Labor Law Cases Full Text I and II Suggested Readings (Cases 1-28)

7/26/2019 Labor Law Cases Full Text I and II Suggested Readings (Cases 1-28)

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1. AFP MUTUAL BENEFIT ASSOCIATION, INC.,petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION and EUTIQUIO

BUSTAMANTE, respondents. [G.R. No. 102199. Janua! 2",

199#$

PANGANIBAN,J.%

The determination of the proper forum is crucial because the ling

of the petition or complaint in the wrong court or tribunal is fatal, even

for a patently meritorious claim. More specically, labor arbiters and the

National Labor Relations Commission have no urisdiction to entertain

and rule on money claims where no employer!employee relations is

involved. Thus, any such award rendered without urisdiction is a nullity.

This petition for certiorariunder Rule "#, Rules of Court see$s to

annul the Resolution%&'of the National Labor Relations Commission,

promulgated (eptember )*, &++&, in NLRC!NCR Case No. !)!&&+"!

+, entitled"Eutiquio Bustamante vs. AFP Mutual Beneft Association,Inc.,- arming the decision of the labor arbiter which ordered payment

of the amount of /0&+,*+". as insurance commissions to private

respondent.

T&' An(')'d'n( Fa)(*

The facts are simple. /rivate respondent 1uti2uio 3ustamante had

been an insurance underwriter of petitioner 45/ Mutual 3enet

4ssociation, 6nc. since &+*#. The (ales 4gent7s 4greement between

them provided8%)'

-3. 9uties and :bligations8

&. 9uring the lifetime of this 4greement, the (4L1( 4;1NT clusively for 45/M346

> > > > > > > > >

C. Commission

&. The (4L1( 4;1NT shall be entitled to the commission due for all

premiums actually due and received by 45/M346 out of life insurance

policies solicited and obtained by the (4L1( 4;1NT at the rates set forth

in the applicant7s commission schedules hereto attached.

> > > > > > > > >

9. ;eneral /rovisions

&. There shall be no employer!employee relationship between the

parties, the (4L1( 4;1NT being hereby deemed an independent

contractor.-

4s compensation, he received commissions based on the following

percentages of the premiums paid8%0'

-0B of premium paid within the rst year

&B of premium paid with the second year

#B of the premium paid during the third year

0B of the premium paid during the fourth year and

&B of the premium paid during the fth year up!to the tenth year.
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:n Duly #, &+E+, petitioner dismissed private respondent for

misrepresentation and for simultaneously selling insurance for another

life insurance company in violation of said agreement.

4t the time of his dismissal, private respondent was entitled to

accrued commissions e2uivalent to twenty four pected commission would amount to /0#F,*+".+. 5rom that gure at

a B compromise settlement this would mean /#0,)&+.F& due him to

settle his claim.-

/rivate respondent, however, was paid only the amount

of /0#,..

:n November )0, &+E+, private respondent led a complaint with

the :ce of the 6nsurance Commissioner praying for the payment of the

correct amount of his commission. 4tty. ;erman C. 4leandria, Chief of

the /ublic 4ssistance and 6nformation 9ivision, :ce of the 6nsurance

Commissioner, advised private respondent that it was the 9epartment

of Labor and 1mployment that had urisdiction over his complaint.

:n 5ebruary )", &++, private respondent led his complaint with

the 9epartment of Labor claiming8 istence of employer!employee relationship between petitioner and

private respondent.

:n appeal, the (econd 9ivision%"'of the respondent Commission

armed the decision of the Labor 4rbiter. 6n the assailed Resolution,respondent Commission found no reason to disturb said ruling of the

labor arbiter and ruled8%*'

-H?1R15:R1, in view of the foregoing considerations, the subect

appeal should be as it is hereby, denied and the decision appealed from

armed.
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(: :R91R19.-

?ence, this petition.

T&' I**u'

/etitioner contends that respondent Commission committed grave

abuse of discretion in ruling that the labor arbiter had urisdiction over

this case. 4t the heart of the controversy is the issue of whether theree>isted an employer!employee relationship between petitioner and

private respondent.

/etitioner argues that, despite provisions 3istence of an employer!

employee relationship is ultimately a 2uestion of fact and that the

ndings thereon by the labor arbiter and the National Labor Relations

Commission shall be accorded not only respect but even nality when

supported by substantial evidence.%E'The determinative factor in such

nality is the presence of substantial evidence to support said nding,

otherwise, such factual ndings cannot bind this Court.

Respondent Commission concurred with the labor arbiter7s ndings

that8%+'

-> > > The complainant7s ob as sales insurance agent is usually

necessary and desirable in the usual business of the respondent

company. Inder the (ales 4gents 4greement, the complainant was

re2uired to solicit e>clusively for the respondent company, 7and he was

bound by the company policies, memo circulars, rules and regulations

which were issued from time to time. 3y such re2uirement to follow

strictly management policies, orders, circulars, rules and regulations, it

only shows that the respondent had control or reserved the right to

control the complainant7s wor$ as solicitor. Complainant was not an

independent contractor as he did not carry on an independent business

other than that of the company7s > > >.-

To this, respondent Commission added that the (ales 4gent7s

4greement specically provided that petitioner may assign private

respondent a specic area of responsibility and a production 2uota. 5rom

there, it concluded that apparently there is that e>ercise of control by

the employer which is the most important element in determining

employer!employee relationship.%&'

He hold, however, that respondent Commission misappreciated the

facts of the case. Time and again, the Court has applied the -four!fold-

test in determining the e>istence of employer!employee

relationship. This test considers the following elements8 ercise e>clusive supervision

over their agents in their solicitation wor$. Thus, the e>clusivity

restriction clearly springs from a regulation issued by the 6nsurance

Commission, and not from an intention by petitioner to establish control

over the method and manner by which private respondent shall

accomplish his wor$. This feature is not meant to change the nature of

the relationship between the parties, nor does it necessarily imbue such

relationship with the 2uality of control envisioned by the law.
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(o too, the fact that private respondent was bound by company

policies, memo@circulars, rules and regulations issued from time to time

is also not indicative of control. 6n its Reply to Complainant7s /osition

/aper,%&0'petitioner alleges that the policies, memo@circulars, and rules

and regulations referred to in provision 3ercise of control over an

employee. 5irst of all, the place of wor$ in the business of soliciting

insurance does not gure prominently in the e2uation. 4nd more

signicantly, private respondent failed to rebut petitioner7s allegation

that it had never issued him any territorial assignment at all. :bviously,

this Court cannot draw the same inference from this feature as did the

respondent Commission.

To restate, the signicant factor in determining the relationship of

the parties is the presence or absence of supervisory authority to controlthe method and the details of performance of the service being

rendered, and the degree to which the principal may intervene to

e>ercise such control. The presence of such power of control is indicative

of an employment relationship, while absence thereof is indicative of

independent contractorship. 6n other words, the test to determine the

e>istence of independent contractorship is whether one claiming to be

an independent contractor has contracted to do the wor$ according to

his own methods and without being subect to the control of the

employer e>cept only as to the result of the wor$. %&F'(uch is e>actly the

nature of the relationship between petitioner and private respondent.

5urther, not every form of control that a party reserves to himself

over the conduct of the other party in relation to the services being

rendered may be accorded the eJect of establishing an employer!

employee relationship. The facts of this case fall s2uarely with the case

of 6nsular Life 4ssurance Co., Ltd. vs. NLRC. 6n said case, we held that8

-Logically, the line should be drawn between rules that merely serve as

guidelines towards the achievement of the mutually desired result

without dictating the means or methods to be employed in attaining it,

and those that control or > the methodology and bind or restrict the

party hired to the use of such means. The rst, which aim only to

promote the result, create no employer!employee relationship unli$e the

second, which address both the result and the means used to achieve

it. The distinction ac2uires particular relevance in the case of an

enterprise aJected with public interest, as is the business of insurance,

and is on that account subect to regulation by the (tate with respect,

not only to the relations between insurer and insured but also to theinternal aJairs of the insurance company. Rules and regulations

governing the conduct of the business are provided for in the 6nsurance

Code and enforced by the 6nsurance Commissioner. 6t is, therefore, usual

and e>pected for an insurance company to promulgate a set of rules to

guide its commission agents in selling its policies that they may not run

afoul of the law and what it re2uires or prohibits. >>>> None of these

really invades the agent7s contractual prerogative to adopt his own

selling methods or to sell insurance at his own time and convenience,

hence cannot ustiably be said to establish an employer!employee

relationship between him and the company.-%'

/rivate respondent7s contention that he was petitioner7s employee is

belied by the fact that he was free to sell insurance at any time as he

was not subect to denite hours or conditions of wor$ and in turn was

compensated according to the result of his eJorts. 3y the nature of the

business of soliciting insurance, agents are normally left free to devise

ways and means of persuading people to ta$e out insurance.There is no

prohibition, as contended by petitioner, for private respondent to wor$
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for as long as he does not violate the 6nsurance Code. 4s petitioner

e>plains8

-pressly

e>cluded by this Code.-%&+'Hithout this critical element of employment

relationship, the labor arbiter and respondent Commission can never

ac2uire urisdiction over a dispute. 4s in the case at bar. 6t was serious

error on the part of the labor arbiter to have assumed urisdiction and

adudicated the claim. Li$ewise, the respondent Commission7s

armance thereof.

(uch lac$ of urisdiction of a court or tribunal may be raised at anystage of the proceedings, even on appeal. The doctrine

of estoppelcannot be properly invo$ed by respondent Commission to

cure this fatal defect as it cannot confer urisdiction upon a tribunal that

to begin with, was bereft of urisdiction over a cause of action.%)'Moreover, in the proceedings below, petitioner consistently

challenged the urisdiction of the labor arbiter %)&'and respondent

Commission.%))'

6t remains a basic fact in law that the choice of the proper forum is

crucial as the decision of a court or tribunal without urisdiction is a total

nullity.%)0'4 void udgment for want of urisdiction is no udgment at all. 6tcannot be the source of any right nor the creator of any obligation. 4ll

acts performed pursuant to it and all claims emanating from it have no

legal eJect. ?ence, it can never become nal. -> > > hibits its head.-%)F'

The way things stand, it becomes unnecessary to consider the

merits of private respondent7s claim for unpaid commission. 3e that as it
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may, this ruling is without preudice to private respondent7s right to le a

suit for collection of unpaid commissions against petitioner with the

proper forum and within the proper period.

/EREFORE, the petition is hereby GRANTE, and the assailed

Resolution is hereby !ET A!IE.

SO ORERE.

Narvasa, .#., $%airman&, avi'e, #r., Melo, andFrancisco,

##., concur.

2. NORT AAO MINING CORPORATION and ASSET

PRIATI3ATION TRUST,petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION, LABOR ARBITER ANTONIO M.

ILLANUEA and /ILFREO GUILLEMA, respondents. G.R.No. !!"#$%. arch !', !((%)

E C I S I O N

PANGANIBAN,J.*

6s a company which is forced by huge business losses to close its

business, legally re2uired to pay separation benets to its employees at

the time of its closure in an amount e2uivalent to the separation pay

paid to those who were separated when the company was still a going

concernK This is the main 2uestion brought before this Court in thispetition for certiorari under Rule "# of the Revised Rules of Court, which

see$s to reverse and set aside the Resolutions dated Duly )+, &++0 %&'and

(eptember )*, &++0%)'of the National Labor Relations

Commision%0'


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was plagued by insurgency and other peace and order problems, the

employees had to collect their salaries at a ban$ in Tagum, 9avao del

Norte, some #E $ilometers from their wor$place and about ) hours

travel time by public transportation this arrangement lasted from &+E&

up to &++.

(ubse2uently, a complaint was led with respondent labor arbiter

by respondent Hilfredo ;uillema and )*& other seperated employees

for8


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0. There is no appeal, nor any plain, speedy and ade2uate remedy in the

ordinary course of the law.

and the following issues8

&. Hhether or not an employer whose business operations ceased due to

serious business losses or nancial reverses is obliged to pay separation

pay to its employees separated by reason of such closure.

). Hhether or not time spent in collecting wages in a place other than

the place of employment is compensable notwithstanding that the same

is done during ocial time.

0. Hhether or not private respondents are entitled to transportation

e>penses in the absence of evidence that these e>penses were incurred.

The +irst Issue* -eparation a

To resolve this issue, it is necessary to revisit the provision of law

adverted to by the parties in their submissions, namely 4rt. )E0 of theLabor Code, which reads as follows8

4rt. )E0. Closure of establishment and reduction of personnel. ! The

employer may also terminate the employment of any employee due to

the installation of labor saving devices, redundancy, retrenchment to

prevent losses or the closing or cessation of operation of the

establishment or under!ta$ing unless the closing is for the purpose of

circumventing the provisions of this Title, by serving a written notice on

the wor$ers and the Ministry of Labor and 1mployment at least one periencing nancial

reverses, decided as a retrenchment measure to lay!oJ some employees

on May &", &+EE and gave them separation pay e2uivalent to one!half tend e2ual treatment to its employees. 6t may not, in the

guise of e>ercising management prerogatives, grant greater benets to

some and less to others. > > >

6n resolving the present case, it bears $eeping in mind at the outset

that the factual circumstances of BI!!I are 2uite diJerent from the
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current case. The Court noted that 36((6 continued to suJer losses even

after the retrenchment of the rst batch of employees clearly, business

did not improve despite such drastic measure. That notwithstanding,

when 36((6 nally shut down, it could well aJord to ercise of management prerogatives. That is why the Court correctly

faulted it with impermissible discrimination. Clearly, it e>ercised its

management prerogatives contrary to general principles of fair play and

ustice.

6n the instant case however, the companys practice of giving one

months pay for every year of service could no longer be continued

precisely because the company could not aJord it anymore. 6t was

forced to close down on account of accumulated losses of over /)billion. This could not be said of 36((6. 6n the case of North 9avao, it

gave 0!days separation pay to its employees when it was still a going

concern even if it was already losing heavily. 4s a going concern, its

cash ow could still have sustained the payment of such separation

benets. 3ut when a business enterprise completely ceases operations,

i.e., upon its death as a going business concern, its vital lifeblood !its

cashow ! literally dries up. Therefore, the fact that less separation

benets were granted when the company nally met its business death

cannot be characteriAed as discrimination. (uch action was dictated not

by a discriminatory management option but by its complete inability to

continue its business life due to accumulated losses. 6ndeed, one cannots2ueeAe blood out of a dry stone. Nor water out of parched land.

4s already stated, 4rt. )E0 of the Labor Code does not obligate an

employer to pay separation benets when the closure is due to losses. 6n

the case before us, the basis for the claim of the additional separation

benet of &*.# days is alleged discrimination, i.e., une2ual treatment of

employees, which is proscribed as an unfair labor practice by 4rt. )FE


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complainants, so there is no reason to e>pect any $ind of bailout by the

national government under e>isting law and urisprudence.

The -econd and Third Issues*

/ac0 1a2es and Transportation Allo3ance

4nent the award of bac$ wages and transportation allowance, the

issues raised in connection therewith are factual, the determination ofwhich is best left to the respondent NLRC. 6t is well settled that this

Court is bound by the ndings of fact of the NLRC, so long as said

ndings are supported by substantial evidence.%'

4s the (olicitor ;eneral pointed out in his comment8

6t is undisputed that because of security reasons, from the time of its

operations, petitioner N9MC maintained its policy of paying its wor$ers

at a ban$ in Tagum, 9avao del Norte, which usually too$ the wor$ers

about two and a half


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Corollary to the above ndings, and for e2uitable reasons, we li$ewise

hold respondents liable for the transportation e>penses incurred by

complainants at /F. round trip fare during pay days.

penses.

:ther than the bare denials of petitioners, the above ndings stands

uncontradicted. 6ndeed we are not at liberty to set aside ndings of facts

of the NLRC, absent any capriciousness, arbitrariness, or abuse or

complete lac$ of basis. 6n Ma)a Farms Emplo)ees 7rani8ations vs.

N+R,%&"'we held8

This Court has consistently ruled that ndings of fact of administrative

agencies and 2uasi!udicial bodies which have ac2uired e>pertise

because their urisdiction is conned to specic matters are generallyaccorded not only respect but even nality and are binding upon this

Court unless there is a showing of grave abuse of discretion, or where it

is clearly shown that they were arrived at arbitrarily or in disregard of

the evidence on record.

/EREFORE, udgment is hereby rendered M:965P6N; the

assailed Resolution by (1TT6N; 4(691 and deleting the award for

additional separation pay of &*.# days for every year of service, and

4556RM6N; it in all other aspects. No costs.

SO ORERE.

Narvasa, .#., Pa'illa, Reala'o, avi'e, #r., Romero, Bellosillo, Melo,

Puno, 9itu, :apunan, Men'o8a, Francisco, and;ermosisima, ##., concur.

0. ANILO B. TABAS, EUARO BONOC, RAMON M. BRIONES,

EUARO R. ERISPE, JOEL MARIAGA, ARTUR M. ESPINO,

AMARO BONA, FERINAN CRU3, FEERICO A. BELITA,

ROBERTO P. ISLES, ELMER ARMAA, EUARO UOG, PETER

TIANSING, MIGUELITA QUIAMBOA, NOMER MATAGA, IOL4

ESTEBAN and L4IA ORTEGA, vs.

CALIFORNIA MANUFACTURING COMPAN4, INC., LIL45ICTORIA

A. A3ARCON, NATIONAL LABOR RELATIONS COMMISSION, and

ON. EMERSON C. TUMANON, respondents. G.R. No. L5"06"0Janua! 26, 19"9

SARMIENTO,J.*

:n Duly )&, &+E", Duly )0, &+E", and Duly )E, &+E", the petitioners

petitioned the National Labor Relations Commission for reinstatement

and payment of various benets, including minimum wage, overtime

pay, holiday pay, thirteen!month pay, and emergency cost of living

allowance pay, against the respondent, the California Manufacturing

Company. 1

:n :ctober *, &+E", after the cases had been consolidated, the

California Manufacturing Company istence of an employer!

employee relation between the petitioners and the company and,

conse2uently, any liability for payment of money claims. 2:n motion of

the petitioners, Livi Manpower (ervices, 6nc. was impleaded as a party!

respondent.

6t appears that the petitioners were, prior to their stint with California,

employees of Livi Manpower (ervices, 6nc.


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as future laws, rules and regulations pertinent to employment of

labor- 6and that -%California' is free and harmless from any liability

arising from such laws or from any accident that may befall wor$ers and

employees of %Livi' while in the performance of their duties for

%California'.#

6t was further e>pressly stipulated that the assignment of wor$ers to

California shall be on a -seasonal and contractual basis- that -%c'ost of

living allowance and the & legal holidays will be charged directly to%California' at cost - and that -%p'ayroll for the preceeding %sic' wee$

%shall' be delivered by %Livi' at %California7s' premises.- "

The petitioners were then made to sign employment contracts with

durations of si> months, upon the e>piration of which they signed new

agreements with the same period, and so on. Inli$e regular California

employees, who received not less than /),E)0. a month in addition to

a host of fringe benets and bonuses, they received /0E.#" plus /.

in allowance daily.

The petitioners now allege that they had become regular Californiaemployees and demand, as a conse2uence whereof, similar benets.

They li$ewise claim that pending further proceedings below, they were

notied by California that they would not be rehired. 4s a result, they

led an amended complaint charging California with illegal dismissal.

California admits having refused to accept the petitioners bac$ to wor$

but deny liability therefor for the reason that it is not, to begin with, the

petitioners7 employer and that the -retrenchment- had been forced by

business losses as well as e>piration of contracts.96t appears that

thereafter, Livi re!absorbed them into its labor pool on a -wait!in or

standby- status. 10

4mid these factual antecedents, the Court nds the single most

important issue to be8 Hhether the petitioners are California7s or Livi7s

employees.

The labor arbiter7s decision, 11a decision armed on appeal,12ruled

against the e>istence of any employer!employee relation between the

petitioners and California ostensibly in the light of the manpower supply

contract, supra, and conse2uently, against the latter7s liability as and for

the money claims demanded. 6n the same breath, however, the labor

arbiter absolved Livi from any obligation because the -retrenchment- in

2uestion was allegedly -beyond its control .- 17?e assessed against the

rm, nevertheless, separation pay and attorney7s fees.

He reverse.

The e>istence of an employer!employees relation is a 2uestion of lawand being such, it cannot be made the subect of agreement. ?ence, the

fact that the manpower supply agreement between Livi and California

had specically designated the former as the petitioners7 employer and

had absolved the latter from any liability as an employer, will not erase

either party7s obligations as an employer, if an employer!employee

relation otherwise e>ists between the wor$ers and either rm. 4t any

rate, since the agreement was between Livi and California, they alone

are bound by it, and the petitioners cannot be made to suJer from its

adverse conse2uences.

This Court has consistently ruled that the determination of whether ornot there is an employer!employee relation depends upon four

standards8


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the employer shall be ointly and severally liable with his

contractor or sub!contractor to such employees to the

e>tent of the wor$ performed under the contract, in the

same manner and e>tent that he is liable to employees

directly employed by him.

The (ecretary of Labor may, by appropriate regulations,

restrict or prohibit the contracting out of labor to protect

the rights of wor$ers established under this Code. 6n soprohibiting or restricting, he may ma$e appropriate

distinctions between labor!only contracting and ob

contracting as well as diJerentiations within these types

of contracting and determine who among the parties

involved shall be considered the employer for purposes of

this Code, to prevent any violation or circumvention of

any provisions of this Code.

There is 7labor!only7 contracting where the person

supplying wor$ers to an employer does not have

substantial capital or investment in the form of tools,e2uipment, machineries, wor$ premises, among others,

and the wor$ers recruited and placed by such person are

performing activities which are directly related to the

principal business of such employer. 6n such cases, the

person or intermediary shall be considered merely as an

agent of the employer who shall be responsible to the

wor$ers in the same manner and e>tent as if the latter

were directly employed by him.

that notwithstanding the absence of a direct employer!employee

relationship between the employer in whose favor wor$ had beencontracted out by a -labor!only- contractor, and the employees, the

former has the responsibility, together with the -labor!only- contractor,

for any valid labor claims, 16by operation of law. The reason, so we held,

is that the -labor!only- contractor is considered -merely an agent of the

employer,-1#and liability must be shouldered by either one or shared by

both. 1"

There is no doubt that in the case at bar, Livi performs -manpower

services-, 19meaning to say, it contracts out labor in favor of clients. He

hold that it is one notwithstanding its vehement claims to the contrary,

and notwithstanding the provision of the contract that it is -an

independent contractor.- 20The nature of one7s business is not

determined by self!serving appellations one attaches thereto but by the

tests provided by statute and prevailing case law. 21The bare fact that

Livi maintains a separate line of business does not e>tinguish the e2ual

fact that it has provided California with wor$ers to pursue the latter7sown business. 6n this connection, we do not agree that the petitioners

had been made to perform activities 7which are not directly related to

the general business of manufacturing,- 22California7s purported

-principal operation activity. - 27The petitioner7s had been charged with

-merchandiAing %sic' promotion or sale of the products of %California' in

the diJerent sales outlets in Metro Manila including tas$ and occational

%sic' price tagging,- 28an activity that is doubtless, an integral part of

the manufacturing business. 6t is not, then, as if Livi had served as its


14/114

reason that it is an activity related to the day!to!day operations of

California.

6t would have been diJerent, we believe, had Livi been discretely a

promotions rm, and that California had hired it to perform the latter7s

merchandising activities. 5or then, Livi would have been truly the

employer of its employees, and California, its client. The client, in that

case, would have been a mere patron, and not an employer. The

employees would not in that event be unli$e waiters, who, although atthe service of customers, are not the latter7s employees, but of the

restaurant. 4s we pointed out in the P%ilippine Ban- o*

ommunicationscase8

>>> >>> >>>

... The underta$ing given by C1(6 in favor of the ban$ was

not the performance of a specic ob for instance, the

carriage and delivery of documents and parcels to the

addresses thereof. There appear to be many companies

today which perform this discrete service, companies withtheir own personnel who pic$ up documents and pac$ages

from the oces of a client or customer, and who deliver

such materials utiliAing their own delivery vans or

motorcycles to the addressees. 6n the present case, the

underta$ing of C1(6 was to provide its client the ban$ with

a certain number of persons able to carry out the wor$ of

messengers. (uch underta$ing of C1(6 was complied with

when the re2uisite number of persons were assigned or

seconded to the petitioner ban$. :rpiada utiliAed the

premises and oce e2uipment of the ban$ and not those

of C1(6. Messengerial wor$ the delivery of documents todesignated persons whether within or without the ban$

premises!is of course directly related to the day!to!day

operations of the ban$. (ection +ercises control over the petitioner vis!a!vis the four barometers

referred to earlier, since by ction of law, either or both shoulder

responsibility.

6t is not that by dismissing the terms and conditions of the manpower

supply agreement, we have, hence, considered it illegal. Inder the

Labor Code, genuine ob contracts are permissible, provided they are

genuine ob contracts. 3ut, as we held in P%ilippine Ban- o*ommunications, supra, when such arrangements are resorted to -in

anticipation of, and for the very purpose of ma$ing possible, the

secondment- 70of the employees from the true employer, the Court will

be ustied in e>pressing its concern. 5or then that would compromise

the rights of the wor$ers, especially their right to security of tenure.

This brings us to the 2uestion8 Hhat is the liability of either Livi or

CaliforniaK

The records show that the petitioners bad been given an initial si>!

month contract, renewed for another si> months. 4ccordingly, under4rticle )E& of the Code, they had become regular employees!of!

California!and had ac2uired a secure tenure. ?ence, they cannot be

separated without due process of law.

California resists reinstatement on the ground, rst, and as we 6d, that

the petitioners are not its employees, and second, by reason of nancial

distress brought about by -unfavorable political and economic

atmosphere- 71-coupled by the 5ebruary Revolution.- 724s to the rst


15/114

obection, we reiterate that the petitioners are its employees and who,

by virtue of the re2uired one!year length!of!service, have ac2uired a

regular status. 4s to the second, we are not convinced that California

has shown enough evidence, other than its bare say so, that it had in

fact suJered serious business reverses as a result alone of the prevailing

political and economic climate. He further nd the attribution to the

5ebruary Revolution as a cause for its alleged losses to be gratuitous

and without basis in fact.

California should be warned that retrenchment of wor$ers, unless clearly

warranted, has serious conse2uences not only on the (tate7s initiatives

to maintain a stable employment record for the country, but more so, on

the wor$ingman himself, amid an environment that is desperately

scarce in obs. 4nd, the National Labor Relations Commission should

have $nown better than to fall for such unwarranted e>cuses and

nebulous claims.

H?1R15:R1, the petition is ;R4NT19. Dudgment is hereby R1N91R198


16/114

rights and privileges. This resolution was armed by the (upreme Court,

in ;.R. No. L!E&+*, on :ctober 0&, &+#E.

:n Danuary &F, &+#+, said employees were reinstated and subse2uently

their bac$wages, computed at the rate of their compensation at the

time of the aforementioned dismissal, less the wages and salaries

earned by them elsewhere during the lay!oJ period, were paid to them.

The employees obected to this deduction and the C6R sustained them,

in a Resolution dated May )), &+", which was reversed by the (upremeCourt, on Duly )", &+", in ;.R. No. L!#FF. (oon later, or on November

&, &+", the /4L14 moved for the e>ecution of the C6R resolution of Duly

&0, &+#F, as regards the -other rights and privileges- therein mentioned,

referring, more specically to8


17/114

The /4L7s appeal as regards the free trip passes is, however, well ta$en,

for the employees had no absolute right thereto, even if they had

actually rendered services during the lay!oJ period. The free trip passes

were given, neither automatically, nor indiscriminately. The employees

had to apply therefore and their applications were subect /4L7s

approval.

Hherefore, e>cept as to the free trip passes for the lay!oJ period, which

should not be deemed included in the -rights and privileges- awarded inthe resolution of Duly &0, &+#F, and subect to the 2ualication that the

accumulated sic$ leave privileges cannot e>ceed &F days, the

appealed resolution of :ctober E, &+"), is hereby armed in all other

respects, without pronouncement as to costs. 6t is so ordered.

Reyes, D.3.L., 9iAon, Regala, Ma$alintal, 3engAon, (ancheA and Castro,

DD., concur. ;.R. No. &&F*00 Danuary ), &++*

. AURORA LAN PROJECTS CORP. o-n AURORA PLA3A> and TERESITA T. QUA3ON,

:'(-(-on'*, ;*. NATIONAL LABOR RELATIONS COMMISSION

and ONORIO AGUI, '*:ond'n(*. G.R. No. 118#77 Janua!

2, 199#

?1RM:(6(6M4, DR., D.8

The 2uestion as to whether an employer!employee relationship e>ists in

a certain situation continues to bedevil the courts. (ome businessmen

try to avoid the bringing about of an employer!employee relationship in

their enterprises because that udicial relation spawns obligationsconnected with wor$men7s compensation, social security, medicare,

minimum wage, termination pay, and unionism. & 6n light of this

observation, it behooves this Court to be ever vigilant in Chec$ing the

unscrupulous eJorts of some of our entrepreneurs, primarily aimed at

ma>imiAing their return on investments at the e>pense of the lowly

wor$ingman.

This petition for certiorari see$s the reversal of the Resolution ) of public

respondent National Labor Relations Commission dated March &", &++F

arming with modication the decision of the Labor 4rbiter, dated May

)#, &++), nding petitioners liable to pay private respondent the total

amount of /&+#,")F. as separation pay and attorney7s fees.

The relevant antecedents8

/rivate respondent ?onorio 9agui was hired by 9oa 4urora (untayTanangco in &+#0 to ta$e charge of the maintenance and repair of the

Tanangco apartments and residential buildings. ?e was to perform

carpentry, plumbing, electrical and masonry wor$. Ipon the death of

9oa 4urora Tanangco in &+E), her daughter, petitioner Teresita

Tanangco uaAon, too$ over the administration of all the Tanangco

properties. :n Dune E, &++&, private respondent 9agui received the

shoc$ of his life when Mrs. uaAon suddenly told him8 -Hala $a nang

trabaho mula ngayon,- 0 on the alleged ground that his wor$ was

unsatisfactory. :n 4ugust )+, &++&, private respondent, who was then

already si>ty!two


18/114

Commission armed, with modication, the Labor 4rbiter7s decision in a

Resolution promulgated on March &", &++F, in the following manner8

H?1R15:R1, in view of the above considerations, let the appealed

decision be as it is hereby 4556RM19 with


19/114

ob contractor. No proof was adduced by the petitioners to show that

9agui was merely a ob contractor, and it is absurd to e>pect that

private respondent, with such humble resources, would have substantial

capital or investment in the form of tools, e2uipment, and machineries,

with which to conduct the business of supplying 4urora /laAa with

manpower and services for the e>clusive purpose of maintaining the

apartment houses owned by the petitioners herein.

The bare allegation of petitioners, without more, that private respondent9agui is a ob contractor has been disbelieved by the Labor 4rbiter and

the public respondent NLRC. 9agui, by the ndings of both tribunals,

was an employee of the petitioners. He are not inclined to set aside

these ndings. The issue whether or not an employer!employee

relationship e>ists in a given case is essentially a 2uestion of fact. E 4s a

rule, repetitious though it has become to state, this Court does not

review supposed errors in the decision of the NLRC which raise factual

issues, because factual ndings of agencies e>ercising 2uasi!udicial

functions %li$e public respondent NLRC' are accorded not only respect

but even nality, aside from the consideration that this Court is

essentially not a trier of facts. +

?owever, we deem it wise to discuss this issue full!length if only to

bolster the conclusions reached by the labor tribunals, to which we fully

concur.

Durisprudence is rmly settled that whenever the e>istence of an

employment relationship is in dispute, four elements constitute the

reliable yardstic$8


20/114

The employment relationship established, the ne>t 2uestion would have

to be8 Hhat $ind of an employee is the private respondent Q regular,

casual or probationaryK

He nd private respondent to be a regular employee, for 4rticle )E of

the Labor Code provides8

Regular and Casual employment. Q The provisions of written agreement

to the contrary notwithstanding and regardless of the oral agreement ofthe parties, an employment shall be deemed to be regular where the

employee has been engaged to perform activities which are usually

necessary or desirable in the usual business or trade of the employer,

e>cept where the employment has been >ed for a specic proect or

underta$ing the completion or termination of which has been

determined at the time of the engagement of the employee or where

the wor$ or services to be performed is seasonal in nature and the

employment is for the duration of the season.

4n employment shall be deemed to be casual if it is not covered by the

preceding paragraph8 /rovided, That, any employee who has renderedat least one year of service, whether such service is continuous or

bro$en, shall be considered a regular employee with respect to the

activity in which he is employed and his employment shall continue

while such actually e>ists.

4s can be gleaned from this provision, there are two $inds of regular

employees, namely8


21/114

:choco v. NLRC, )0 followed by /hilippine National Construction

Corporation v. NLRC, )FMagante v. NLRC, )# and Capitol 6ndustrial

Construction Corporation v. NLRC, )" if truly, private respondent was

employed as a -proect employee,- petitioners should have submitted a

report of termination to the nearest public employment oce everytime

his employment is terminated due to completion of each proect, as

re2uired by /olicy 6nstruction No. ), which provides8

/roect employees are not entitled to termination pay if they areterminated as a result of the completion of the proect or any phase

thereof in which they are employed, regardless of the number of proect

in which they have been employed by a particular construction

company. Moreover, the company is not re2uired to obtain a clearance

from the (ecretary of Labor in connection with such termination. Hhat is

re2uired of the company is a report to the nearest /ublic 1mployment

:ce for statistical purposes.

Throughout the duration of private respondent7s employment as

maintenance man, there should have been led as many reports of

termination as there were proects actually nished, if it were true thatprivate respondent was only a proect wor$er. 5ailure of the petitioners

to comply with this simple, but nonetheless compulsory, re2uirement is

proof that 9agui is not a proect employee. )*

Coming now to the second issue as to whether or not private respondent

9agui was illegally dismissed, we rule in the armative.

Durisprudence abound as to the rule that the twin re2uirements of due

process, substantive and procedural, must be complied with, before a

valid dismissal e>ists. )E Hithout which the dismissal becomes void. )+

The twin re2uirements of notice and hearing constitute the essential

elements of due process. This simply means that the employer shall

aJord the wor$er ample opportunity to be beard and to defend himself

with the assistance of his representative, if he so desires. 0 4s held in

the case of /epsi Cola 3ottling Co. v. NLRC8 0&

The law re2uires that the employer must furnish the wor$er sought to be

dismissed with two written notices before termination of employee can

be legally eJected8


22/114

Considering, however, that the termination of private respondent 9agui

was made on Dune E, &++& or after the eJectivity of the amendatory

provision of Republic 4ct No. "* on March )&, &+E+, private

respondent7s bac$wages should be computed on the basis of said law.

6t is true that private respondent did not appeal the award of the Labor

4rbiter awarding separation pay sansbac$wages. Hhile as a general

rule, a party who has not appealed is not entitled to armative relief

other than the ones granted in the decision of the court below, 0* lawand urisprudence authoriAe a tribunal to consider errors, although

unassigned, if they involve


23/114

contingent, all claims for funeral e>penses for the last sic$ness of the

decedent, and udgment for money against the decedent, must be led

within the time limited in the notice otherwise they are barred forever,

e>cept that they may be set forth as counterclaims in any action that

the e>ecutor or administrator may bring against the claimants. . . .

H?1R15:R1, the instant petition is partly ;R4NT19 and the Resolution

of the public respondent National Labor Relations Commission dated

March &", &++F is hereby M:965619 in that the award of separation payagainst the petitioners shall be rec$oned from the date private

respondent was re!employed by the petitioners in &+E), until Dune E,

&++&. 6n addition to separation pay, full bac$wages are li$ewise awarded

to private respondent, inclusive of allowances, and other benets or

their monetary e2uivalent pursuant to 4rticle )*+ F" of the Labor Code,

as amended by (ection 0F of Republic 4ct No. "*, computed from the

time he was dismissed on Dune E, &++& up to the nality of this decision,

without deducting therefrom the earnings derived by private respondent

elsewhere during the period of his illegal dismissal, pursuant to our

ruling in :smali$ 3ustamante, et al. v. National Labor Relations

Commission. F*

No costs.

(: :R91R19.

6. /ILLIAM L. TIU, :'(-(-on', ;*.NATIONAL LABOR RELATIONS

COMMISSION and ERMES ELA CRU3, '*:ond'n(*. G.R. No.

9"8 F'


24/114

the wages ed dailyrate and in e>change, they would canvass, assist and help passengers

of respondents7 passenger truc$s. This privilege or arrangement was

made possible due to the eJorts and representation of complainant7s

father, Mr. Regino dela CruA, who is close and $nown to the standbys

and@or dispatchers.- The impression that this oce gets from said

allegation is that the /). received by complainant represents the

value that respondents attach to complainant7s services hence, it is

remuneration for services rendered. Respondent7s admission of regular

payment of such an amount, already establishes the e>istence of one of

the factors that indicate employment relationship.

The right to hire and re, on the other hand, has been indubitably

established by complainant7s 1>hibit 4 ercise of the prerogative to dismiss.

Complainant7s 1>hibit -9- rebuttal, respondent7s ocial document,

reecting the designation of respondent7s witness, ercises supervisory control. 6f a chief dispatcher wor$s with the

company, uses and signs ocial documents as is reected in 1>hibit

-9,- it follows that his employment as such was in consideration of a

chief dispatcher7s e>ercise of his duties to supervise and control

subordinate dispatchers. 4long this line, Regino dela CruA7s testimony

that 97Rough Riders does not e>ercise control over the complainant

cannot preponderate over 1>hibit -9.-

6n ne, this :ce nds that complainant was an employee ofrespondent.

4rming the Labor 4rbiter decision, the NLRC held8

He perused at length the record of the instant case, analyAing in the

process, the grounds and supporting arguments advanced in the appeal

and the reply thereto and we found no merit in the appeal.

. . . 4 reading of the adavit of Regino dela CruA, a witness for the

respondent who is the Chief 9ispatcher and father of the complainant

would reveal that it was he who included the complainant as one of thedispatchers of the respondents. Considering that Regino dela CruA is the

Chief 9ispatcher, the selection and engagement of the complainant as a

dispatcher of the respondents was made thru him and with the

ac2uiescence of the management.

4lso, it is admitted by the respondents, as borne out by the records,

including the adavit of Regino dela CruA, that complainant was

receiving a >ed daily rate from the respondent. The Labor 4rbiter is

therefore correct when she ruled that what complainant received from

the respondents is a remuneration for services rendered.

The power of dismissal which respondents e>ercised over the person of

the complainant is clearly established by complainants7 1>hibit -4-

hibit refers to a disciplinary memorandum to the !

complainant written in Gisayan dialect. This e>hibit was not refuted by

the respondents.


25/114

4lso, we agree with the observation of the Labor 4rbiter that

respondent7s Chief 9ispatcher is e>ercising his supervision and control

over the complainant who is a dispatcher as clearly manifested in

1>hibit -9- hibit would reveal that complainant was

indeed signing a daily time record of their hours of wor$.

The evidences %sic' submitted by the complainant have proven thatcomplainant is really an employee of the respondents.

The 2uestion whether an employer!employee relationship e>ists is a

2uestion of fact. 4s long as the ndings of the labor agencies on this

2uestion are supported by substantial evidence, the ndings will not be

disturbed on review in this Court. Review in this Court concerning factual

ndings in labor cases is conned to determining allegations of lac$ of

urisdiction or grave abuse of discretion.0

He agree with the nding that an employer!employee relationship

e>isted between petitioner and private respondent, such nding beingsupported by substantial evidence. /etitioner has failed to refute the

evidence presented by private respondent. ?e points to his Chief

9ispatcher, Regino de la CruA, as the one who e>ercised the powers of

an employer over the -dispatchers.- /etitioner argues that under an

agreement with Regino de la CruA, it is the latter who selects and

engages the -dispatchers,- dictates their time, supervises the

performance of their wor$, and pays their wages. ?e further argues that

the -disciplinary memorandum- issued by him was not addressed to

private respondent but to Regino de la CruA, as employer of private

respondent, to remind him regarding the discipline of the -dispatchers.-

/etitioner7s contention is without merit. 6n determining whether there is

an employer!employee relationship between the parties the following

2uestions must be considered8


26/114

the wor$ers in the same manner and to the same e>tent as if they had

been directly employed by him.+ 4s held in 3roadway Motors, 6nc. v.

NLRC,& citing /hilippine 3an$ of Communications v. NLRC, && the

-labor!only- contractor is a mere agent of the employer who is

responsible to the employees of the -labor!only- contractor as if such

employees had been employed by him directly. 6n such a case the

statute establishes an employer!employee relationship between the

employer and the employees of the -labor!only- contractor to prevent

any violation or circumvention of the provisions of the Labor Code, byholding both the employer and the -labor!only- contractor responsible to

the employees.

5or this reason, we hold that Regino de la CruA can, at most, be

considered a -labor!only- contractor and, therefore, a mere agent of

petitioner. 4s he is acting in behalf of petitioner, private respondent

?ermes de la CruA is actually the employee of petitioner.

H?1R15:R1, the petition is 91N619 for lac$ of merit.

(: :R91R19.

#. AIR MATERIAL /ING SAINGS AN LOAN ASSOCIATION, INC.,

:'(-(-on', ;*. NATIONAL LABOR RELATIONS COMMISSION, '( a.,

'*:ond'n(*. G.R. No. 111"#0 Jun' 70, 1998

Derry 9. 3anares for petitioner.

/erdrelito . 42uino for private respondent.

CRIW, D.8

/rivate respondent Luis (. (alas was appointed -notarial and legal

counsel- for petitioner 4ir Material Hings (avings and Loan 4ssociation


27/114

presented documentary evidence to show that he was indeed an

employee of 4MH(L46.

The motion was denied and both parties were re2uired to submit their

position papers. 4MH(L46 led a motion for reconsideration ad

cautelam, which was also denied. The parties were again ordered to

submit their position papers but 4MH(L46 did not comply. Nevertheless,

most of (alas7 claims were dismissed by the labor arbiter in his decision

dated November )&, &++&. &

6t was there held that (alas was not illegally dismissed and so not

entitled to collect separation benets. ?is claims for vacation leave, sic$

leave, medical and dental allowances and refund of ((( premiums were

reected on the ground that he was a managerial employee. ?e was also

denied moral and e>emplary damages for lac$ of evidence of bad faith

on the part of 4MH(L46. Neither was he allowed to collect his notarial

fees from &+E up to &+E" because the claim therefor had already

prescribed. ?owever, the petitioner was ordered to pay (alas his notarial

fees from &+E* up to March ), &++, and attorney7s fee e2uivalent to

&B of the udgment award.

:n appeal, the decision was armed in toto by the respondent

Commission, prompting the petitioner to see$ relief in this Court. )

The threshold issue in this case is whether or not (alas can be

considered an employee of the petitioner company.

He have held in a long line of decisions that the elements of an

employer!employee relationship are8


28/114

He must disagree with the NLRC, however, on (alas7 claims for notarial

fees.

The petitioner contends that the public respondents are not empowered

to adudicate claims for notarial fees. :n the other hand, the (olicitor

;eneral believes that the NLRC acted correctly when it too$ cogniAance

of the claim because it arose out of (alas7 employment contract with the

petitioner which assigned him the duty to notariAe loan agreements and

other legal documents. Moreover, (ection + of Rule &F& of the Rules ofCourt does not restrict or prevent the labor arbiter and the NLRC from

determining claims for notarial fees.

Labor arbiters have the original and e>clusive urisdiction over money

claims of wor$ers when such claims have some reasonable connection

with the employer!employee relationship. The money claims of wor$ers

referred to in paragraph 0 of 4rticle )&* of the Labor Code are those

arising out of or in connection with the employer!employee relationship

or some aspect or incident of such relationship.

(alas7 claim for notarial fees is based on his employment as a notarialocer of the petitioner and thus comes under the urisdiction of the

labor arbiter.

The public respondents agreed that (alas was entitled to collect notarial

fees from &+E* to &++ by virtue of his having been assigned as notarial

ocer. He feel, however, that there is no substantial evidence to

support this nding.

The letter!contract of Danuary )0, &+E*, does not contain any stipulation

for the separate payment of notarial fees to (alas in addition to his basic

salary. :n the contrary, it would appear that his notarial services werepart of his regular functions and were thus already covered by his

monthly compensation. 6t is true that the notarial fees were paid by

members!borrowers of the petitioner for its own account and not of

(alas. ?owever, this is not a sucient basis for his claim to such fees in

the absence of any agreement to that eJect.

4CC:R96N;LP, the appealed udgment of the NLRC is 4556RM19, with

the modication that the award of notarial fees and attorney7s fees is

disallowed. 6t is so ordered.

9avide, Dr., 3ellosillo, uiason and Vapunan, DD., concur.

". ELIAS ILLUGA, RENATO ABISTAO, JILL MENO3A, ANRES

ABA, BENJAMIN BRI3UELA, NORLITO LAIA, MARCELO

AGUILAN, AI ORO, NELIA BRI3UELA, FLORA ESCOBIO,

JUSTILITA CABANIG, and OMINGO SAGUIT, :'(-(-on'*, ;*.

NATIONAL LABOR RELATIONS COMMISSION ?TIR IISION@

and BROA STREET TAILORING ando ROOLFO 3APANTA,

'*:ond'n(*. G.R. No. L5#07" Auu*( 27, 1997

3alguma, Macasaet 4ssociates for petitioners.

Teresita ;andionco :ledan for private respondents.

N:C:N, D.8

4 basic factor underlying the e>ercise of rights and the ling of claims

for benets under the Labor Code and other presidential issuances or

labor legislations is the status and nature of one7s employment. Hhether

an employer!employee relationship e>ist and whether such employment

is managerial in character or that of a ran$ and le employee are

primordial considerations before e>tending labor benets. Thus,

petitioners in this case see$ a denitive ruling on the status and natureof their employment with 3road (treet Tailoring and pray for the

nullication of the resolution dated May &), &+E" of the National Labor

Relations Commissions in NLRC Case No. R3!6G! )#E!*E!T arming the

decision of Labor 4rbiter 1rnilo G. /ealosa dated May )E, &+*+, which

held eleven of them as independent contractors and the remaining one

as employee but of managerial ran$.


29/114

The facts of the case shows that petitioner 1lias Gilluga was employed

as cutter in the tailoring shop owned by private respondent Rodolfo

Wapanta and $nown as 3road (treet Tailoring located at (haw 3oulevard,

Mandaluyong, Metro Manila. 4s cutter, he was paid a >ed monthly

salary of /EF. and a monthly transportation allowance of /F.. 6n

addition to his wor$ as cutter, Gilluga was assigned the chore of

distributing wor$ to the shop7s tailors or sewers when both the shop7s

manager and assistant manager would be absent. ?e saw to it that their

wor$ conformed with the pattern he had prepared and if not, he hadthem redone, repaired or resewn.

The other petitioners were either ironers, repairmen and sewers. They

were paid a >ed amount for every item ironed, repaired or sewn,

regardless of the time consumed in accomplishing the tas$. /etitioners

did not ll up any time record since they did not observe regular or >ed

hours of wor$. They were allowed to perform their wor$ at home

especially when the volume of wor$, which depended on the number of

ob orders, could no longer be coped up with.

5rom 5ebruary &* to )), &+*E, petitioner Gilluga failed to report for wor$allegedly due to illness. 5or not properly notifying his employer, he was

considered to have abandoned his wor$.

6n a complaint dated March )*, &+*E, led with the Regional :ce of

the 9epartment of Labor, Gilluga claimed that he was refused

admittance when he reported for wor$ after his absence, allegedly due

to his active participation in the union organiAed by private respondent7s

tailors. ?e further claimed that he was not paid overtime pay, holiday

pay, premium pay for wor$ done on rest days and holidays, service

incentive leave pay and &0th month pay.

/etitioners Renato 4bistado, Dill MendoAa, 3enamin 3riAuela and 9avid

:ro also claimed that they were dismissed from their employment

because they oined the /hilippine (ocial (ecurity Labor Inion cept petitioner Gilluga7s claim for

&0th month pay for the years &+*", &+** and &+E. The dispositive

portion of the decision states as follows8

H?1R15:R1, premises considered, the respondent 3road (treet

Tailoring and@or Rodolfo Wapanta are hereby ordered to pay complainant

1lias Gilluga the sum of :N1 T?:I(4N9 TH: ?IN9R19 5:RTP!16;?T

/1(:( 4N9 (6OTP!(6O C1NT4G:(


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&. That the respondent National Labor Relations Commission abused its

discretion when it ruled that petitioner@complainant, 1lias Gilluga falls

within the category of a managerial employee

). . . . when it ruled that the herein petitioners were not dismissed by

reason of their union activities

0. . . . when it ruled that petitioners 4ndres 4bad, 3enamin 3riAuela,

Norlito Ladia, Marcelo 4guilan, 9avid :ro, Nelia 3riAuela, 5lora 1scobido,Dustilita Cabaneg and 9omingo (aguit were not employees of private

respondents but were contractors.

F. . . . when it ruled that petitioner 1lias Gilluga is not entitled to

overtime pay and services for (undays and Legal ?olidays and

#. . . . when it failed to grant petitioners their respective claims under

the provisions of /.9. Nos. +)#, &&)0 and E#&. F

Inder Rule &, (ection )ist, to wit8 ecute approved and established policies leaving little or no

discretion at all whether to implement said policies or not. "

Conse2uently, the e>clusion of Gilluga from the benets claimed under

4rticle E*


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dismissal, there must be a deliberate and unustied refusal of the

employee to resume his employment. Mere absence is not sucient, it

must be accompanied by overt acts unerringly pointing to the fact that

the employee simply does not want to wor$ anymore. E 4t any rate,

dismissal of an employee due to his prolonged absence without leave by

reason of illness duly established by the presentation of a medical

certicate is not ustied. + 6n the case at bar, however, considering that

petitioner Gilluga absented himself for four ist, the following elements

are generally considered8 -ercise of the right. &F

6n determining whether the relationship is that of employer and

employee or one of an independent contractor, -each case must be

determined on its own facts and all the features of the relationship are

to be considered.- Considering that petitioners who are either sewers,

repairmen or ironer, have been in the employ of private respondent asearly as &+*) or at the latest in &+*", faithfully rendering services which

are desirable or necessary for the business of private respondent, and

observing management7s approved standards set for their respective

lines of wor$ as well as the customers7 specications, petitioners should

be considered employees, not independent contractors.

6ndependent contractors are those who e>ercise independent

employment, contracting to do a piece of wor$ according to their own

methods and without being subected to control of their employer

e>cept as to the result of their wor$. 3y the nature of the diJerent

phases of wor$ in a tailoring shop where the customers7 specicationsmust be followed to the letter, it is inconceivable that the wor$ers

therein would not be subected to control.

6n Rosario 3rothers, 6nc. v. :ple, &" this Court ruled that tailors and

similar wor$ers hired in the tailoring department, although paid wee$ly

wages on piece wor$ basis, are employees not independent contractors.

4ccordingly, as regular employees, paid on a piece!rate basis,

petitioners are not entitled to overtime pay, holiday pay, premium pay


32/114

for holiday@rest day and service incentive leave pay. Their claim for

separation pay should also be dened for lac$ of evidence that they

were in fact dismissed by private respondent. They should be paid,

however, their &0th month pay under /.9. E#&, since they are

employees not independent contractors.

H?1R15:R1, in view of the foregoing reasons, the assailed decision of

respondent National Labor Relations Commission is hereby M:965619 by

awarding Q


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66. Hhether insurance agents are entitled to the employee benets

prescribed by the Labor Code.

666. Hhether the public respondent NLRC has urisdiction to ta$e

cogniAance of a controversy between insurance agent and the insurance

company, arising from their agency relations.

6G. Hhether the public respondent acted correctly in setting aside the

decision of Labor 4rbiter Gito D. Minoria and in ordering the caseremanded to said Labor 4rbiter for further proceedings. of these issues boil down to the 2uestion of whether or not

employer!employee relationship e>isted between petitioner and private

respondent.

/etitioner admits that on Dune +, &+*", private respondent Dudico

entered into an agreement of agency with petitioner ;repalife to

become a debit agent attached to the industrial life agency in Cebu City.

/etitioner denes a debit agent as -an insurance agent selling@servicing

industrial life plans and policy holders. 6ndustrial life plans are thosewhose premiums are payable either daily, wee$ly or monthly and which

are collectible by the debit agents at the home or any place designated

by the policy holder-


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initiative they are not re2uired to account for their time nor submit a

report of their activities they shoulder their own selling e>penses as

well as transportation and they are paid their commission based on a

certain percentage of their sales. :ne salient point in the determination

of employer!employee relationship which cannot be easily ignored is the

fact that the compensation that these agents on commission received is

not paid by the insurance company but by the investor ed wee$ly wage of / ). for

thirteen wee$s regardless of production. ?e was assigned a denite

place in the oce to wor$ on when he is not in the eld and in addition

to his canvassing wor$ he was burdened with the ob of collection. 6n

both cases he was re2uired to ma$e regular report to the company

regarding these duties, and for which an anemic performance would

mean a dismissal. Conversely faithful and productive service earned him

a promotion to Wone (upervisor with additional supervisor7s allowance, a

denite amount of /&&. aside from the regular / ). wee$ly

-allowance-. 5urthermore, his contract of services with petitioner is not

for a piece of wor$ nor for a denite period.

:n the other hand, an ordinary commission insurance agent wor$s at his

own volition or at his own leisure without fear of dismissal from the

company and short of committing acts detrimental to the business

interest of the company or against the latter, whether he produces or

not is of no moment as his salary is based on his production, his anemic

performance or even dead result does not become a ground for

dismissal. Hhereas, in private respondent7s case, the undisputed facts

show that he was controlled by petitioner insurance company not only

as to the $ind of wor$ the amount of results, the $ind of performance

but also the power of dismissal. Indoubtedly, private respondent, by

nature of his position and wor$, had been a regular employee of

petitioner and is therefore entitled to the protection of the law and could

not ust be terminated without valid and ustiable cause.

/remises considered, the appealed decision is hereby 4556RM19 in toto.

(: :R91R19.

Melencio!?errera


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0. the -rules in ... ercise hisown udgment as to time, place and means of soliciting insurance.

Nothing herein contained shall therefore be construed to create the

relationship of employee and employer between the 4gent and the

Company. ?owever, the 4gent shall observe and conform to all rules and

regulations which the Company may from time to time prescribe.

6LL1;4L 4N9 IN1T?6C4L /R4CT6C1(. The 4gent is prohibited from

giving, directly or indirectly, rebates in any form, or from ma$ing any

misrepresentation or over!selling, and, in general, from doing or

committing acts prohibited in the 4gent7s Manual and in circulars of the

:ce of the 6nsurance Commissioner.

T1RM6N4T6:N. The Company may terminate the contract at will, without

any previous notice to the 4gent, for or on account of ... plicitly

specied causes=. ...

1ither party may terminate this contract by giving to the other notice in

writing to that eJect. 6t shall become ipso facto cancelled if the

6nsurance Commissioner should revo$e a Certicate of 4uthority

previously issued or should the 4gent fail to renew his e>isting

Certicate of 4uthority upon its e>piration. The 4gent shall not have any

right to any commission on renewal of premiums that may be paid afterthe termination of this agreement for any cause whatsoever, e>cept

when the termination is due to disability or death in line of service. 4s to

commission corresponding to any balance of the rst year7s premiums

remaining unpaid at the termination of this agreement, the 4gent shall

be entitled to it if the balance of the rst year premium is paid, less

actual cost of collection, unless the termination is due to a violation of

this contract, involving criminal liability or breach of trust.

4((6;NM1NT. No 4ssignment of the 4gency herein created or of

commissions or other compensations shall be valid without the prior

consent in writing of the Company. ...

(ome four years later, in 4pril &+*), the parties entered into another

contract Q an 4gency Manager7s Contract Q and to implement his end

of it 3asiao organiAed an agency or oce to which he gave the name M.

3asiao and 4ssociates, while concurrently fullling his commitments

under the rst contract with the Company. )

6n May, &+*+, the Company terminated the 4gency Manager7s Contract.

4fter vainly see$ing a reconsideration, 3asiao sued the Company in a

civil action and this, he was later to claim, prompted the latter to

terminate also his engagement under the rst contract and to stop

payment of his commissions starting 4pril &, &+E. 0

3asiao thereafter led with the then Ministry of Labor a complaint F

against the Company and its president. Hithout contesting the

termination of the rst contract, the complaint sought to recover

commissions allegedly unpaid thereunder, plus attorney7s fees. Therespondents disputed the Ministry7s urisdiction over 3asiao7s claim,

asserting that he was not the Company7s employee, but an independent

contractor and that the Company had no obligation to him for unpaid

commissions under the terms and conditions of his contract. #

The Labor 4rbiter to whom the case was assigned found for 3asiao. ?e

ruled that the underwriting agreement had established an employer!

employee relationship between him and the Company, and this

conferred urisdiction on the Ministry of Labor to adudicate his claim.

(aid ocial7s decision directed payment of his unpaid commissions -...

e2uivalent to the balance of the rst year7s premium remaining unpaid,at the time of his termination, of all the insurance policies solicited by ...


36/114

The chief issue here is one of urisdiction8 whether, as 3asiao asserts, he

had become the Company7s employee by virtue of the contract invo$ed

by him, thereby placing his claim for unpaid commissions within the

original and e>clusive urisdiction of the Labor 4rbiter under the

provisions of (ection )&* of the Labor Code, E or, contrarily, as the

Company would have it, that under said contract 3asiao7s status was

that of an independent contractor whose claim was thus cogniAable, not

by the Labor 4rbiter in a labor case, but by the regular courts in an

ordinary civil action.

The Company7s thesis, that no employer!employee relation in the legal

and generally accepted sense e>isted between it and 3asiao, is drawn

from the terms of the contract they had entered into, which, either

e>pressly or by necessary implication, made 3asiao the master of his

own time and selling methods, left to his udgment the time, place and

means of soliciting insurance, set no accomplishment 2uotas and

compensated him on the basis of results obtained. ?e was not bound to

observe any schedule of wor$ing hours or report to any regular station

he could see$ and wor$ on his prospects anywhere and at anytime he

chose to, and was free to adopt the selling methods he deemed most

eJective.

Hithout denying that the above were indeed the e>pressed implicit

conditions of 3asiao7s contract with the Company, the respondents

contend that they do not constitute the decisive determinant of the

nature of his engagement, invo$ing precedents to the eJect that the

critical feature distinguishing the status of an employee from that of an

independent contractor is control, that is, whether or not the party who

engages the services of another has the power to control the latter7s

conduct in rendering such services. /ursuing the argument, the

respondents draw attention to the provisions of 3asiao7s contract

obliging him to -... observe and conform to all rules and regulations

which the Company may from time to time prescribe ...,- as well as to

the fact that the Company prescribed the 2ualications of applicants for

insurance, processed their applications and determined the amounts of

insurance cover to be issued as indicative of the control, which made

3asiao, in legal contemplation, an employee of the Company. +

6t is true that the -control test- e>pressed in the following

pronouncement of the Court in the &+#" case of Giana vs. 4leo 4l!

Lagadan &

... 6n determining the e>istence of employer!employee relationship, the

following elements are generally considered, namely8


37/114

afoul of the law and what it re2uires or prohibits. :f such a character are

the rules which prescribe the 2ualications of persons who may be

insured, subect insurance applications to processing and approval by

the Company, and also reserve to the Company the determination of the

premiums to be paid and the schedules of payment. None of these really

invades the agent7s contractual prerogative to adopt his own selling

methods or to sell insurance at his own time and convenience, hence

cannot ustiably be said to establish an employer!employee

relationship between him and the company.

There is no dearth of authority holding persons similarly placed as

respondent 3asiao to be independent contractors, instead of employees

of the parties for whom they wor$ed. 6n Manco Trading Corporation vs.

:ple,&0 the Court ruled that a person engaged to sell soft drin$s for

another, using a truc$ supplied by the latter, but with the right to

employ his own wor$ers, sell according to his own methods subect only

to prearranged routes, observing no wor$ing hours >ed by the other

party and obliged to secure his own licenses and defray his own selling

e>penses, all in consideration of a peddler7s discount given by the other

party for at least )# cases of soft drin$s sold daily, was not an

employee but an independent contractor.

6n 6nvestment /lanning Corporation of the /hilippines us. (ocial (ecurity

(ystem &F a case almost on all fours with the present one, this Court

held that there was no employer!employee relationship between a

commission agent and an investment company, but that the former was

an independent contractor where said agent and others similarly placed

were8 isted or were issued which

eJectively controlled or restricted his choice of methods Q or the

methods themselves Q of selling insurance. 4bsent such showing, the

Court will not speculate that any e>ceptions or 2ualications were

imposed on the e>press provision of the contract leaving 3asiao -... free

to e>ercise his own udgment as to the time, place and means of

soliciting insurance.-

The Labor 4rbiter7s decision ma$es reference to 3asiao7s claim of having

been connected with the Company for twenty!ve years. Hhatever this

is meant to imply, the obvious reply would be that what is germane here

is 3asiao7s status under the contract of Duly ), &+"E, not the length of his

relationship with the Company.

The Court, therefore, rules that under the contract invo$ed by him,

3asiao was not an employee of the petitioner, but a commission agent,

an independent contractor whose claim for unpaid commissions should

have been litigated in an ordinary civil action. The Labor 4rbiter erred in

ta$ing cogniAance of, and adudicating, said claim, being withouturisdiction to do so, as did the respondent NLRC in arming the

4rbiter7s decision. This conclusion renders it unnecessary and premature

to consider 3asiao7s claim for commissions on its merits.

H?1R15:R1, the appealed Resolution of the National Labor Relations

Commission is set aside, and that complaint of private respondent

Melecio T. 3asiao in R43 Case No. G6!&!E0 is dismissed. No


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pronouncement as to costs. (: :R91R19. CruA, ;ancayco, ;rio!

42uino, and Medialdea, DD., concur.

11.MAATI ABERASER4, INC., JORGE LEESMA and CECILIO

G. INOCENCIO, :'(-(-on'*, ;*. NATIONAL LABOR RELATIONS

COMMISSION, CEFERINA J. IOSANA ?La


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H?1R15:R1, udgment is hereby rendered in NLRC NCR Case No. )!F)E!

E# nding respondents guilty of illegal dismissal and ordering them to

reinstate 9ioscoro /elobello and Casimiro Wapata to their respective or

similar positions without loss of seniority rights, with full bac$wages

from Duly F, &+E# up to actual reinstatement. The charge of unfair labor

practice is dismissed for lac$ of merit.

6n NLRC NCR Case No. *!)"0!EF, the complainants7 claims for

underpayment re violation of the minimum wage law is hereby ordered

dismissed for lac$ of merit.

Respondents are hereby found to have violated the decrees on the cost

of living allowance, service incentive leave pay and the &0th Month /ay.

6n view thereof, the economic analyst of the Commission is directed to

compute the monetary awards due each complainant based on the

available records of the respondents retroactive as of three years prior

to the ling of the instant case.

(: :R91R19. #

5rom the foregoing decision, petitioners appealed to the NLRC. The latter

on March 0, &+EE armed said decision but limited the bac$wages

awarded the 9ioscoro /elobello and Casimiro Wapata to only one


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you will cooperate with your supervisors. 6f you have many due dates for

certain day, advise Ruben or :fel at once so that they can ma$e

necessary adustment on due dates.

9. 4lteration!3efore accepting alteration person attending on customs

>> >>> >>>

ed amount for performing a

specic wor$, irrespective of the time consumed in the performance


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thereof, e>cept where the wor$ers are paid on piece!rate basis in which

case the employer shall be covered by this issuance insofar as such

wor$ers are concerned. ed

amount for performing wor$ irrespective of time consumed in the

performance thereof, they fall under one of the e>ceptions stated in

(ection &pressly provided for in 4rticle )E0


42/114

are hereby modied. The complaint led by /elobello and Wapata for

illegal dismissal doc$eted as NLRC NCR Case No. )!F)E!E# is dismissed

for lac$ of factual and legal bases. 4ward of service incentive leave pay

to private respondents is deleted.

(: :R91R19.

;utierreA, Dr., 5eliciano, 3idin and Cortes, DD., concur.

12.COSMOPOLITAN FUNERAL OMES, INC., :'(-(-on', ;*.

NOLI MAALAT and NATIONAL LABOR RELATIONS COMMISSION,

'*:ond'n(*. G.R. No. "6697 Ju! 2, 1990

Castro, 1nri2ueA, Carpio, ;uillen 4ssociates for petitioner.

Castro 3. 9orado for private respondent.

;IT61RR1W, DR., D.8

The nature of the wor$ of a -funeraria- supervisor, whether employee or

commission agent, is the issue raised in this petition.

(ometime in &+"), petitioner Cosmopolitan 5uneral ?omes, 6nc.

engaged the services of private respondent Noli Maalat as a -supervisor-

to handle the solicitation of mortuary arrangements, sales and

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