition p.15. FIR based on lecture)
FACTS:
Mr. Pomar is a mestizo Spaniard who runs the company that
makes cigars, Tabacalera Filipinas. In order for him to make
cigarettes and cigars, he had to obtain tobacco. They needed
to go around and the way to go around that time was by horse
and carriage.
At that time, the Philippines was still in an unsettled state. The
Americans had not fully pacified Luzon. There were still pockets
of rebellion. So, in the main body of Luzon where Mr. Pomar
had to go around to look for tobacco, he had to bring an
interpreter. He needed an interpreter because American
soldiers manned so many checkpoints. Checkpoints are not new
at all. In 1900 there are already checkpoints.
When they would reach a particular checkpoint, he (Mr. Pomar)
only knew Spanish and Filipino and the Americans only knew
English. How could they communicate? He would be a
suspect. Especially since the Americans have to overrun and
defeat the Americans to take over the Philippines. So, he
convinced Mr. Perez to come along with him.
9 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Perez knew Spanish, English and Filipino. Now, how did he get
Perez to get along with him. He says, can you come along with
me and you act as my interpreter in the checkpoints and you
can also engage in business yourself. If you want to buy
something, if you can load it in the carriage and later on you
can make use of it.
So, that is what happen they went around buying and Perez also
probably bought something and he did translation work for and
in behalf of Omar. They went about that way for about 7-8
months and then after that and Perez went to Omar you owe
me for my translation services.
Omar said, we never talk about compensation. I thought you
just came for the ride and the benefit that you can purchase
things and you load it in the carriage and be of profit to you. He
says I did not owe you a single cent because we did not agree
about your compensation. Perez says you have to pay me
because for 7 or 8 months I have not been able to do anything
except do interpreters work for you.
ISSUE:
If services are rendered and no agreement was made
beforehand as to whether or not it is compensated or much less,
or how much the compensation should be, is there obligation
to pay for that service?
Take note this is not a labor question. This can be the rendition
of service even outside employer-employee relationship.
They went to court and the lower court ruled in favor of Omar.
Since there is no agreement, there is no compensation. They
raised it to the Supreme Court. Perez is the appellant and Omar
as the appellee.
HELD:
The Court decided that compensation is owing to Perez.
Yes. The Supreme Court ordered Omar to pay Perez. How
much? According to the SC “quantum meruit”. As much as the
value of that service fetches in ordinary circumstances.
Human relations case. You remember that doctor who attended
somebody who fell by the sidewalk and had a heart attack? The
doctor revived him, put him in his car, brought them to the
hospital and the man finally got well. Is the doctor owing
compensation from the person he just saved?
The Supreme Court said “that patient owes the doctor
compensation.”
Did the patient ask the doctor to serve him? No. He lost
consciousness, so he could not have asked the doctor.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
So, if you translate it in Labor Code terms, there was no
selection and hiring. Did they agree on the service that it was
compensable? Did they agree as to how much would it be
compensated? They did not agree because he was
unconscious.
Why is it that the doctor must be paid? Did he not swear the
Hippocratic oath, that he will strive to do no harm and save
lives? He has an oath as a doctor. Why does he have to paid
when it was his duty to attend? What was the Supreme Court’s
ratio decidendi?
(Ratio decidendi – that reasoning or enunciation of the ruling of
the court without which there would be no ruling. It is the
essence of the opinion of the court. It is that which makes the
gist of the decision)
Ratio decidendi of the SC: If you do not pay the physician who
attended to you when you were unconscious and brought you
to the hospital, you will be unjustly enriching yourself.
So, the underlying principle is unjust enrichment. Why? If the
service rendered is normally compensable, then you have to
pay for the service, regardless whether it is covered by Labor
Code or Civil Code, prescinding from the law that is applicable,
you must pay.
What if you are the beneficiary of a
service that is NOT normally compensable?
You cannot demand compensation. For instance, if the school
were open, you would come here, and before you come, since
you are a smoker, you would stand by across the street and go
to the sari-sari store and ask the seller to light your cigarette.
Everyday, you do that. Until the sari-sari store owner’s face and
forehead furrows even more wrinkled every time you go to him.
Ngano maning tawhana mudungka ug kalayo dili man gani
mupalit sa ako ug isa kastick ug sigarilyo.
Can that owner of the sari-sari store. Will you or your
accumulated recipient of his service of lighting your cigarette.
Kay naka bintaha man ka niya sige ka ug dungka sige ka ug
dungka isa naka kabulan.
22 days ka na sigeg dungka sa iyang sigarilyo wa gyud ka
mupalit niya. Wa kay compensation gihatag niya. Moingon siya
sunod nimo dungka nimo gani ingnon nimo siya bayri ko sa
tanan nimo pag light your fire. Every time you came to me. Can
she do that?
The issue is whether the service of
lighting or sharing fire is a compensable
act.
The answer is no. Since time immemorial, fire is shared.
10 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Fire is not given. Putting out a fire might be compensable but
giving fire is unpaid service since time immemorial. You are not
thereby diminished by sharing fire. Tungod kay naa kay gipa
dungka, di man ka makabsan ug kalayo. There is no unjust
enrichment. So, it is not compensable. There is no agreement
as to whether or not how much you should pay for the service
of lighting your cigarette. This is a dictum. This is a principle
even before industrial revolution.
LVN v. Philippine Musicians Guild
The most famous and important labor case in the whole
Philippine reports and the whole SCRA is the case of LVN vs
Philippine Musicians Guild. This case is ancient as it is.
Why is it the most important case?
Because the Supreme Court teaches us how to understand the
requisites of employer-employee relationship. The requisites of
employer-employee relationship are mentioned in LVN vs
Philippine Musicians Guild. But it is not the first time
enumerated by the court.
In Viana vs Alagadan, that was the first time that the Court
enumerated. It is a case in the 50’s.
Now, why is it that it is LVN that is more famous than Viana vs
Alagadan. Alagadan was the first one, they say that these are
the requisites of existence of employer-employee relationship.
These are the four elements whether employer-employee
relationship exists. What are those four?
• First, there must be selection and hiring. There is
engagement.
• Second, there must be payment of wages.
• Third, there must be power to dismiss.
• Fourth, there must be power of control.
What kind of control?
Control not just as to the goal or ends to be achieved by the
service but as to the manner or mode particular to the service.
If you have those four you have employer-employee
relationship.
LVN v. Philippine Musician’s Guild
(FIR based on lecture. read previous digest.)
Here, you have the putative employer as a movie producer-
(LVN). The ones who were respondents are these groups of
musicians who want to form a union vis-a-vis LVN.
Now this group of musicians probably dissatisfied by how they
are paid by LVN because they want to form a union. Now when
they filed a petition for certification on ----election (?) --- with
the department of labor, the answer of LVN is “they are not our
employees.”
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
So you see how the ee-er relationship issue arose?
LVN: we do not know them.
Why do you not know them?
LVN: bec there was no selection & hiring--- we did not hire these
musicians!
Who hired them? It is the musical director.
Who is this musical director? This musical director is engaged
by LVN to provide music for a particular movie. They will
negotiate, they will get the opinion of the musical director
LVN: here is the movie. Here is the script.
What kind of movie is it? Is it a romantic movie? Detective
movie? War movie?---- and it is the director who suggests the
music. ---an agreement.
What kind of music will be used? Will it be an original
composition? In which case, the musical director will try to look
for a composer.
The musicians according to LVN, were not selected and hired
by LVN productions. Who hired them? It is the musical director.
And the musical director is paid a lumpsum by LVN and out of
that lumpsum, he budgets the payment of the musicians,
payment of the copyright, and other expenses of practicing and
rehearsing the music and finally appending it to the final version
of the movie.
So alright, who pays the salaries of the musicians? It is not LVN,
it is the musical director. It is the musical director who knows
the rates of the various musicians. Who are the beginners, who
are the accomplished musicians? Who are the virtuosos, the first
fiddle, the second fiddle. Whatever. It is the musical director.
The producers, they dont know that. So they don’t know to pay
musicians.
So, the second requisite is no longer complied with. Who has
the power to dismiss? It is also the musical director. So, of the
four requisites, three are not complied with! So, the Supreme
Said the musicians are in an employer employee with LVN.
Why?
This is where the Supreme Court (SC) explains in its decison
shows that the 4th requisite - the power of control is the
overarching requirement for the existence of employer-
employee relationship, it is more than the previous three (3)
requisites. Remember, control not just as to the end or to the
goal to be accomplished but as to the means, methods,
measure that will be undertaken to accomplish that makes it
employer-employee relationship.
So how is this 4th test verify in LVN? SC says, it is clear that LVN
has power of control over the musicians, the musicians it is true
that they are selected and paid by the musical director, the
musicians may also be dismissed by the musical director
11 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
because it is he who can gauge the musicians, if he is absent,
does not shows up, is lazy, it is the musical director who will
dismiss him,
But how control is shown by LVN :
LVN issues what is called a call slip it has the name of the
musician supplied by the musical director, his instrument also
made known by the musical director and the place where he
should be there at a particular time to be picked up by the LVN
bus, why are they picked up? Obvioulsy, so many of them
cannot take public transportation because many of them are
carrying big boxes, suppose you are carrying this box and you
hail a jeepney, will they let ride you a jeepney? Wala nay
lingkuranan tong uban eh, you are not allowed, difficulty in
transportation, maski mag taxi ka, lisod man gani ng isulod sa
taxi niya mahal, that is why LVN picks them.
So the control is the call slip, above the call slip is written LVN
Productions Incorporated, the movie is The Return of The
Comeback, that is the movie and you are the musician, you
report there and you were being picked up by the LVN, another
control sign, you were brought to the studios of LVN, you
practice within the studios that is not owned by the musical
director but by the LVN. The meal time, let us say lunch or
supper it is LVN that provides you meals because if you are not
provided meals you may wander away and waste time looking
for karinderya then eat, no, you are fed there by the LVN, LVN
controls you.
The most significant item of evidence that shows you control as
to the manner, means of producing the end desire is in the final
recording of the music that is the rendition of music that you
will produce that will be attached to the film.
At first, it will be the music director who will be leading and
meeting you, but in the final take it is the movie director, he
takes over the music director and he will direct how to play the
music so that it will fit the movie, the scene is that the main actor
and love interest is about to kiss, the movie director will take
over he will want the violins to be emphasized and the notes
stretched so as to bring out the romanticism of the scene.
So, to bring out the romanticism of the scene, it is not the
musical director who will do that because he is not responsible
for the final impact of the movie. It is the movie director. And
the Movie Director represents the LVN employer. That is why
the SC concluded that this ER-EE relationship existed and the
musicians who form union vis a vis LVN. When I read it, I see
many things because it is well researched it is not a *fly of
melody decision.
Roberto Concepcion is not a labor expert, he is a civilist. He has
doctorate in Civil Law from Madrid. He studied Spanish just like
J.B.L. Reyes, Obrado Sanchez. But his decision is well narrated.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
employee relationship is rendition of service, why is it not one
Now, the main argument of LVN says, we are not in the business of the requisites? You look for any labor code authority if you
of making music. Why do you make musician our employees? can answer that question you look for the decisions of the
We are in the business of making movies. If it were the Supreme Court, they can answer that question and tell me
cameraman, lightman, costumes man, understandable that they because I have not found that answer from decided cases and
are our employees. But musician? We did not make music! We from the commentaries. Not even the mighty J.J. Chan, he has
make movies! not answer it. It is up to you to look for these things.

Cases on Power of Control Test

How the SC resolve it?
The SC said, it is true that you make movies but trials and
So we said that according to Justice Roberto Concepcion, the
hardest we kept, we have not found a movie without music.
most important of the four requisites is the power of control
Music may be secondary to you but secondary does not mean
test. How are we to understand the power of control test? There
not necessary.
are at least four cases that you must be familiar with in order to
realize the ramifications of this test. The first is Sterling Products
Secondary means practical necessity that there must be music.
vs Sol 7 SCRA 446 (1963).
Even before that there was sophisticated recording of music in
the movie, they were already pianist while the Charlie Chaplin
LOCATION SEPARATED FROM CONTROL
movie made shown. Because it is ALWAYS movie, visual and
Sterling Products vs Sol 7 SCRA 446 (1963)
music and audio that are put together that made an impact on
entertainment.
Sol is a radio monitor. As a radio monitor, she listens to the
radio stations as directed as to the time, at noon, afternoon,
Now, the SC is saying you might not comply with the first three
evening, early morning. The job is to listen and to find out
requisites but if there is evidence that power of control as to the
whether the advertisement of your principal is aired on that day.
means and manner of achieving the end, then you have ER-EE
relationship. This is the overarching element; it is the most The principal contracts with an advertising agency as to the
number of times that it will air and the specific times of its
important requisite of all.
advertisement. To see whether or not they are fulfilling the
contract, they need a radio monitor. Sol, does not report to the
Now, I would like for you to have this knowing ____ because
office. As early as 1960, she was a work-at-home person
here you will be reading many many cases because here there
because you can listen to the radio in your home.
is something like forty cases on employer-employee
relationship.
Sterling products is maker of Astring-o-sol and other over-the-
counter home remedies therefrom. Sol complained that she
Try to list on the one hand, evidence that could prove
was not paid the minimum wage. When she complained the
employer-employee relationship regardless of the categories
employer said, she's not an employee. That is the defense. Why
they fall in. There are many into decided cases then you list
is she not an employee? Because according to Sterling
items of evidence that negate employer-employee relationship.
Products, “How can he be our employee when we cannot
Read those cases then you will really profit by reading
exercise the power of control? He's at home. We are in the
employer-employee relationship cases.
company premises.” So they are postulating that the power of
control test can only be met If the employee is within the
Later on, when you practice you will have that horizon, mangita
physical premises of the employer over which she
ka og ebidensya, who the employees are, you are to decide
or he can be controlled as to the means and methods of work.
how can you prove. It is important that you have the four
requisites or employer-employee relationship.
Is that correct?
The Supreme Court did not accept that measure. The Supreme
Let me ask you why there is no element which says the rendition Court said it does not require physical juxtaposition for you to
of service is a requisite for the existence of employer-employee be the effective subject of control by your employer. You can
relationship. So, there are four requisites but nowhere does it be controlled even if you are away.
say rendering of service.
How can she be controlled?
Can employer-employee exist even if no She was given a radio that could only be tuned to the radio
evidence for services that has been station that the company bought their time from. She was given
rendered?
The answer is yes because it is not present in employer- a schedule as to the times that she specifically had to listen:
employee relationship. Is it not that the essence of employer- 12:00 noon, 3:00 in the afternoon, 6:00 in the evening, etc - she

12 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.

 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
is to listen. That is control. There is no need to be really within
the physical reach of the corporation/employer for you to be
effectively under its control.
What is the doctrine that comes out from
it?
For the power of control test to be met, physical proximity is
not necessary. You can be controlled in some other ways - your
schedule, your equipment, reporting requirements, etc. That
can take the place of physical distance and fulfill the
requirements of control.
ACTUAL EXERCISE OF CONTROL
Dy Keh Beng vs. International Labor
In Dy Keh Beng vs International Labor, you have an employer
there whose business is selling kaings (big baskets). There are
these two petitioners who went to the department of labor for
a petition because they want to form a union vis-a-vis Dy Keh
Beng.
What is the answer of Dy Keh Beng? He said that he does not
know those two people and that they are strangers to them.
They are not their employees and are not reported in SSS, they
do not have working hours. Their relation with them is that they
buy kaings from them. They just buy their homemade products
and that is how they are connected to them. “They are not our
employees. They do not have office hours and we do not
control them. They are only selling to us their home-made
kaings.”
The argument here is the piece rate. Since the kaings are
bought on a piece rate basis, equivalently, the petitioners are
paid on a per piece basis.
Second, they have not demonstrated how we control them.
They have not demonstrated exactly how we control them. Do
we require them to sell us definite number of baskets? Do we
give them working hours, office hours?
Kamo, how do we control them? They have not
given us evidence. So, is that a worthy
defense?
The Supreme Court said that was a flimsy piece rate system
neither denies nor affirms the relationship between the one who
is paid and the one paying. Does not deny nor confirm
employer-employee relationship.
What does it assert? What does it prove?
It proves payment. That’s it. It does not prove the legal
characterization nor relationship. He is neutral. You could be or
could not be in an employer-employee relationship.
The fact that they have not shown evidence how they were
patrolled is not necessary. What is necessary is that you prove
13 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
that there is reservation that there is power of control. Prove
that there is power of control not necessarily the actual exercise
of power of control.
How is the reservation of the power of
control proven?
By the petitioners. It is proven by saying “look we cannot vary
the size of the kaings. Sakto gyud among kaings pareho lang
ang gidak-on sa mga kaings nil ana gipalit.”
The materials that are use pariha gyud. It is not the same, we
are not making kaings out of plastic.
So, the Supreme Court says that is what’s necessary minimum
requirement to prove the existence of the power of control. All
you need to do is prove that the putative employer reserves the
power of control. He can exercise the power of control. Pag-
abot na anang duha magdala na na sila ug basket na lahi ug
size. Nganu man nganu gagmay ug basket murag souvenir sa
kasal. Dawatun ba na? Dili na dawatun. Because it is not
according to the specification. The specs prove the exercise of
the control of the kinds of those baskets.
CONTINUITY OF CONTROL
RJL Martinez Fishing v. NLRC 127 Scra 455
1982.
The employer here is a deep see fishing... It has about 60 boats
throughout into the bay. They would land in Malabon, Manila.
At that time, there was still no fishing port.
They would go to the shore and depending of the tide whether
it is low tide or high tide, they still needed to load and unload
the boat and so they would hire workers to wait to reach the
boat and unload the catch to waiting refrigerated vans. Then
they would load them with the rituals needed for the ship for
you to go out again to the deep. So that was the job. Loading
and unloading of the vessel.
Now, they complained of not payment of 13th month pay,
holiday pay. The response of the RJL Martinez Fishing is they
are not our employee. They are independent contractors. Our
engagement with them is on the loading and unloading basis.
Why do you say that? Because they would also load and unload
other fishing vessels. Of course, we have priority, if our vessels
arrive, they would first load and unload our vessels, but they are
there to load and unload other fishing vessels. We do not really
control them. They pass on to other employers. So, they are not
our employees. That is their basis.
How did the Supreme Court understand? Did
they accept that kind of reasoning?
The Supreme Court says, you do not have enough vessels
landing every day to keep them working for loading and
unloading for 8 hours. So, they are paid partially. So, they look
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
for other jobs and if there is another vessel that will land, they
will go over and work, load and unload those vessels.
Are you penalizing them for earning full
pay by going other vessels?
The Supreme Court says, the power of control test need not be
exercised in a continuous and an unbroken fashion.
to be an employee do you need to be
controlled every minute of the 8 hours that
he is working?
No, you do not have to. He might go to another employer that
does not make him any less of an employee of that employer
after the latter has exercised control as to him of the use of his
time, the method that he should adopt and the actual steps to
be undertaken.
You have 4 instances. ER-EE relationship can be established
even if the 3 first 3 requisites are not complied with, as long as
you can prove, overwhelmingly, that there is power of control.
Power of control is not limited to controlling those that you can
see, hear and actually or physically relate with. You can control
a worker or employee even if he is far away from the workplace.
Third, what you need to prove is reservation of the power of
control; that the putative employer possesses the power to
exercise the power of control. Not necessarily that you must
produce evidence that he exercised control, as long as you can
prove that he can if he wanted to. That’s in the case of Dy Keh
Beng.
Piece-Rate System
Piece-rate system does not prove or disprove the existence of
the power of control. It is the evidence only of payment. It is not
the evidence of the existence or non-existence of power of
control.
Finally, power of control is proven even if there is no continuous
exercise thereof. If there is a legitimate reason to break the
power of control, power of control proof is not jeopardized by
discontinuity or a break in its exercise.
You might say “power of control is everything in ER-EE
relationship. It is the be-all and the end-all. It is everything that
I should remember. I shall forget selection and hiring, payment
of wages. Just power of control.” It is not that simple.
Between you and me, who controls? Our class begins at 5:00. I
come here, I turn this (laptop) on, and you must, in turn, turn
(your laptops/any gadgets) on. I say “5-minute break”, and you
might turn it off, I also go out and take a break. Then I come
back and say “let’s start.”
14 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Who is in control? Looks like its me. Is there ER-EE relationship
between you and me? There is no such relationship. The power
of control – it may be important and over-arching – but it is not
the only test. It is the number one test, but it is not the only test.
You paid tuition; you are in an educational sector. You may do
work for me and I may control the work – I would say “you write
a paper’ and you will submit the paper, and it will be according
to my specification. I exercise control, but there are other
underlying facts which deny ER-EE relationship. Which tells you
that power of control is not the be-all and end-all. It is not a
monopolizing test. Maybe the most important, but not the only
test.
G. Lease Contract
For example, I will choose a case. Lease contract. How do you
differentiate ER-EE relationship from lease? The example given
in the case Citizens League v. Abbas, which is a Davao case,
involves the boundary system.
Citizens League v. Abbas
You have a jeepney, the driver comes, and you say my boundary
is P700.00. And the driver says “okay”. He takes the vehicle,
drives it on your route. He is responsible for the gas, his
meals/drink. At the end of the day, he returns the jeep he filled
it with gas because when he took it was filled with gas. He
returns it and he pays you the 700 that you agreed upon as the
boundary mao mana ang abang.
Is that lease contract? That is the issue in Citizens league vs
Abbas.
You know those jeepney drivers. Those short jeepneys AC. AC
ilang classification dili PUJ. PUJ is public utility jeep. AC is Auto
Calesa. Kanang gagmay gani Route 4 kana ganing san pedro,
bangkerohan. Those were the drivers of the jeepneys who
(inaudible) certification of election during the time of Abbas.
Abbas was a CFI judge. Before RTC there was a CFI, Court of
First Instance. He was the judge. And the operators, suddenly
met with the (inaudible) by the union of the drivers. The divers
were forming a union. And they were asking to lower the abang,
the boundary. And of course the operators said you are not our
employees.
Nag abang mo unya karon mag union mo. Abang mani atong
relationship. You’re paying us to rent the jeepney for one day.
Now, in other words, the petitioners are denying the lease-
relationship between the lessor and lessee. Who is the lessor?
The operator and tagiya sa jeepney. Who is the lessee? The
driver.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Now, the SC said it is obvious that it is not lease agreement.
And then the Supreme Court did not give the reason. Because
it said that it is obvious. Only later on in subsequent cases is the
reasoning SC finally brought to life. And the SC said, if it were
a lease, the lessee will take the vehicle from the lessor and drive
it anywhere. Just like this rent-a-car.
But in this case, the operator, the one who leases it ostensibly
gets the jeep and follows the route of the franchise of the
operator. And the so-called lease price is calculated such that
after spending gasoline, oil, whatever expenditure that is and
the fuel… there is something left behind as his take home pay
after returning it to the operator. That is the share of the
employer.
The employer who must buy tires, buy batteries, buy spare parts
for this vehicle that is ostensibly leased. That is not leased. It is
operated, he makes money, pays expense and whatever is left
that is his share. He is therefore controlled. You cannot drive it
anywhere! It is only the franchise route that he has to follow. He
is under control of the operator. That is lease.
H. Industrial Partnership
What about industrial partnership?
Industrial partnership that is found in the Civil Code Article
1769. Two or more persons contribute property, money or a
common venture and those who cannot contribute money
contribute their industry, their effort. And then out of the profits
realized, they share according to the value of their contribution.
It is an industrial partnership.
Now you have these deep sea fishing boats in Gen San. The
owner of the boat engages a patron. The patron is a non-
licensed captain of the ship but is very experienced. He knows
how to navigate. So after engaging the patron, the patron
gathers his own crew. The owner of the boat or the financer
gives the supplies that the boat needs. The crude oil, the rice,
the solid ice to keep their catch fresh and so on. The expenses
he provides for it. And then they go out to the sea.
Two weeks, sometimes more than they comeback . They sell
their catch. The proceeds from the sale of their catch, the gross
proceeds…basically the pagkaon is only rice. Magsige raman
na silag kilaw… now after the expenses are deducted, what is
left behind is divided into two. One half to the owner of the
vessel, the other half to the crew. And the patron has double
shares. In other words if there are six in the crew, the other half
is divided by seven because the patron gets double. Two shares
Is there ee-er relationship between the
patron and his crew with the fishing boat
owner? Or is that not a partnership?
15 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
The owner of the vessel contributes money, the patron and his
crew contribute their industry. Isnt that an industrial
partnership?
You know these are the fishing boat cases--- there are many of
them. There are two lines of decision. One where the SC says
there is an ee-er relationship. And another line of decision
where the SC says no, there is industrial partnership.
---the difference is explained by the fulfillment or nonfulfillment
of the power of control test.
When is there power of control?
If the patron leaves the shore and has necessary equipment to
be dictated by satellite data as to where to go to look for the
fish. If he has contact with the port of origin, with the owner who
now and then advises him on direction, or the meeting of other
circumstance, that is NOT industrial partnership. It is er-ee
relationship.
Why? Because the owner of the fishing vessel directs the
particulars --- tells you where to go, gives you satellite data
where the fish is, meets you where the fish is with bigger boats,
etc. that is power of control.
But if the patron makes all of the decisions, where to go, how
long to stay out in the deep sea, he alone makes the decisions.
There is no contact from the owner, that is industrial
partnership. That is a true partnership.
So im bringing you to this principle because that is the same
principle in diwalwal.
Up in the mountains, owners of tunnels. Instead of engaging
with a patron, he engages an abantero.
Unsa man ning abantero?
The abantero is a skilled miner who knows how to trace the ore
that they are looking for. They are looking for gold. The
abantero engages people to help him in the looking for ore.
They go down the tunnel, normally it’s 24 hours. The tunnel
owner supplies the electricity that they need to pump out the
water. Mahal ng electricity didto kay dad-on man ang krudo nga
maoy mu-operate sa bomba. If you don't --- the water,
mangalumos na silas ilawm. Sometimes wala na nay electricity.
Kandila2 nalang didto--- that's still an expense.
Now, at the end of 24 hours, the ore that is recovered is
gathered, and then it is sold. The gross proceed is deducted
from the expenses. After it is deducted the net proceeds is
divided into one half to the tunnel owner and one half to the
crew. And the abantero gets double share.
Muingon ka, is that employer-employee
relationship?
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
If it is the tunnel owner that says “naa kay destinasyon ha, kini
dinha, ani---pagdalag radyo ha sa ubos---ayaw adto diras uban
kay kanang uban naay kuan dinha---” that is er-ee relationship.
But if they are free to go anywhere-- mura silag mga ilaga
didto… ang tawag ana sa uban kicker. They put the ores in very
small sacks of flour, they tie it, they put it behind and they kick
it. Unya kuhaon nasad sa lain human ipatid nasad nila didto---
mao na sila gitawag ug kicker. Di na sila Kiko, Kicker. And they
receive one share from the one half that is divided from the net
proceeds.
Many arrangements are like that. Differentiate it from industrial
partnership...
Manila Golf Club v. IAC
one of the famous cases, the so called golf caddies of the
Manila Golf Club (MGC), the club is located between Makati
Business District and Fort Bonifiacio, between those two is
Forbes Park, Manila Polo Club and Manila Golf Club, why is
MGC expensive?
There are only 500 and they have not increased membership
and it is the most convenient golf club if you are a businessman
with businesses in Makati, you can go there at 5 o’clock in the
morning at the first light of dawn, you go to the tahoe, 9 holes
beat 30, rush taking a shower, and go to the office in Makati by
9 o’clock, wakwak gani kag golf not wakwak golfcourse lain pud
na haaa kung wakwak gani kag golf.
How much is membership in MGC? Membership in MGC is
already over a million, you cannot be a member without shelling
out buying an existing membership of 1 million pesos. MGC has
qualified caddies, they just do not carry your golf clubs but they
give you advice kay kahibalo man sila sa game “sir ang hangin
painon diri, adto atubang didto arun imong bola tumahong ”,
they give you advice and the caddies has rules.
They cannot caddie with slippers dapat naka sapatos ka, the
pants must not be porontong pants but regular pants and then
you cannot wear t-shirt, it must be a shirt with collar, and if you
are the caddie slated for a certain day you must be there at a
certain hour, if not you will be substituted by another caddie.
Now, are these caddies who are sometimes paid by the clients,
or taken out by the clients to play somewhere, they can be taken
out, “oh adto ta sa alabang didto ta mag golf”, so he will just
tell the Supervisor.
Now, is he or is he not an employee?
If he is an employee he can form a union vis-à-vis the MGC, that
is the issue, or is he an industrial partner of the MGC, he is just
paid by the client , the member and that is all, he is in no
employee-employer relationship, that is the issue.
16 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Now, the union that was forming by the caddies was argued on
the point of control, the MGC exercises power over the caddies,
how? They cannot wear anything, they must wear shoes, they
cannot wear slippers, t-shirts, daghan silag rules, so MGC has
control over the caddies, therefore, they are employees,
therefore they can form a union.
What is the argument of the MGC?
The argument of MGC is, No, our members themselves are
under rules to follow, for instance their members and their
dependents cannot go the the lanai of the MGC if they are not
on proper attire. If you are a lady you cannot go there wearing
shorts, you cannot go there wearing skimpy clothing, it must be
a sport shirt with a collar.
You know at one time, the wife of Cesar Buenaventura, central
bank governor that time, went to MGC lanai and she was
wearing a spaghetti strap top, the floor manager ordered that
she should not be served as she was not in proper attire, what
happened? She complained but to no avail. Finally, the central
bank governor wrote a letter to the management “you
disrespected my wife, you put her on shame”, but they did not
botch. Cesar Buenaventura was fined and suspended, that is
how powerful the board is, that is how they maintain discipline.
Lucio Tan made a call, he was in a hurry, he was in the 8th hole,
his helicopter came and he boarded then and there. According
to the rules of MGC, helicopters can only land at the top of the
house not on the grounds much less in the tahoe, you
destroyed then plants. Lucio was suspended, Lucio Tan
appealed, he even hired lawyers to appeal his case before the
board, but to no avail, Lucio Tan was fined and suspended.
Lucio Tan said “wala man ning land ang akong helicopter
naghover raman, unya nisakay lang ko!" That was Lucio Tan's
defense.
But Golf Club Management said you may not have literally
landed, but you hovered and destroyed the plants! So Lucio
Tan was disciplined.
So that is what the SC said about the rules. The rule that
discipline imposed is no more assigned of the fulfillment of the
control test. Then the rules are that are imposed on the
members. The evidence of control test is also in the ER-EE
relationship with the ---
But what the SC did not say is that there were two members of
Manila North that are justices who did not inhibit themselves.
Who are those two? Justice Abella and Justice Feliciano.
Alright so much about industrial partnership. You must find a
way to determine whether it is true control or semblance of true
control.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
F. Agricultural Tenancy
De los Reyes v. Espinelli
1969 case (landmark case of the existence of tenancy) p. 26 LA
TSN 2019 ed.
Facts:
You have a man who owns 50 hectares of coconut land. He
entrusts it to a farm manager, an encargado that time. and he
stays in the City, so absent ni nga Landlord. The encargado
engages people to stay there and watch the farm because he
too wants to imitate the owner by being an absentee. He gets
this people who stay there, build their houses and harvest the
coconut and sell them and even they will be given a share, and
he will also give it to the landowner.
Finally, the farm owner decides to visit his farm. Lo and behold
he found these people staying there. Who told you to stay
here? The encargado. I did not permit him and he drew these
people away. Ofcourse, wala sila mapuntahan, so they go to the
DAR. And they said they are TENANTS. We have been driven
out.
What is the defense of the landowner?
They are not tenants. I did not allow them to stay there. it is the
encargado. Am I bound to what the encargado has done? That
is one issue.
If they are not your tenants, so what are they?
… he is the only one who is at the top and the owning and
directing character of the production facility involving farmland.
This one is joint-production, tenant and landowner. As to
compensation, in employer-employee relationship it is fixed
according to amount and according to time whether the farm is
making money or not the farm owner must pay the his
employee every 15th and 30th and the amount is fixed no matter
if there is a harvest or if there is no harvest.
In joint-production, the compensation is contingent from the
harvest and whether or not the harvest is bountiful or very little
and if very little the share will be little because there is little to
share. But if the harvest is bountiful then there will be a big
share for the tenant so the compensation of tenancy is not fixed
it is variable.
As to labor, the labor provided in the employer-employee
relationship of a farm is by the farm worker only, he works the
farm and his family will be somewhere and he is paid wages. In
tenancy, it is not only tenant that works but his whole family
works. From the time of planting, even the children helped
17 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
planting and during harvest time, the children, the wife and
even some relatives helped in the harvest and they also share
in the harvest. That is the protocol in tenancy.
Now, how about control?
in farm owner-farm worker relationship, the power of control
test is met in that farm owner dictates what to plant, how much
to plant is all his decision. But in tenancy, it is the tenant who
decides when to plant, how much to plant, how to plant and the
landlord does not control that.
What type of control if any does the
landlord have over the tenants?
It is control by means of veto power in other words he exercises
control only in exceptional cases. When? when the tenants
strike out and does something which is beyond the control of
agricultural practices of the location.
For instance, you have a tenant in a wheat rice field. Every
morning he listens to the radio and hears this announcement
raising orchids and finally he say I am through with this rice field
and will raise orchids. Tanang kwarta na ihatag sa landlord
akong ipalit og orchids. The landlord can veto that practice
because it is contrary to the accepted agricultural practices.
Magunsa man ka magsolo ka og orchid nga rice man mi dire.
Dili ka makahimo ana.
I put my foot down, it is by way of exception. Those are the
differences of tenancy and employer-employee relationship.
Both involve services and in those criteria the differences are
pronounced.
So what happened in the case of Reyes vs Espenelli? Are those
people there tenants? The SC said yes they are tenants.
Is the absentee landlord bound the actions of his tenants?
The SC said yes they are bound by what his tenant did.
Why is the tenant not employees as the landlord claimed. Their
job was pagbantay, that was their job, why are they not
employee?
The SC said if they were employees and they were told to watch
then they would have been given specific time range to watch
and should be 8 hours each because the maximum time of work
of an employee is 8 hours unless you extend it and you give
overtime just like the security guards, makaovertime baya na sila
og up to 12 hours.
Now, wala man silay range sa pagbantay so they are tenants
and if you are a tenant you cannot be driven off. Unlike in
employer-employee relationship, a tenant has a right of
possession.
An employee has no right of possession, he may be allowed to
stay in a bunk house but is not as a right. It is one of the benefits
of employment. In other words, he cannot go to court to
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
compel the owner to let him stay there because he has no right thing that he peddles - hanger, brush,
to stay in a bunk house. But a tenant cannot be driven off in fact puto, kutsinta, kalamay)
Is he an independent peddler who owns what he sells? And the
if it is the government that expropriate for public use,
difference between if he’s the employee of the owner of the
government has to pay the landowner and the tenant the
thing that he sells. What is the difference? You have to read the
equivalent of disturbance fee. You took this up on just
case of Snow White Ice Cream vs Garcia (1971), Mafinco
compensation on imminent domain.
Trading vs Ople 70 SCRA 139.

Snow White Ice Cream vs Garcia

17 July 2020 p. 20 LA 2019 TSN. FIR based on lecture.

Employer-employee relationship (although it has four
requisites), the last requisite which is the power of control test,
is the most important test so that even if the three tests are not
met, if the power of control test is met, then there is employer-
employee relationship.
Then, we discussed differentiating employer-employee
relationship with the contract of lease - the boundary system
and driver for a passenger vehicle.
The Supreme Court has said time and again in several decided
cases that the boundary system is employer-employee
relationship.
A peddler has an ice cream cart. Who owns the cart? Snow
White Ice Cream. Snow White Ice Cream provided the cart, the
ice cream, the ice to keep the ice cream from not melting. Snow
White Ice Cream provided the salt to put on the ice so that the
ice will not melt and the ice pick to keep reducing the ice into
small bits so it can fit the container.
Now, this Garcia at a time, the block of ice fell on his foot and
he did not have shoes. So, his foot was swollen but continued
to pedal. What is worst is that his foot got caught in a barb wire
and that barb wire is rusty. So, what happen? He became sick.
He could not work, and it turned out to be tetanus. So, he died.
It was substituted in his case by his widow.

The question is, is he entitled to workmen’s compensation?

Then we went into differentiation of employer-employee
That time it was called workmen’s compensation but now it is
relationship with the industrial partnership. The fishing in
called employee’s compensation. At that time, it is the duty of
General Santos, mineral mining, the tunneling, then the Manila
the employer to obtain insurance to answer for work related
Golf Club case. Again, this is determined by the control test and
injury, sickness or death. These are accidents that happen in the
that there is control.
workplace.
C. Roving Independent Peddlers
But then snow white said, that we are not liable because he is
Let us go into the determination between an independent
not an employee. Actually, the ice cream is from us, it was
salesman and an employee salesman. There are two groups of
actually popsicles. He got it from us for 3 centavos and he sold
cases here.
it for 5 centavos and the difference of 2, that goes to him. So,
they are not liable...
What is the difference between a salesman
and a peddler?
What did the SC say?
Salesman Peddler He is your employee. The SC use one primary criterion. The SC
A salesman books his But a peddler carries says if he is an independent peddler, he owned the ice cream
sales and after he has with him that which he that he sold. At the end of the day if there were still some ice
booked a sale, he will sells. drop which are unsold, he could not return it to them, he will
undertake to deliver the have to consume that because he is the owner. But because he
goods that he has could still return it to them, the SC says he is your employee.
succeeded in selling. You own the ice cream and he just sell, and his compensation
is the difference between 3 centavos and 5 centavos. If he could
Technically speaking you pay a local tax to have a vehicle that not return it, then title has already transferred from you, the
peddles. It might just be a bicycle with a sidecar and over there manufacturer of the ice cream to him but the fact that he can
on top of that are green mangoes - that is a peddler and you still return it, means he is just your employee. You really own
need to pay a tax to be able to move it around. the ice cream.

What is the difference between an So take note, kanang mamaligya ug manga pangutan-a ra gud
independent peddler (that means he owns the na, kanang dili mahalin na mangga unsa man ang buhaton nimo
ana? I-uli bana nimo sa imung gi-angkatan ana. Kung dili niya
18 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
mauli independent peddler sya. Mauli gani niya, dili siya
independent peddler, employee sya adtung tag-iya sa mangga
hilaw na iyang gibaligya.
Now, how about this
Mafinco Trading v. Ople
p. 20 LA 2019 TSN. FIR based on lecture.
This is about the precursor of RC Cola before RC Cola, it is
called Sarsaparilla, an imitation of coke and pepsi. Now,
Sarsaparilla manufacturing used to have salesmen then decided
to separate the salesman into another corporation as the
marketing and sales arm of sarsaparilla. What was the name of
this corporation? The name of this corporation is Mafinco
Trading.
So, extensively Mafinco Trading entered into an agreement
with Sarsaparilla to be the marketing owner. This Mafinco
Trading in turn enter into agreement with these different drivers
that used to sell Sarsaparilla. The agreement they entered into
is so called peddler’s agreement.
Mafinco would supply them the soft drink truck and the driver/
peddler was supposed to obtain license from the City
Government to be able to peddle the soft drinks. And then, the
peddler’s agreement provided that they (the peddlers) must put
up two kinds of bonds. First, a bond which answers for any loss
that might occur of the soft drinks that the peddler was allowed
to withdraw early in the day and deliver it to the costumers. If
he losses that, then, the bond will answer.
Second Bond that he had to put up surety bond was to answer
for unpaid or underpaid salary to the peddlers/employees
because the peddler...to choose whether to have a driver and
a helper. Ang helper kanang mag-diskarga sa mga cases of soft
drinks, butang sa kariton, then i-deliver niya dinha sa mga
mupalit na tindahan. He also brings the empty bottles back to
the truck. So that is the obligation of the peddler. If the peddler
cannot sell the soft drinks, he brings it back and accounts for it,
at the end of the day, in the bodega of Mafinco. Now these
peddlers decided to form a union. Mafinco answered that they
are not union members, they are peddlers.
Mafinco: That’s why we enter into an agreement with them,
there is this peddler’s contract. If you will read it, it’s almost the
same as Snowhite Ice Cream v. Garcia. In Snowhite, you have
an ice cream cart. In Mafinco, it’s bigger because it is a soft
drinks truck. Then you have ice cream here (Snowhite case)
which you can return if you do not sell it. In Mafinco, there are
soft drinks, and you also return if you cannot sell.
Why is it that the ruling is not the same?
19 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
The Supreme Court finally says “there cannot be ER-EE
relationship between the peddler and Mafinco”.
Why is it that it says “there cannot be”
instead of simply saying “there is no (ER-
EE relationship)”?
Because there is an ancillary, subsidiary contract involved in the
peddler’s contract. What is that subsidiary contract? The
contract of surety. That is a nominate contract under the Civil
Code. Jurisdiction over controversies arising from that contract
belongs to those regular courts. The Labor Arbiter, the NLRC,
those are courts or forums with special jurisdiction. They do not
have general jurisdiction, they have special jurisdiction. They
only decide cases which require the use of Labor Code
provisions to resolve the disputes.
Now, if the dispute includes the principles of the Civil Code with
respect to the controversy, then that is already beyond the
jurisdiction of the Labor Arbiter. If the controversy to be
decided by the Labor Arbiter requires him to look into the
factual configurations of this ancillary contract, which is the
contract of surety, he would be like a RTC judge, which he is
not. He cannot decide on the nominate contracts (i.e. sale,
lease, mutuum, commodatum).
That is why the SC said “the ruling in Mafinco is there is no ER-
EE relationship and these so-called “employees” cannot form a
union vis-a-vis Mafinco because they are not employees of
Mafinco. “
If you take a look at salesman’s cases,
what is the difference between a salesman
and an independent salesman?
Cases (all in the syllabus):
Ysmael v. CIR
Investment Planning v. SSS
Dr. Renato Sara v. Agarrado & NLRC
D. Independent Salesman
Ysmael v. CIR
p. 22 LA 2019 TSN. FIR based on lecture.
Ysmael was the first maker in the PH of appliances. They have
the system of accepting production workers. Production
workers were unionized. The sales people, those who would be
going around selling the appliances, they have a different way
of acceptance and hiring with Ismael. They were not paid on a
daily basis like the production workers. They (sales people) too,
wanted to from a union. But then, Ismael said “No, they cannot
form a union. There’s already a union for our EEs. They are
independent sales people.”
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Why are they independent?
They are not like the production workers whose rigid system of
hiring must be followed. They don’t go through a medical
check-up and filing of labor history. They are not paid a daily
wage. They’re just paid a small basic wage, not even half of the
wages of the production workers. They are just paid a small
amount of transportation allowance and it is up to them to serve
as many so that they can have pot commissions. If they are so
industrious they will have so much money from the commission
of the sale. They are independent salesmen. They are not by-
hour production.
What was the decision of the Court?
The decision of the court says they are your employees. When
you say that they are not, you don’t have to go to a rigid process
of pre-qualifying to be hired. It is because their work is different.
They are white collar not blue collar. You don’t make them go
through physical check-up because it is plain. When somebody
comes sakiton ba ni siya or dili, you hire them as salesman. But
a production worker since they are into the shop floor with
heavy machinery with dust etc., it is important for you to
determine whether or not they have really clean lungs when
they come in. Mo ingon sila nag sakit ko ug TB tungod sa abog
sa planta. It’s important to determine whether or not they are
of physically their lungs, their heart, their whole physical
condition is healthy.
Second, possibly they don’t have regular hours but you require
them the file a written report of their customer visits. Di lang ka
mo ingon nga ila nibisita ko ani kay Carlos, Ibanez, kinsa pa na.
You make them write whether it is their first visit, second visit,
concluding visit and when the visit already includes the
perfection of the sale contract of appliance. You have control.
You make them report what they did really allowance.
So the SC says there is evidence of control. They are not free! -
-- business but to sell your appliances. There is exclusivity. So
they are your employees. You see how control is manifested.
Investment Planning vs SSS
The people involved here sell securities. Later on 3rd yr you will
find what securities is. There is no definition of securities in
Revised Securities Code. There is an enumeration of what
security is. Shares of stocks, bonds, investment contracts, etc.
That’s what RSC says.
They were selling securities, Investment Planning. They wanted
to be registered with SSS. To be registered with SSS, your
employer registers you. So they were asking Investment
Planning “Register us. Deduct from our commissions from our
counterpart and you as our employer pay counterpart in the
SSS.” Diba duha man bayran ana employer counterpart and you
beneficiary.
20 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Investment Planning says: No! You are not our employees. You
are independent brokers or sellers of securities.
Unsa may ibaligya nga security kanang mga retirement plans.
Palit ka nila og retirement plans magbayad ka nila. Taga buwan
after the number of times that you have paid then mo huwat ka
na lang nga mo retire ka.
Pag retire nimo Investment Planning katong gibaligya niya
security probably let’s say Prudential Bank retirement plan or
Pryce retirement plan, mao na na magbayad nimo. Kana sang
plan kanang mangutana ka sa ordinary ba. Unsa manang plan
nga baligya? Patay na Fr. Patay ng plan. Unsang patay nga
plan? Kana bang mamatay ka set na. Unsay klase sa lungon
nimo, pila nga kandila ibutang sa imong wake, pila ka adlaw
imong wake, asa man sa Anghel ba o sa Cosmo.
Diba? That is sold and that is a security. Bayad ka ana kada
buwan ma impas gani maghuwat na lang ka mamatay ka. Pero
mag ampo lang ka na di ka mamatay dayon. But you have a
mortuary plan.
Now the one who is selling it, is he an
employee? Gusto man siya magpareguster ug SSS. The SSS
said, Sir employee na! He has to be registered. Siyempre the
SSS always want people to be their employee para mag sigeg
contribute sa SSS. So Investment Planning appealed to the SC.
What did the SC say?
The SC said there is no employer-employee relationship. You
are under no obligation to enroll this people in the SSS.
Why? number one clearly they are not under your control. Why?
1. You do not require them to make reports of their visits
to prospective clients.
2. You do not ask them to go to specific places It's up to
them where to look for clients So they do not even
have traveling allowance.
3. They do not observe working hours and
4. the most crucial is you did not require exclusivity from
these people they can even sell other plans if they
want to. Not just investment planning.
So the Supreme Court said that these are the tell-tale signs that
would tell us that these people are independent salesman.
Another mark that they are independent is when they sell the
plan of course they go to the office Of the ---they sign there
but it can happen That they already pay the salesman and the
salesman remits the proceeds and get the net of their
commission. Sa ato pa, Kuhaon na nila ilang commission ana.
Ang ihatag sa kompanya, kadto nalang gyod para sa
kompanya.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
So that act by itself means that they are independent salesman.
Pero kung ang tanan imo jung ihatag unya sila ray muhatag sa
imo ug komisyon, that is a sign that you are an employee. But
if youre (inaudible) remittance by depositing it, the proceeds in
the bank in the account of the owner, means that you are an
independent (salesman).
Segue...
Karon baya nausab na na. Daghan namay klase sa payment.
Niadto makuyawan tawon na kanang mga driver, mga salesmen
nga gadrive ug truck sa tanduay, sa ginebra suroy2 na sila.
Kuyaw kaayo na sila kay gadala mana sila ug cash, gadala ug
mga cheke… wa manay problema ang cheke kay naa may ma
cross check pero kanang cash na dala nila… masaag na sila,
maadto na silas north cotabato, sultan kudarat, kuyawan na na
sila. Gadag cash. Pero karon wa nay cash na. Kay daghan na
kaayog klase (inaudible). Ug tagaan man galing silag cash,
diretso najud dayon na sila sa Palawan. Butang dayon. Aron wa
na silay dalang cash. Llhuillier, di ba palawan, di ba… daghan
naman kaayo nag sending. Mao nay nakadiperensya ron.
Ikaw, salesman ka. These are the badges of an employee. If you
are a salesman of let’s say, cigarettes, tanduay...wines and
drinks with spirits of what is this kanang mga consumer goods,
like mga chichirya ba like cheetos, jack and jill, mga unsa pa na
imong baligya ba. Kita gani ka anang trak nga dako kaayo unya
gamay kayg makina unya, unsa mani kabuang ba aning designa,
di ba kaha ni sila mabalintuwang? Gaan ramana ilang karga.
Mga chichirya mana ilang karga. Kit-an kay nimo kung bugat
kaayog karga, Mga reinforcing bars mga angular bars gamiton
sa construction… kita na…. Kung kanang mga chichirya...
How do you judge whether they are
independent salesmen or the employees of
Mr. Gokongwei? Jack and jill is Gokongwei man.
The Supreme Court said in this case that if the price at which
you sell them is dictated by your supplier, that is a mark that
you are an employee.
Second, if you cannot sell anything else but their products. Or
you cannot sell all their products, only the products that they
say you can sell for this particular area, salesman kas sigarilyo.
Ang imong ibaligya anang lugara, kana rang mga unsa na.. ----
, ayaw tong philip morris. Di ka baligya dnha kay sa syudad rana.
Way ka afford sa hilid hilid ana. Ang kompanya magbuot ana.
That means, that you are NOT an independent salesman. You
are just an employee. So if what you sell is dictated by the
supplier, you are not an independent salesman you are an
employee.
Of course if you cannot sell on your term therefore you are an
employee; but even if you are an employee, but you are made
to sign a peddler’s contract by which you post a bond, ah mao
na. Your relationship is taken out of er-ee relationship and you
21 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
become an independent salesman. You have to look for a
surety. Ngita kag uncle na datu nga maoy mutubag sa
imong… kay kung dili ka makakita og parente na muput-ap to
put up a bar, mangita kag cash para mu put up the bar, can you
afford it the cash will be tied with your supplier because no your
relationship with the supplier is remove from employer-
employee relationship you are now and independent sales man.
The only time you are required to post a bond is when you and
you are still an employee is if you are not a sales man.
when is that?
If you are a cashier or somebody entrusted with so much funds,
if your position requires a bond cashier ka, payroll master then
you put a bond then gitabangan ka sa kumpanya na makakuha
kag lisensya sa imong .45 caliber, ngano man? Kay kuyugan
man nimo ang mobile teller sa banko kung asa ka magkuha og
cash niya kuyog mo sa bukid kay manweldo mo didto sa banana
workers, sa mining are workers, naa kay bond to answer payroll
amount you are carrying that doesn’t remove you from an
independent, that doesn’t make you an independent pay
master, you are still paymaster.
Those are the cases, I tell you read the cases which and all this
you which before mag tan-aw ka lang wala ka kasabot, unsa
maning mga truck, daghan kaayo ka makatun-an dinhi, daghan
kaayo.
Alright, now, I would like to introduce you to a big shift to the
part of the Supreme Court, and this big shift is presented by
these two cases – Tabas v. California Manufacturing Co., Inc
169 SCRA 497, January 28, 1989, that is decided is in 1989.
Subsequently, the SC decided another case and the title of the
case is Fonterra Brands Philippines, Inc. (petitioner) v. Largado,
et al., 753 SCRA 649, March 18, 2015, in between Tabbas v.
California Manufacturing and Frontera Branch, Inc. decision
there is 25 years, atleast 26 years,
Why is this important?
This is important because this the case of merchandisers,
kanang promo ba, promo, kanang gina hire para sa promo
kasagaran ra baya intawon nila kay babae haaaa, naay mga
promo nga ang pirmerong criteria nila kinahanglan naay looks,
diba? asa mana na promo, ma promo gani kag beer, beer na
beer, san miguel beer, unsa panang beer kinahanglan naa gyud
kay looks, tangkad ka, kanang beer garden haa, ikaw man ang
mubangil-bangil ana arun manginom na sila, ikaw man ang
promote ana, promo merchandiser ka ana.
Ika duha kanang mga conusmer items, mga sabon mga tide,
unsa pa gani diha, they are always promoting, those poor girls
who carry big bags, go house to house, to convince people to
buy are they employees of tide or breeze, or whatever it is they
are selling or are they employees of the man power agency that
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
is contracted by the manufacturers of the things they are
selling? haaa very important.
There are also merchandisers in the supermarket haaaa they are
hired, let us say head and shoulders Procter & Gamble (P & G),
(P & G) mana they are hired exclusively for head and shoulders
shampoo, conditioner, etc. hers and his, naay silay gitabangan
sa supermarket na special place kanang ilang gibutangan,
display, mangablit na silag mga tao, “sir, palit mo ani”, silay
mu-stop ana, they are supplied by man power agency
contracted by (P & G) , are they employees of (P & G) or are
they employees of the manpower agency?
D. Agency
Alright ---- now. There are other decided cases that I would like
you to also concentrate on because this is a basic feature of the
insurance industry. This has --- with the courts for over 25-26
years. Just like the merchandise---
Latest case w/c there is a new judgment is Tongco v.
Manufacturers Life Insurance. June 29 2010 622scra 58 it is an
en banc resolution penned by j. Arturo brion who used to be
the labor law luminary of the SC. J. Brion was a labor lawyer of
---- enrile law office.
J. Brion taught me statutory construction when I was a freshman
in law school. That time he just passed the bar exam. He was
number one.
But before that, there is this decision in Insular Life Insurance v.
NLRC 179 SCRA 254 nov 15 1989 and before that Carungcong
v. NLRC 283 SCRA 309 1997.
So you have 1989, then 1997,then you have the tongco
decision….
Let me just give you a geography of the facts
There is so much pressure now on financial institutions to cut
down expenses and really believe---- so insurance companies
who are headquartered in manila or makati-- how do they
operate in Davao city?
Mostly what they do is to look for somebody who is really
experienced, who has worked in the head office for a long time,
they know insurance from selling to contract, what is that
claims, servicing claims, the client, etc. kana sila they make them
sign an insurance agent’s covenant normally (…) differently, for
a specific lump sum let us say for the 1st year of operation,
tagaan kag 8 million adto kag Davao pangita didto(…) building
or floor unsa bana diha, bayad sa abang naa dinha, naa diha
ang telepono, tubig, suga, tanan naa na diha, training for dicers,
promo, your brokers, those will sell for you, you will train them
22 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
and then you will have a commission, overriding commission on
the insurance that is sold by any of your personnel or any
insurance involving our company in davao city.
So ma enganyo ka ana, you have a commission niya taga-an
pud kag gamay na basic.
Now, the question is: are you an employee of Insular life or
Manufacturer’s life? or are you an agent representing? There is
no employee-employer (E-E) relationship there is a civil law
contract, that is the issue.
Carungcong v. NLRC,
(p. 24 LA TSN. FIR based on lecture)
The Supreme Court (SC) said there is NO, Er-Ee relationship
dako kaayo iyang gipangayo from the company, 3 million gud
iya gipangayo wala daw siya gi taga-an ani ana, nag ka gidlay
man iyang opisina so papahawaon na siya, ilisdan na siya sa
insurance company, ingon siya “I am permanent, wala koy sala,
I have not been investigated” etc., So he was invoking the rights
of an employee.
Now, the SC says you are not an employee, 3 million gud na
imong gipangayo kinsa man na employee og ginabayran of 3
million, ingon siya unpaid compensation.
Insular Life Insurance v. NLRC
Then the case of Insular life came about 9 years later, mao lang
gihapon, lump sum, bayad ana tukod kag office, pagadagan
ka, ikaw maoy ang responsible ana, for the advertising, training
personnel, replacing, hiring basta ikaw, the SC said “there is Er-
Ee relationship”.
Tongco v. Manufacturer’s Life Insurance
Then, 10 years ago, 2010, there is this other Tongko v.
Manufacturer’s Life Insurance, this time the SC said “there is no
Er-Ee relationship” and this is now an En Banc decision, that is
the doctrine now.
Take a look now the specific features of an insurance agent.
Why is he an agent and not an employee, reasoning of the SC,
services are involved, services are rendered but services the
basic function of which is representation that is not his office it
is Insular, he is just representing, he renders services just for
representation. He binds Insular life but he is not an employee
of Insular Life. (Tongco v. Manufacturer Life Insurance ang
mentioned case ni sir pero Insular Life iyang gina ingon later)
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
By the way, kanang mamaligya og insurance; sa atong They just ask for 105 dollar instead of 300 dollars an hour. 105,
sinultihan, 'namaligya ta insurance' but actually you cannot sell 15 dollars goes to the corporation of which they are now an
insurance. You can sell insurance if you can sign for the benefit employee and they are seconded to the indirect employer who
of your principal. But to be able to sign or binding your has signed the contract with the corporation of ex oracle guys.
principal, you need to pass an exam; Insurance Agent Exam.
Lisod na nga exam, but if gakuha nkag law, gwapo nkag Unsa may investment of capital aning mga
foundation. gamay nlng ka review just like real estate agent. tawhana?
Wa man they cannot show any physical investment. In fact they
These are technical exams.
just incorporated and put a nominal fund. Where is there
investment each year and in between the years? They do not
How about those teachers midwifes, housewives, ordinary
use their own computer they go and use the main frame of the
people na maghanyag nimu og insurance? “Maayo ka dong kay
indirect employer and then you have the test in 106 that if you
bata pka; barato ron ang insurance. Gamay lang imung bayad,
do not have sufficient investment in capital, you are not a bona
mao na ni imung premium. Unya, at the end of 20 yrs, wala nka
fide contractor.
huna.huna.on. Kanang interest, ako na magbayad” (Side
comment by Fr: BINUANG NA!)
Behind ang labor code, daghan na na especially now naa na ng
mga robotics. Kanang mga magmaintain og robotics nga in
If gusto ka true insurance, Streak Life?! Barato ra na. Palit 1
assembly plants, Toyota is now partially robotics. Asa man gikan
million dollars, molupad kag eroplano, ahh! Pero if kanang
ang mga mucontract ana? Filipino na nga nagresign gikan sa
term2 ug daghan conditions, awa ng CAP; nawala! Daghan
Japan, magbuhat sila og corporation? What do they do
naghilak ato. Asa naka CAP! The credibility of term insurance in
basically? They change the program if they want to change the
the Philippines is bad.
functions of the robots.
You must really know how this insurance company works.
What is their capital? Did they have robots? No, they use the
robots of the indirect employer. Their capital is basically
So today we tackle with the issue WON Er-Ee relationship is a
question? promo.

The insurance cases that has become a standard practice now

… Mao na if it is just one putative employer, it is more likely a
of insurance companies. They don't want to put up an office so
question. if there is contracting and sub-contracting that is
they engage the services of an agent and they give it a lump
involved then most like it is not a question.
sum amount to put up an office, recruit brokers or
merchandisers and then they give them money to train them on
The SC says if you do not have sufficient investment or you do
how to sell insurance and the agent gets a commission.
not have sufficient capital or you are engaged contracted to
Overriding commission is taken separate from the commission
perform activities which are directly related to the business of
brokers who succeed in bringing new policyholders.
the indirect employer then you are not a bona fide contractor,
you are a labor only contracting and that is anathema in labor
code. There are three cases.

You are canceled out and there is one employer left. Who is insurance Carungcong Tongco v.
that employer? The indirect employer. You are engaged in life v. nlrc Manufacturers
labor- only contracting. That is good only for shop floor assurance Life
contracting, when you are contracted to do security service, v. nlrc
when you are janitorial and maintenance. In Insular Life Carungcong vs The latest one is
Assurance vs NLRC 283 SCRA Tongko vs
But suppose you are contracted to install or upgrade a NLRC (1st 309. 1997. The Manufacturers Life
computer system with all the application. Let us say a very large ruling in 1989) ruling there is that is 2010 en banc
data base like oracle, if you hire oracle to do that, they will ask this was there is no resolution penned by
from you 300 dollars per hour. Kinsa man gagamit oracle dire succeeded by employer- Justice Brion. The
sa Pilipinas? PLDT, DOLE Pineapple dagko kaayo, ka afford na Carungcong. employee court there
sila mga anang contractor. Now many of the oracle people after To reconcile relationship. entertained a motion
they gained experience wa na sila, they leave oracle and they these two for reconsideration.
form their own corporation to service others nga masakitan na different The first decision was
kaayo sa bayad sa oracle. rulings, 570 SCRA 503
Tongko vs November 7 2008

23 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.

 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Manufacturers Second division of
Life Insurance the supreme court
was decided Penned by justice
by the Court en velasco. The
banc. resolution on the
motion was two years
later in 2010.
The Tongco decision says an important lesson that:
First, insurance life case teaches us is that a commitment to
abide by the rules and regulations of an insurance company
does not ipso facto make the insurance agent an employee.
Neither do guidelines somehow restrictive of the insurance
agent’s conduct necessarily indicate control as this term is
defined in jurisprudence.
Second, guidelines indicative of labor law control as the first
Insular Life case tells us should not merely relate to the mutually
desirable result Intended by the contractual relationship. They
must have the nature of dictating the means of methods to be
employed in attaining the result or fixing the methodology and
of binding or restricting the party hired through the use of these
means. That is in the Tongko decision. Very important case.
I. Employer-Employee Relationship Created
by Law
1. Limited Employer-Employee Relationship
2. Comprehensive ER-EE Relationship
Another very important chunk of employer-employee
relationship cases are the so-called employer-employee
relationship created by law. This is in your Labor Standards law
cases on employer-employee relationship. There is the bona
fide indirect employer-employee contracting where as I told
you there are four instances where the Supreme Court said it is
valid indirect employment.
The company can’t engage a manpower institution to provide
security guards to the principal. The Supreme Court says it takes
judicial notice that that is allowable or bona fide labor
contracting out of services.
Services. Why? because the SC does it. SC does not say that,
but the SC says we take judicial notice. When SC says we take
judicial notice, it means it is not subject of an argument, it is
already accepted.
You have taken up evidence, is it not and there are conclusive
presumptions in evidence.
24 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
What are the conclusive presumptions of
evidence?
Some of them that there are 24 hours in a day, that there are 7
days in a week, that there are 12 months in a year. You don’t
have to prove that, you use that to prove. It is the material that
you use to prove, you do not prove. You begin with that.
So, also when the SC says, we take judicial notice that you a
corporation they do not usually hire their security guards. They
go to an agency, a security agency. And they enter into an
agreement to provide you with security guards.
Normally, a corporation also doesn’t hire janitors. Janitorial
service, you go to another agency and you enter into an
agreement that they will provide you with janitors. Maintenance
services, you can enter into an agreement with a maintenance
group to provide you with the services of air-conditioning
maintenance personnel.
Like the Ateneo, we have so many air-conditioning units. The
Ateneo enters into agreement with the air-conditioning
maintenance corporation and they will provide the people who
will come, and they will keep track of how many times a unit is
cleaned, maintained and repaired if something goes wrong.
That’s a maintenance of machinery agreement.
And then, so called Special Services that is the subject of
controversy in Neri v. NLRC in your list of cases, 1993 case.
Neri v. NLRC
here the Supreme Court says, these court takes judicial notice
of the widespread practice in the public as well as the private
sector of contracting out security services, janitorial services and
other specialized services. In other words, there no need for it
to be proven.
Supposed the indirect employer has already
paid the amounts agreed upon to the
manpower agency. Is he still obliged to pay
the wages of the complaining workers?
And the answer is yes. It is the problem now of the indirect
employer to be reimbursed because he already paid the
manpower agency, but the manpower agency did not release
the salaries.
So, in that same case where it is made a respondent it makes a
cross claim to the manpower agency to be reimbursed the
amount he already paid.
Now, what happens if the indirect employer
is government like National Food Authority?
It is government it is sued by the security guards of the
bodegas of the NFA because they have not been paid by their
agency.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Can the NFA raise its government status as a proper defense
against the money claims complaint by the security guards
seconded to it? The answer is NO
The SC said, this defense that you are government is unavailing
because the law itself imposes employer-employee
relationship, so that is employer-employee relationship
imposed by law. It is not employer-employee relationship as a
result of the four requisites. The law itself imposes it. Now,
suppose it is labor-only contracting. The definition of labor-only
contracting is found in Article 106. It is when a manpower
agency is engage by the indirect employer to provide services
which are directly related to the main business of the employer.
Now, what happens there?
The Supreme Court says “There are 2 ways you can become a
labor-only contractor, in which case that is illegal.” What are
those 2 ways?
1. If you lack capital or investments by way of equipment,
an office or other machineries required; or
2. You are made to perform activities which are usual and
necessary to the trade and business of the indirect ER.
If these exist, then you are engaged in labor-only contracting. If
you are engaged in such, the law cancels you out completely
and there is only one ER who is responsible for the obligations
of an ER under Labor Code and social legislation.
Coca Cola Bottlers v. NLRC
Coca-Cola Bottling Company hired security guards. Can it have
Commando Security Agency enter into a contract with Coca-
Cola to provide security guards for the bottling premises?
YES, according to Neri v. NLRC ruling.
Can it hire janitors, supplied by a man-power agency and pay
the man-power agency instead of the janitors?
YES, that is allowed by Neri v. NLRC.
But can it enter into an agreement with a
man-power agency to provide additional EEs
that will man it’s bottling line (you know
the ones who stand there and see that the
bottles are filled correctly; that there is
no disruption in the bottling line)?
The Supreme Court said that Coca-Cola Bottling cannot do
that. Why? Because that is an activity that is directly related to
the main business of the indirect ER.
It is Coca-Cola’s business to put Coke in bottles and sell it. So
you do not hire an agency to supply you with manpower to do
that. Security guards, you can. Maintenance staff, you can.
Janitorial services, you can. But not for mainline activities.
What happens if you do that (entering into
an agreement with a man-power agency to
provide employees for mainline activities)?
25 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Then the man-power agency is cancelled by the law; there is no
other ER but Coca-Cola. Coca-Cola must answer for all
underpayment or non-payment of wages. What is more, Coca-
Cola must answer for the offense of not reporting and or
enrolling these people to the SSS, Pag-Ibig, Philhealth and
Employees Compensation. These are 4 statutory payroll
requirements.
Di lang kay mubayad ka ug payroll. If somebody is in your
payroll and he is your EE, you must put him under SSS, in which
case the ER enrolls and also pays the ER’s counterpart for
enrolling in the SSS. The EE also pays from his salary. But that
is done by the ER who deducts it at source and sends it to the
SSS on a quarterly basis. If you are an ER and you don’t do that,
you commit an offense under the SSS Law.
So that is the total and complete ER-EE relationship imposed
by law. If you are a man-power agency and you engage in labor-
only contracting, together with an indirect ER like Coca-Cola,
then you can be subject to so many penalties.
Under the SSS Law (if you did not enroll and pay the EEs
contribution), you will be subjected to fines and surcharges. The
obligation to enroll the EE to the SSS is from the first day of
work. From the first day of your operations, you have to enroll
your people to the SSS. On the part of the EE, from the first day
of his working engagement, he must be enrolled with SSS.
Please keep that in mind. Dili man ni SSS jud atong gitun-an (na
subject), you will study this next sem. But you should disabuse
your mind from pedestrian knowledge which normally, in law, is
erroneous. Or as Donald Trump says, its “false news”. Muingon
sila “Naa kay SSS?” The EE answers “Wala pa kay probie
(probationary) pa man ko”. Is being a probationary a reason why
you should not have enrollment in the SSS?
In the law from the first day of work you have to be reported.
SSS, ma in-house counsel ka ug corporation unya boang-boang
inyong mga manager, dili i-enroll that is a criminal violation!
That is a felony under SSS law.
From the first day of work, you have to be enrolled. That is not
an excuse. So, employer-employee relationship imposed by
law: first, Bona fide employer-employee relationship or labor
contracting, like security guard, janitorial, maintenance.
Second, Labor-only contracting. If you are engaged in labor-
only contracting, then it is more complete. It is not limited. It is
limited if its bona fide labor contracting only when there is non-
payment or underpayment of wages.
If there is no underpayment or non-payment, you cannot be
made to pay these seconded employees from the manpower
agencies if you are an indirect employer. You are not the
employer. But in case of labor-only contracting, it is complete!
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
You are responsible as employer imposed by law for non-
payment and underpayment of wages plus enrolment with the
SSS, PhilHealth, Pag-Ibig and Employee’s compensation.
Third employer-employee relationship imposed by law is found
in Art. 136 “Any woman who is permitted or suffered to work,
with or without compensation, in any night club, cocktail
lounge, massage clinic, bar or similar establishments under the
effective control or supervision of the employer for a substantial
period of time as determined by the Secretary of Labor and
Employment, shall be considered as an employee of such
establishment for purposes of labor and social legislation.”
So, if you’re going to these places and you notice these women;
trying to lure customers, table customers, and they ordered
drinks. No that is an employee of that establishment even if the
manager does not know her from eve. Why? Because the law
says so. It is the law itself that imposes employer-employee
relationship.
I tell you, the bar girls are the most protected- Women workers
of the Philippines because of this provision, Art. 136. That is an
example of employer-employee relationship.
Oriondo vs CA
Fourth is the pronouncement of Justice Leonen in the
celebrated case of Oriondo vs CA.
What did he say?
When it is a private corporation like Corrigidor Foundation Inc,
but it is owned and controlled by the government, even if the
government put up a separate capital and incorporated it under
the corporation law, now revised corporation code, and it has
been issued a certificate of incorporation, in other words it is
not corporation created by law but it is a corporation by
operation of law, it complied with the requirements then it
became a corporation. So it should be private!
Leonen says, it is public because the purpose is public! What is
the purpose of Corrigidor Foundation? To maintain, safeguard
the assets in Corrigidor which is used to be under Department
of Defense. It was a camp but because of what happened in
1943-1944, it is now converted to a tourist attraction. Na, so
many Americans died there, etc. and they come around their
relatives and they look at it. That’s the purpose of Corrigidor
Foundation. So even if it’s a private corporation, the SC says the
employees there, what they receive is subject to COA. Their
payroll is subject to COA. COA is government. COA should
look into government funds only!
So even if it is a private corporation, SC says ….
the payroll is subject to COA. COA is government. COA should
look into govt funds only. But the employees there accdording
26 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
to J. Marvic leonen, you can resort to the labor arbiter because
they are employees of a govt owned and controlled corporation
that do not have original charter. Gubot na ni ron. There was a
disbursement to their bonus, it was disallowed by COA, so they
went to court. They should have gone to DOLE. if they went to
LA and said “what COA is doing is violating our rights under
the Labor Code and we are under the Labor Code, what
particular provision in LC? 113- Prohibitions against deductions
from wages. Gihatag naman to, nganong gideduct man?”
So can the LA summon the COA, to be a respondent in a case?
Ah dako kaynang gubot kay jurisdictional na.
What I'm telling you is that these two statements of the
distinguished honorable justice marvic leonen is bound to crash
somewhere in the future. He said they're under the LA, and yet
the COA can come in. there will be another case! There has to
be another case to resolve this contradictions. It will come. Mark
my words. As night follows day it will happen because the
principles are just (gi fist bump ni father iyang self) in
contradiction. Its like saying “a square circle” di na mahimo!
Mathematically in the mind, it might make sense but in reality it
cannot stand.
So muabot ranang panahon, it will come. it . will. Come.
So and then i told you about merchandisers, we discussed
merchandisers.
“Miss untal, where are you? Frontera, and the case of tabas v.
California manufacturing???”
Oh we took that already ha...so you are responsible for frontera
philippines 2015 case (753 SCRA 649) third division j. Velasco
jr.
Now you can contract out the jobs of merchandisers which is a
REVERSAL in the ruling in Tabas vs. California manufacturing
(169SCRA 497) January 28 1989
--- so that is 31 years.
The SC held here that merchandisers that are provided by a
manpower agency because of an agreement by the indirect
employer and the manpower agency, that is a labor-only
contracting.
Thirty years later, the SC said: merchandisers, they can be
CONTRACTED.
Merchandisers
Daghan na sila. Adto kag supermarket, you can see them. Walk
down the street. Engage in house to house, promotions of
products. So what made the SC change its mind? Does the SC
changes its minds? I doubt! Read the cases.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
Tabas vs California Manufacturing
Now, as early as 1989, there is this California Manufacturing.
What is the most common product to you? Kana gani namaligya
og noodles, tang, etc. They entered a contract with Levi's, a
manpower agency to supply them manpower. Later on, these
people wanted to remain permanent but they were dismissed.
California Manufacturing says: we don’t have any obligation.
The only obligation we have is the contracted price with Levis.
The argument of merchandiser is: we are performing to the
activities and duties that are directly related to your product.
Ngano makabuhat man mo og Tang? Kami man gabaligya. So
our activities that we are made to perform are usual and
necessary to the trade and business of the indirect employer.
Therefore, we are your employees. And if we are your
employees because we do the work, you are just trying to
escape regularization. That is why we went through rubric of
hiring, engaging a manpower agency to supply workers.
What is the reason by the California Manufacturing for denying
the existence of Ee-Er?
You are not necessary for the trade of our business. We need
you to launch our product, to promote our product. But once
our products are established, we don’t need you!
In other words, you are TEMPORARY in NATURE. Because if
you are made to perform activities that are usual and necessary
to the trade and business of the indirect employer, the law says
in Art. 106, the manpower agency is cancelled and there is one
employer. That is the owner of the goods that you are
merchandising. There is only employer who is responsible of all
the duties of all employer under labor legislation and social
legislation such as enrolling you in the SSS.
Reply of California: Look at the provisions of our contract. Levis
says we are the only employer and we absorb as blameless the
P&G and California from the obligations of giving an employer,
oral and written agreements contrary notwithstanding. "Kami ra
ang EMPLOYER!" The managers of the California do not
supervise them; it is our own supervisor of Levis Manpower that
supervise them. So they are not under our Control!
The SC said, there is Er-Ee relationship. Promos are not
considered as temporary in nature. All consumer goods
engaged in non-stop promos; only the name of the promos
changed! But that is now ---- into industry of merchandise. Like
in Tide product with "amoy malinis"; they are always saying that
there is a new product/ additional product; that is why we are
launching it again! Walay kahumanan ang promo. Sigeg contest
27 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
sa promo. That is why merchandisers are now regular
employees!
The Supreme Court says the law is not subjected to convention.
Employer-employee relationship is a question of law. The
manpower supplier and the indirect employer cannot
determine where employer-employee resides. That is not by
convention that is by law. You read 106 and 106 tells you when
you engage in labor-only contracting and what is bona fide
contracting.
Bona fide contracting has been pronounced by the SC in
Kimberly Clark Independent Labor Union vs Drilon, a 1990 case,
1 year after Tabas.
The SC says this court takes judicial notice of the widespread
practice both in the private and public sectors on the practice
of contracting out services such as security, janitorial services,
maintenance services and other special services. Those are the
only contracting out that is recognized by SC without need of
proving it. If you are a corporation and you contract out your
security service you are sure there that the law approves
because the SC has taken judicial notice. If your janitors are
from a janitorial service that is true contracting, that is respected
by the law. You cannot challenge that.
Special services like telephone operators. This is a Davao case,
Davao fruits vs NLRC
This is the case of Davao Fruits Corporation hiring telephone
operators to man their switch board. Of course, now hardly do
you hire telephone operator. No more, that era has ended.
These are the allowable contracting out of services pronounced
by the SC.
Even its allowable if the manpower agency fails or underpays to
pay the wages of those assigned to the indirect employer. Then
the indirect employer is liable to pay the wages to the
employees.
The SC says a telephone operator is generic work, it is not usual
and necessary to the trade and business.
Most companies have telephone exchanges that was in 1993.
Now if you have a telephone operator, you are lousy
corporation, you are wasting money because everybody now
has a cellphone. Most executives now do not have secretaries.
If you have a secretary you are stupid because you have laptops,
you can take care of your own correspondence, your e-mail.
Wala naman ng letter, email na tanan. Wa na nawagtang na ng
mga secretary. Naa pa gani kay secretary buang buang kana or
you are malicious.
Now, how come the SC says this is judicial notice?
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
The SC says you know why, you go to the website of the SC
then they have a page in their website. Requirements for
contractors, the SC has very strict requirements on documents
you have to submit if you are a manpower supplier of security,
janitorial and maintenance services because the SC itself
contracts out its janitorial service and its security service.
The SC awards the winner of the different entities who bid. Tan
awa ng hall of justice ang security dinha og janitorial service that
is awarded by a manpower agency. This court takes judicial
notice of a widespread practice both in the public and private
sectors of contracting out services. Pursuant to the SC office just
like any office it needs security guards.
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.
107 says whether or not the contracting or sub-contracting is
valid, whether or not it is labor-only contracting or bona fide
contracting, if there is underpayment or non-payment of wages
private contractor immediately the indirect contractor is
solidarily liable to the employees.
Di gani mabayran sa sweldo sa manpower agency ang mga
trabahante, they can sue both at the same time and it is not a
difference on the part of the indirect contractor na mubayad na
sila sa contractor. Kung ang contractor--- bisag nabayran na to
nila they have to pay the employees of the contractor. They
have to pay the salaries. Their liability with the contractor is
solidary.
Kung di na mabayran ang security guard sa
hall of justice asa mana sila mangadto?
Mangadto na sila labor arbiter. Who is the indirect employer?
SC. Does the labor arbiter have jurisdiction over the SC? Mao
ng pangutana nga dako kaayog premyo. One of these days
mark my word mubuto na, mubuto man jud na. God help the
labor arbiter who will have to handle that case.
Fonterra Brands Phils., Inc vs Leonardo
Largado et al
In the case of Fonterra Brands Phils., Inc vs Leonardo Largado
et al, penned by Justice Velasco Jr., March 18 2015. Still about
merchandisers.
What are the products of Fonterra?
Mao na na sila ang namaligya sa Anchor Butter, Anchor Cheese,
Anchor Milk New Zealand. Naa na silay special merchandisers
28 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
kanang ga-maintain sa refrigerated shelves supplied by
manpower agency. Karon, dugay na sila dinha pero gitangtang
sila kay naay bag-ong lain agency nga gikontrata.
“Regular na mi. Walo na gud mi ka tuig dinhi.” “Nganong na
regular naman mo?”
“Kay ang among trabaho usual and necessary to the trade of
business. Tan-awa ang Tabas vs California.”
Ingon ang Supreme Court, “No. You are not. Read. Compare
why 26 years later these merchandisers are now not.
Remember, since the government already engages in
contracting out so many functions like security, janitorial,
maintenance, and other special services.
What happens if the indirect employer is
government like the National Food Authority
(NFA)?
Naa silay mga security guards. Although wa nasweldohi ug
maayo sa manpower agency, nganong wa man masweldohi?
Kay na increase man ang salaries by a wage order unya ang NFA
wa naman mubayad. Kay ingon sila, “Among budget mao
raman ni ang giapprove sa General Appropriations Authority.
Dili mi ninyo mapugos.” The law says whatever increase is for
the account of the indirect employer. Ingon sila, “Sorry,
government man mi. Di man mi covered sa Labor Code.”
What did the Supreme Court say?
You are liable because now it is the law itself that imposes
employer-employee relationship. So, there is now a fifth
requisite. If it is employer-employee relationship that is based
on contracting and sub-contracting, even if the contractor is the
government like NFA, PGH, and all those other government
agencies, you are liable even if you are government – for all
under payment or non-payment of the wages of the manpower
agency that is seconded to you.
That is why pangutan-on gani ka ug what is
the issue of employer-employee
relationship? Is it an issue of fact? Or
an issue of law, a matter of fact or a
matter of law?
Because there is a whole line of decisions that says it is a
question of fact each case must be look into and examined as
to its factual configuration whether or not the four requisites are
complied with that is a question of fact then you can say
whether or not there exist an employer-employee relationship
but then again the SC says employer-employee relationship is
a question of law.
You, indirect employer you are NFA. Do not think that you are
government you are not included, you are included. Because
the law says so that indirect employer is responsible of
underpayment or non-payment of the wages by the contractor
per se.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
So how do you answer that question?
You say, when there is only one putative employer and several
employees (usa ra na ka employer) contracting and
subcontracting are not involved. The issue of employer-
employee relationship is a matter of fact.
The moment there is indirect employer, there is contracting, or
subcontracting employer-employee relationship is a question.
It doesn’t matter even if the four requisites are not complied
with. If the law says so you are an employee, then you are an
employee.
There is an employer-employee relationship. Give an example
that the four are not complied with but the law says there is an
employer-employee relationship. It’s not only labor only
contracting. That’s pronounce in one.---.
3. Hospitality Girls
You go to 138, only it is a special provision. I will read it to you.
Its is 138 in the old numbering of the Labor Code before it is
now 136 of the Labor Code.
Art. 138. Classification of certain women workers. Any woman
who is permitted or suffered to work, with or without
compensation, in any night club, cocktail lounge, massage
clinic, bar or similar establishments under the effective control
or supervision of the employer for a substantial period of time
as determined by the Secretary of Labor and Employment, shall
be considered as an employee of such establishment for
purposes of labor and social legislation.
Social and labor legislation, this is a complete employer-
employee relationship. It is so called hospitality girl privilege.
Nagtrabaho ka sa night club.
Entertainer ka ba or hospitality girl ka diha, kaila ka sa tag-iya?
Wala, di ka kaila sa tag-iya. Why were you allowed to work
there? Kay mao man na imong pangita (livelihood); hitsuraan ka
gamay, maayo kaayo ka mu-kuan (entertain) sa customer, okay,
naa ka diha mutrabaho.
Are you required to report every day?
No. Report ka kung gusto ka. Di ka kinahanglan mu-report.
How are you compensated?
Commission sa drinks. Naa kay customer, i-table ka, order kag
drinks, mu-order sad siya, naa sad kay commission sa iyang
drinks ug sa iyang mga kauban.
Now, ug muingon sila nga dalahon ka sa gawas, mag bar
hopping mo or unsa ba, unya mukuyog ka nila, unsa may
normally practice ana? Mubayad nang mga lalaki nga mudala
nimo ug bar fine. That represents what you would have earned
for the establishment for the night.
29 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.
Is that controlled?
You are not required to be there (at the bar). You do not have
regular hours.
Are you receiving a salary?
No. Even basic salary, none. Unsa may imong kita? Commission
sa drinks. And yet the law says “You are an employee as far as
the owner of that bar is concerned, for purposes of labor and
social legislation.”
Kanang imong commission, if it is lower than the minimum
wage, that is already a violation. Owner of the bar must give her
equivalent at least to minimum wage, bisag commission ra
iyang kita. Even if there are no customers, tagaan nimo,
because under labor and social legislation, she is your
employee.
Do you have to enroll her with the SSS?
Of course. It (law) says “Employee for all purposes of labor and
social legislation.” Also PhilHealth and Employees
Compensation. The owner may say “ah, lupig pa man na sa
anak nako, wa gani ko kaila ana niya.” Too bad, she is suffered
and permitted to work, wa nimo siya pahawaa, pasagdan lang
nimo siya diha in entertaining the guests, employer ka niya.
Why? The law says so. Kung madunggaban na siya kay naay
nag-away diha, unya mamatay na. Employees Compensation -
you will shoulder it because she is an employee and that is her
workplace. That is a work-related sickness, injury or death.
That is ER-EE relationship imposed by the law.
Requisites:
1. Selection and hiring
2. Payment of wages
3. Power to dismiss
4. Power of control
But there are certain times when even these requisites are
thrown out of the window, and the law itself says “He/she is an
employee.”
Mao ng problema ng gibuhat sa SC. Just to show you that even
if you have a remedy against an indirect employer, let’s say that
is an office of the government. Let us say Catitipan, PNP. Naga
contracting ba sad na sila ug janitorial service. Wala nana silay
security guard kay naa naman na silay security naga armas gud
na sila.
Unya dili nila mabayran ang ilang mga janitors. Unya mo ingon
sila ang gi appropriate sa appropriations act kay mao ra man ni
pambayad nila unya nisaka man ang minimum wage. Nisaka
man kay naay bag-ong wage order. And the wage order says
any adjustment as to these wages is for the account of indirect
employer. Unya wala naman mi kwarta kay it’s all appropriated.
 labor standards tsn
From the online lectures of Fr. Agustin Nazareno
So let’s say final judgment abot sa CA- Pay! You’re an employer
because the law imposes employer –employee relationship
even if your government. Pay! Unya ikaw nga manpower
agency, naa naka ana, final na ang decision, naa nay entry of
judgment. Then ang CA, remand to executive Labor Arbiter of
Davao City for execution. Balik ka diris Davao City unya ang
police ni ingon unsaon man wala man gyud mi kwarta.

Unsa man imong buhaton?

Imbargohon dayon nimo mga jeep nila, pusil tapos imong
iauction, ana? Ang solution ana tua sa civil procedure. Sa
appeals. Because if you have a judgment against the
government, it is not a matter of course that execution follows
to satisfy the judgment of the Court. Arm with that judgment,
now you go to the legislature and you ask for a passage of law,
a supplemental appropriation. The PNP to satisfy the judgment.
Because you cannot auction government property because that
will inhibit them from performing their duties.

I hope na--- katapusan na raba nang mga execution.. Unsa

mana? *rules of court* taas kaayo ng execution daghan kaynag
sections. In my time it has 42 sections. That is what you do when
you are met with a judgment...

30 BASINANG, BAYOCBOC, DAHILIG, DILAN, MELCHOR R., MIGULLAS, PARACALE, RAMOS R.