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CASES for LABOREL
G.R. No. 124055 June 8, 2000
ROLANDO E. ESCARIO, NESTOR ANDRES, CESAR AMPER, LORETOBALDEMOR, EDUARDO BOLONIA, ROMEO E. BOLONIA, ANICETO
CADESIM, JOEL CATAPANG, NESTOR DELA CRUZ, EDUARDO
DUNGO ESCARIO REY, ELIZALDE ESTASIO, CAROLINO M. FABIAN,
RENATO JANER, EMER B. LIQUIGAN, ALEJANDRO MABAWAD,
FERNANDO M. MAGTIBAY, DOMINADOR B. MALLILLIN, NOEL B.
MANILA, VIRGILIO A. MANIO, ROMEO M. MENDOZA, TIMOTEO
NOTARION, FREDERICK RAMOS, JOSEPH REYES, JESSIE SEVILLA,
NOEL STO. DOMINGO, DODJIE TAJONERA, JOSELITO TIONLOC,
ARNEL UMALI, MAURLIE C. VIBAR, ROLANDO ZALDUA, RODOLFO
TUAZON, TEODORO LUGADA, MAURING MANUEL, MARCIANO
VERGARA, JR., ARMANDO IBASCO, CAYETANO IBASCO, LEONILO
MEDINA, JOSELITO ODO, MELCHOR BUELA, GOMER GOMEZ,
HENRY PONCE, RAMON ORTIZ, JR., ANTONIO MIJARES, JR., MARIO
DIZER, REYNANTE PEJO, ARNALDO RAFAEL, NELSON BERUELA,
AUGUSTO RAMOS, RODOLFO VALENTIN, ANTONIO CACAM,
VERNON VELASQUEZ, NORMAN VALLO, ALEJANDRO ORTIZ,
ROSANO VALLO, ANDREW ESPINOSA, EDGAR CABARDO, FIDELES
REYES, EDGARDO FRANCISCO, FERNANDO VILLARUEL, LEOPOLDO
OLEGARIO, OSCAR SORIANO, GARY RELOS, DANTE IRANZO,
RONALDO BACOLOR, RONALD ESGUERA, VICTOR ALVAREZ, JOSE
MARCELO, DANTE ESTRELLADO, MELQUIADES ANGELES,GREGORIO TALABONG, ALBERT BALAO, ALBERT CANLAS, CAMILO
VELASCO, PONTINO CHRISTOPHER, WELFREDO RAMOS,
REYNALDO RODRIGUEZ, RAZ GARIZALDE, MIGUEL TUAZON,
ROBERTO SANTOS, AND RICARDO MORTEL, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CALIFORNIA
MANUFACTURING CO. INC. AND DONNA LOUISE ADVERTISING
AND MARKETING ASSOCIATES INCORPORATED, respondents.
D E C I S I O N
KAPUNAN,J.:
Before this Court is a petition for certiorariunder Rule 65, whichseeks to annul and set aside the decision, promulgated on 10 May
1995, of the National Labor Relations Commission (NLRC). The
assailed decision reversed the decision of the Labor Arbiter, and
ruled that the petitioners are employees of Donna Louise
Advertising and Marketing Associates, Inc. and ordered the
reinstatement of petitioners and the payment of backwages.
Private respondent California Marketing Co. Inc. (CMC) is a domestic
corporation principally engaged in the manufacturing of food
products and distribution of such products to wholesalers and
retailers. Private respondent Donna Louise Advertising and
Marketing Associates, Inc. (D.L. Admark) is a duly registered
promotional firm.
Petitioners worked as merchandisers for the products of CMC. Their
services were terminated on 16 March 1992.
The parties presented conflicting versions of the facts.
Petitioners allege that they were employed by CMC as
merchandisers. Among the tasks assigned to them were thewithdrawing of stocks from the warehouse, the fixing of prices,
price-tagging, displaying of merchandise, and the inventory of
stocks. These were done under the control, management and
supervision of CMC. The materials and equipment necessary in the
performance of their job, such as price markers, gun taggers, toys,
pentel pen, streamers and posters were provided by CMC. Their
salaries were being paid by CMC. According to petitioners, the
hiring, control and supervision of the workers and the payment of
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salaries, were all coursed by CMC through its agent D.L. Admark in
order for CMC to avoid its liability under the law.
On 7 February 1992, petitioners filed a case against CMC before the
Labor Arbiter for the regularization of their employment status.
During the pendency of the case before the Labor Arbiter, D.L.
Admark sent to petitioners notice of termination of their
employment effective 16 March 1992. Hence, their complaint was
amended so as to include illegal dismissal as cause of action.
Thereafter, twenty-seven more persons joined as complainants.
CMC filed a motion to implead as party-defendant D. L. Admark and
at the same time the latter filed a motion to intervene. Both
motions were granted.
CMC, on the other hand, denied the existence of an employer-
employee relationship between petitioner and itself. Rather, CMCcontended that it is D.L. Admark who is the employer of the
petitioners. While CMC is engaged in the manufacturing of food
products and distribution of such to wholesalers and retailers, it is
not allowed by law to engage in retail or direct sales to end
consumers. It, however, hired independent job contractors such as
D.L. Admark, to provide the necessary promotional activities for its
product lines.
For its part, D.L. Admark asserted that it is the employer of the
petitioners. Its primary purpose is to carry on the business ofadvertising, promotion and publicity, the sales and merchandising
of goods and services and conduct survey and opinion polls. As an
independent contractor it serves several clients among which
include Purefoods, Corona Supply, Firstbrand, Splash Cosmetics and
herein private respondent California Marketing.
On 29 July 1994, the Labor Arbiter rendered a decision finding that
petitioners are the employees of CMC as they were engaged in
activities that are necessary and desirable in the usual business or
trade of CMC.1In justifying its ruling, the Labor Arbiter cited the
case ofTabas vs. CMCwhich, likewise, involved private respondent
CMC. In the Tabas case, this Court ruled that therein petitioner
merchandisers were employees of CMC, to wit:
There is no doubt that in the case at bar, Livi performs "manpower
services," meaning to say, it contracts out labor in favor of clients.
We hold that it is one not withstanding its vehement claims to the
contrary and not- withstanding its vehement claims to the contrary,
and notwithstanding the provision of the contract that it is "an
independent contractor." The nature of ones business is not
determined by self-serving appellations one attaches thereto but by
the tests provided by statute and prevailing case law. The bare fact
that Livi maintains a separate line of business does not extinguish
the equal fact that it has provided California with workers to pursuethe latters own business. In this connection, we do not agree that
the petitioner has been made to perform activities "which are not
directly related to the general business of manufacturing,"
Californias purported "principal operation activity. The petitioners
had been charged with merchandising [sic] promotion or sale of the
products of [California] in the different sales outlets in Metro
Manila including task and occational [sic] price tagging," an activity
that is doubtless, an integral part of the manufacturing business. It
is not, then, as if Livi had served as its (Californias) promo tions or
sales arm or agent, or otherwise rendered a piece of work it(California) could not itself have done; Livi as a placement agency,
had simply supplied it with manpower necessary to carry out its
(Californias) merchandising activities, using its (Californias)
premises and equipment.2
On appeal, the NLRC set aside the decision of the Labor Arbiter. It
ruled that no employer-employee relationship existed between the
petitioners and CMC. It, likewise, held that D.L. Admark is a
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legitimate independent contractor, hence, the employer of the
petitioners. Finding no valid grounds existed for the dismissal of the
petitioners by D.L. Admark, it ordered their reinstatement. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, the appealed judgment is
modified. Intervenor DL ADMARK is ordered to reinstate the eighty
one (81) complainants mentioned in the appealed decision to their
former positions with backwages from March 16, 1992 until they
are actually reinstated. The award of attorneys fees equivalent to
ten (10%) of the award is deleted for lack of basis.3
Petitioners filed a motion for reconsideration but the same was
denied by the NLRC for lack of merit.4
Hence, this petition.
In the main, the issue brought to fore is whether petitioners are
employees of CMC or D.L. Admark. In resolving this, it is necessary
to determine whether D.L. Admark is a labor-only contractor or an
independent contractor.
Petitioners are of the position that D.L. Admark is a labor-only
contractor and cites this Courts ruling in the case ofTabas, which
they claim is applicable to the case at bar for the following reasons:
1. The petitioners are merchandisers and the petitioners in
the Tabas case are also merchandisers who have the same
nature of work.
2. The respondent in this case is California Manufacturing
Co. Inc. while respondent in the Tabas case is the same
California Manufacturing Co. Inc.
3. The agency in the Tabas case is Livi Manpower Services.
In this case, there are at least, three (3) agencies namely:
the same Livi Manpower Services; the Rank Manpower
Services and D.L. Admark whose participation is to give and
pay the salaries of the petitioners and that the money came
from the respondent CMC as in the Tabas case.lawphi1
4. The supervision, management and/or control rest upon
respondent California Manufacturing Co. Inc. as found by
the Honorable Labor Arbiter which is also, true in the Tabas
Case.5
We cannot sustain the petition.
Petitioners reliance on theTabas case is misplaced. In said case, we
ruled that therein contractor Livi Manpower Services was a mere
placement agency and had simply supplied herein petitioner with
the manpower necessary to carry out the companys merchandising
activity. We, however, further stated that :
It would have been different, we believe, had Livi been discretely a
promotions firm, and that California had hired it to perform the
latters merchandising activities. For then, Livi would have been
truly the employer of its employees and California, its client. x x x.6
In other words, CMC can validly farm out its merchandisingactivities to a legitimate independent contractor.
There is labor-only contracting when the contractor or sub-
contractor merely recruits, supplies or places workers to perform a
job, work or service for a principal. In labor-only contracting, the
following elements are present:
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(a) The person supplying workers to an employer does not
have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others; and
(b) The workers recruited and placed by such person are
performing activities which are directly related to the
principal business of the employer.7
In contrast, there is permissible job contracting when a principal
agrees to put out or farm out with a contractor or a subcontractor
the performance or completion of a specific job, work or service
within a definite or predetermined period, regardless of whether
such job or work or service is to be performed or completed within
or outside the premises of the principal. In this arrangement, the
following conditions must concur:
(a)....The contractor carries on a distinct and independent
business and undertakes the contract work on his account
under his own responsibility according to his own manner
and method, free from the control and direction of his
employer or principal in all matters connected with the
performance of his work except as to the results thereof;
and
(b)....The contractor has substantial capital or investment in
the form of tools, equipment, machineries (sic), workpremises, and other materials which are necessary in the
conduct of his business.8
In the recent case of Alexander Vinoya vs. NLRC et al.,9this Court
ruled that in order to be considered an independent contractor it is
not enough to show substantial capitalization or investment in the
form of tools, equipment, machinery and work premises. In
addition, the following factors need be considered: (a) whether the
contractor is carrying on an independent business; (b) the nature
and extent of the work; (c) the skill required; (d) the term and
duration of the relationship; (e) the right to assign the performance
of specified pieces of work; (f) the control and supervision of the
workers; (g) the power of the employer with respect to the hiring,
firing and payment of workers of the contractor; (h) the control of
the premises; (i) the duty to supply premises, tools, appliances,
materials, and labor; and (j) the mode, manner and terms of
payment.10
Based on the foregoing criterion, we find that D.L. Admark is a
legitimate independent contractor.
Among the circumstances that tend to establish the status of D.L.
Admark as a legitimate job contractor are:
1) The SEC registration certificate of D.L. Admark states that
it is a firm engaged in promotional, advertising, marketing
and merchandising activities.
2) The service contract between CMC and D.L. Admark
clearly provides that the agreement is for the supply of sales
promoting merchandising services rather than one of
manpower placement.11
3) D.L. Admark was actually engaged in several activities,such as advertising, publication, promotions, marketing and
merchandising. It had several merchandising contracts with
companies like Purefoods, Corona Supply, Nabisco Biscuits,
and Licron. It was likewise engaged in the publication
business as evidenced by it magazine the "Phenomenon."12
4) It had its own capital assets to carry out its promotion
business. It then had current assets amounting to P6 million
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and is therefore a highly capitalized venture.13
It had an
authorized capital stock of P500,000.00. It owned several
motor vehicles and other tools, materials and equipment to
service its clients. It paid rentals of P30,020 for the office
space it occupied.
Moreover, by applying the four-fold test used in determining
employer-employee relationship, the status of D.L. Admark as the
true employer of petitioners is further established. The elements of
this test are (1) the selection and engagement of employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to
control the employees conduct.14
As regards the first element, petitioners themselves admitted that
they were selected and hired by D.L. Admark.15
As to the second element, the NLRC noted that D.L. Admark was
able to present in evidence the payroll of petitioners, sample SSS
contribution forms filed and submitted by D.L. Admark to the SSS,
and the application for employment by R. de los Reyes, all tending
to show that D.L. Admark was paying for the petitioners salaries. In
contrast, petitioners did not submit an iota of evidence that it was
CMC who paid for their salaries. The fact that the agreement
between CMC and D.L. Admark contains the billing rate and cost
breakdown of payment for core merchandisers and coordinators
does not in any way establish that it was CMC who was paying fortheir salaries. As correctly pointed out by both CMC
16and the Office
of the Solicitor General,17
such cost breakdown is a standard
content of service contracts designed to insure that under the
contract, employees of the job contractor will receive benefits
mandated by law.
Neither did the petitioners prove the existence of the third element.
Again petitioners admitted that it was D.L. Admark who terminated
their employment.18
To prove the fourth and most important element of control,
petitioners presented the memoranda of CMCs sales and
promotions manager. The Labor Arbiter found that these memos
"indubitably show that the complainants were under the
supervision and control of the CMC people."19
However, as correctly
pointed out by the NLRC, a careful scrutiny of the documents
adverted to, will reveal that nothing therein would remotely suggest
that CMC was supervising and controlling the work of the
petitioners:
x x x The memorandums (Exhibit "B") were addressed to the store
or grocery owners telling them about the forthcoming salespromotions of CMC products. While in one of the memorandums a
statement is made that "our merchandisers and demonstrators will
be assigned to pack the premium with your stocks in the shelves x x
x, yet it does not necessarily mean to refer to the complainants, as
they claim, since CMC has also regular merchandisers and
demonstrators. It would be different if in the memorandums were
sent or given to the complainants and their duties or roles in the
said sales campaign are therein defined. It is also noted that in one
of the memorandums it was addressed to: "All regular
merchandisers/demonstrators." x x x we are not convinced that thedocuments sufficiently prove employer-employee relationship
between complainants and respondents CMC.20
The Office of the Solicitor General, likewise, notes that the
documents fail to show anything that would remotely suggest
control and supervision exercised by CMC over petitioners on the
matter on how they should perform their work. The memoranda
were addressed either to the store owners or "regular"
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merchandisers and demonstrators of CMC. Thus, petitioners, who
filed a complaint for regularization against respondent CMC,
thereby, conceding that they are not regular employees of the
latter, cannot validly claim to be the ones referred to in said
memos.21
Having proven the existence of an employer-employee relationship
between D.L. Admark and petitioners, it is no longer relevant to
determine whether the activities performed by the latter are
necessary or desirable to the usual business or trade of CMC.
On the issue of illegal dismissal, we agree with the findings of the
NLRC that D.L. Admark "admits having dismissed the petitioners for
allegedly disowning and rejecting them as their employer."
Undoubtedly, the reason given is not just cause to terminate
petitioners.22D.L. Admarks belated claim that the petitioners werenot terminated but simply did not report to work
23is not supported
by the evidence on record. Moreover, there is no showing that due
process was afforded the petitioners.
IN VIEW OF THE FOREGOING, finding no grave abuse of discretion
on the part of the National Labor Relations Commission, the
assailed decision is AFFIRMED in toto.
SO ORDERED.
Puno, Pardo, and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave abroad.
G.R. No. 112877 February 26, 1996
SANDIGAN SAVINGS and LOAN BANK, INC., and SANDIGAN REALTY
DEVELOPMENT CORPORATION,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANITA M.
JAVIER, respondents.
D E C I S I O N
HERMOSISIMA, JR.,J.:
This Petition for Certiorari, with prayer for the issuance of a
temporary restraining order, seeks to review, modify and/or set
aside the Resolution1dated 24 September 1993 and the
Resolution2dated 19 November 1993 of public respondent National
Labor Relations Commission (NLRC) in NLRC CAS RAB-III-05-1560-90.
The former affirmed, with modification, the Decision3of the LaborArbiter of the NLRC Regional Arbitration Branch No. III while the
latter denied the motion to reconsider the former.
Private respondent Anita M. Javier (hereinafter referred to as Javier)
worked as a realty sales agent of the petitioner Sandigan Realty
Development Corporation (hereinafter called the Sandigan Realty)
from November 2, 1982 (or November 9, 1982)4to November 30,
1986. Their agreement was that Javier would receive a 5%
commission for every sale, or if no sale was made, she would
receive a monthly allowance of P500,00.
Subsequently, that is, on 1 December 1986, Javier was hired as a
marketing collector of petitioner Sandigan Savings and Loan Bank
(hereinafter called the Sandigan Bank) by Angel Andan, the
President of both the Sandigan Bank and Sandigan Realty. Javier's
monthly salary and allowance were initially in the amount of
P788.00 and P585.00, respectively. These were adjusted thereafter
(the latest adjustment having been made on 1 July 1989), to
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P1,840.00 per month as salary and to P510.00 as monthly
allowance, per "Notice of Salary Adjustment."5
Meanwhile, respondent Javier continued to be a realty sales agent
of Sandigan Realty oh the side, and while she still received the 5%
commission on her sales, she no longer enjoyed the P500,00
monthly allowance.
On 20 April 1990, Javier was advised by Angel Andan not to report
for work anymore. This in effect was a notice of dismissal. The
manner by which her dismissal was effected has been correctly
described by the Solicitor General, thus:
On April 20, 1990, around 8:30 in the morning, while
performing her duties at the Bank, Javier saw and overhead
petitioner Andan summon the Bank's personnel officer,Mrs. Liberata G. Fajardo, and instruct her to prepare her
(Javier's) termination papers. Immediately thereafter,
Andan changed his mind and told Mrs. Fajardo to prepare
instead a resignation letter for Javier, saying, "Ayaw ko na
siyang makita sa susnod." Turning to private respondent, he
said, "Huwag na ninyong itanong kong anong dahilan,
basta't gusto ko, ito ang desisyon ko. Naawa lang ako sa iyo
noon kaya kita tinanggap. Ka Anita, huwag mong isipin na
may kinalaman ang mga pangyayari kay Ditas, wala, wala,
hindi iyon, basta't si Alice, iniskandalo na naman ako.
xxx xxx xxx
In the afternoon, after she received P50,000.00 from one
Mr. Ben Santos as full payment for a lot sold in Sta. Rita
Village, Guiguinto, Bulacan, Andan ordered Reynaldo
Bordado, her co-employee, to withdraw her commission of
P10,000.00 from the account of the Realty, saying, "Ibigay
mo sa ka Anita" yan para hindi na balikan dito.6
The advice of her termination notwithstanding, Javier reported for
work at the bank on the next working day or on 23 April 1990.
Though she signed the attendance sheet, she left when she could
not find her table.
On 18 May 1990, Javier filed a complaint against petitioners and
Angel Andan with the NLRC Regional Arbitration Branch No. III at
San Fernando, Pampanga, for illegal dismissal, seeking
reinstatement and payment of backwages and moral and exemplary
damages.
On 6 October 1992, the labor arbiter rendered judgment in private
respondent's favor, the dispositive portion of which reads:
WHEREFORE, considering the foregoing consideration, and
for having unjustly dismissed Anita Javier from her
employment, respondents are hereby directed to reinstate
her to her former position as marketing collector of
Sandigan Savings and Loan Bank and sales agent of
Sandigan Realty Development Corporation, pay her full
backwages from the time of her dismissal, plus 10%
attorney's fee and all her monetary award, until her actual
reinstatement, and P60,000.00 moral and exemplarydamages to compensate for her mental pain and anguish,
her social humiliation and besmirched reputation. Should
reinstatement be rendered impossible by virtue of the
abolition of her position as marketing collector, grant her, in
addition to backwages and other benefits, separation pay
equivalent to one (1) month for every year of service until
after this decision shall have become final and executory.7
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On appeal, the NLRC affirmed the decision of the Labor Arbiter in its
Resolution, dated 24 September 1993, but, deleting the award of
damages and attorney's fees, provided the following monetary
award of backwages and separation pay:
"Backwages: Fr: April 20, 1990-April 20, 1993 - 36 months
Realty: P500.00 (allowance) x 36 P18,000.00
Savings Bank: P2,400.00 x 36 P86,400.00
TOTAL P104,400.00
Separation Pay:
Realty: Nov. 2, 1982-April 20, 1993 - 10 years
P500.00 (allowance) x 10 P5,000.00
Savings Bank: Dec. 1, 1986-April 20, 1993 - 6 years
P2,400.00 x 6 P14,400.00
GRAND TOTAL P123,800.00"
The petitioners' Motion for Reconsideration of the said Resolution,
and that of the private respondent, were denied by the NLRC in its
Resolution, dated 19 November 1993, the dispositive portion of
which reads:
It appearing that the issues raised by both parties in theirMotions for Reconsideration were thoroughly discussed and
duly passed upon in the questioned Resolution promulgated
on September 24, 1993, the same are hereby denied for
lack of merit with finality.
No further motion for reconsideration shall be entertained.
The petitioners, thus, instituted this petition for certiorari,
contending that the NLRC gravely and seriously abused its discretion
in holding that:
1. Javier is a regular employee of both Sandigan Realty and
Sandigan Bank and entitled to backwages and separation
pay from both;
2. Javier was receiving P2,400.00 a month from the bank
and that she is entitled to separation pay for six years.8
The records disclose that petitioner Sandigan Bank no longer
disputes the finding that Javier was dismissed by it and that she did
not abandon her job thereat. In fact, it would have paid private
respondent the monetary award representing backwages and
separation pay adjudged against it in the assailed NLRC resolution, ifonly it found the same to be in the correct amount.
9
Consequently, the issues in this case are: (1) whether or not the
respondent NLRC abused its discretion in finding that private
respondent was a regular employee of the petitioner Sandigan
Realty, entitled to backwages and separation pay because of her
alleged illegal separation therefrom; and (2) whether the
computation of the monetary award owing to the private
respondent, as contained in the assailed NLRC resolution, was
attended with serious errors as to its bases both in fact and in law.
In determining the existence of an employer-employee relationship,
the following elements are generally considered: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the employer's power to control the
employee with respect to the means and methods by which the
work is to be accomplished.10
This Court has generally relied on the
so called "right of control test" in making such a determination.
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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
by which such end is reached,11
the relationship is deemed to exist.
Stated differently, it is the power of control which is the most
determinative factor.12
It is deemed to be such an important factor
that the other requisites may even be disregarded.13Thus, in the
case ofCosmopolitan Funeral Homes, Inc. v. Maalat, it was held that
"to determine whether a person who performs work for another is
the latter's employee or is all independent contractor, the prevailing
test is 'the right of control test'." In the said case, the petitioner
therein failed to prove that the contract with private respondent
was that of a mere agency, an indication that subject person is free
to accomplish his work on his own terms and may engage in other
means of livelihood.14
Viewed in the light of the foregoing criteria, the features of therelationship between Javier and the Sandigan Realty, as may be
gleaned from the facts described herein below by the Office of the
Solicitor General, readily negate the existence of an employer-
employee relationship between them, the element of control being
noticeably absent.
Javier was hired in 1982 to sell houses or lots owned by the
Realty. She was paid 5% commission for every lot or house
sold. From 1982 up to 1986 when she was hired as a
marketing collector of petitioner bank, she received fromthe Realty P500.00 monthly allowance if she was unable to
make any sale. The P500.00 allowance ceased when she
became a regular employee of the petitioner bank.
Javier sold houses or lots according to the manner or means
she chose to. The petitioner realty firm, while interested in
the result of her work, had no control with respect to the
details of how the sale of a house or lot was achieved. She
was free to adopt her own selling methods or free to sell at
her own time. (cf.Insular Life Assurance Co., Ltd. v. NLRC,
179 SCRA 459 [1989]). Her obligation was merely to turn
over the proceeds of each sale to the Realty and, in turn,
the Realty paid her by the job, i.e., her commission, not by
the hour.
Moreover, selling houses and lots was merely her sideline
or extra work for a sister company.15
As it appears that Sandigan Realty had no control over the conduct
of Javier as a realty sales agent since its only concern or interest was
in the result of her work and not in how it was achieved, there
cannot now be any doubt that Javier was not an employee, much
less a regular employee of the Sandigan Realty. Hence, she cannot
be entitled to the right to security of tenure nor to backwages andseparation pay as a consequence of her separation therefrom.
Evidently, the legal relation of Javier to the Sandigan Realty can be
that of an independent contractor, where the control of the
contracting party is only with respect td the result of the work, as
distinguished from an employment relationship where the person
rendering service is under the control of the hirer with respect to
the details and manner of performance.16
In the case ofSara v. Agarrado, private respondent who sold palayand rice for the petitioners under an arrangement or agreement
that the former would be paid P2.00 commission per sack of milled
rice sold as well as a commission of 10% per kilo of palay
purchased,17
and that she would spend her own money for the
undertaking, and where she was shown to have worked for
petitioners at her own pleasure, that she was not subject to definite
hours or conditions of work, that she could even delegate the task
of buying and selling to others, if she so desired, or simultaneously
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engaged in other means of livelihood while selling and purchasing
rice or palay, was held to be an independent contractor.18
By the same token, the private respondent in another case, 19
who
earns on a per head/talent commission basis and who works as she
pleases, on her own schedule, terms and conditions was also held to
be an independent contractor.
Private respondent Anita Javier is clearly similarly placed as the
private respondents in the above-cited cases. Hence, she could not
have been a regular employee but an independent contractor in
relation to the petitioner Sandigan Realty.
As we hold that private respondent was not a regular employee of
the Sandigan Realty and that she could not, therefore, be entitled to
backwages and separation pay, we will necessarily have to limit ourtreatment of the alleged errors committed by the NLRC in the
computation of the monetary award to that adjudged against the
petitioner Sandigan Bank. But, first, we have to settle the question
as to whether reinstatement or payment of separation pay in its
stead is the proper relief to be accorded the private respondent, it
appearing that neither the labor arbiter nor the NLRC made a
definitive ruling on the matter. This has become especially more
significant since private respondent, in her Comment20
and
Memorandum,21
presses for an order of reinstatement to her
former position, claiming that there is no sufficient basis for a grantof separation pay in lieu thereof.
We agree with the private respondent in this respect.
Private respondent Anita Javier, by virtue of her employment status,
is, under the law entitled to security of tenure, which means that
she has the right to continue in employment until the same is
terminated under conditions required by law. Article 279 of the
Labor Code, as amended, clearly provides that:
Security of Tenure. - In cases of regular employment, the
employer shall not terminate the services of an employee
except for a just cause or when authorized by the Title. An
employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement.
There being a finding of illegal dismissal of private respondent Anita
Javier, her reinstatement should follow as a matter of course, unlessit be shown that the same is no longer possible, in which case,
payment of separation pay will be ordered, in lieu thereof.22
In this
case, we do not find any such showing or basis to preclude private
respondent's reinstatement.
In effect, the petitioner bank is liable to private respondent only for
backwages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time her compensation
was withheld from her up to the time of her actual reinstatement,
at the rate of her latest monthly salary and allowance which was inthe total amount of P2,350,00 as shown by Javier's latest "Notice of
Salary Adjustment". However, earnings derived elsewhere by Javier
from the date of dismissal up to the date of reinstatement, if there
be any, should be deducted from said backwages. 23
In this
connection, it must be pointed out that the NLRC applied the old
rule, otherwise known as the "Mercury Drug Rule", and so, as to the
rate of P2,400.00, no-evidence was presented as basis. The rule that
should apply in this case is that provided in Article 279 of the Labor
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Code, as amended by Section 34, Republic Act No. 6715, as
aforequoted, which took effect on March 21, 1989, considering that
the private respondent's dismissal occurred thereafter, or on April
20, 1990.
WHEREFORE, the petition is GRANTED. The assailed resolutions of
the National Labor Relations Commission, dated 24 September 1993
and 19 November 1993, are hereby modified to conform both to
our finding that private respondent was not a regular employee of
Sandigan Realty Development Corporation but of the Sandigan
Savings and Loan Bank, Inc. and to our determination respecting the
monetary award to which the private respondent is entitled. The
petitioner Sandigan Savings and Loan Bank, Inc. is hereby ordered to
reinstate private respondent Anita Javier and to pay her backwages
from April 20, 1990 up to the date of her actual reinstatement, less
earnings derived elsewhere, if any.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Separate Opinions
PADILLA, J.: concurring and dissenting:
I concur in the ponencia of Mr. Justice Regino Hermosisima, Jr.
including its holding that because of the illegal dismissal, the
backwages to be awarded to the dismissed employee (Anita Javier)
should be reckoned from the date of illegal dismissal to date of
actual reinstatement (thereby departing from the "Mercury Drug
Rule"). Article 279 of the Labor Code as amended by Rep. Act No.
6715 provides for such a period as the basis in the computation of
backwages.
I do not however agree to the deduction from backwages of income
or salaries earned by the employee from elsewhere during the
period of his illegal dismissal. As I stated in my separate opinion
in Pines City Educational Center v. NLRCG.R. No. 96779, 10
November 1993, 227 SCRA 655:
xxx xxx xxx
The amendment to Art. 279 of the Labor Code introduced
by Rep. Act No. 6715 inserted the qualification " full" to the
word "backwages". The intent of the law seems to be clear.
The plain words of the statute provide that an employee
who is unjustly dismissed is entitled to FULL backwages
from the time of his dismissal to actual reinstatement. The
law provides no qualification nor does it state that income
earned by the employee during the period between hisunjust dismissal and reinstatement should be deducted
from such backwages. When the law does not provide, the
Court should not improvise.
It is further my view that the principle of unjust enrichment
(if no deduction is allowed from backwages) does not apply
in this case, for the following reasons:
1. The applicable provision of law should be
construed in favor of labor.
2. The Labor Code is special lawwhich should
prevail over the Civil Code provisions on unjust
enrichment.
3 The language employed by the statute and,
therefore, its intent are clear. Where the unjust
dismissal occurs after Rep. Act No. 6715 took effect,
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backwages must be awarded from the time the
employee is unlawfully dismissed until the time he
is actually reinstated. There is no provision
authorizing deduction of any income earned by the
employee during that period. The statutory formula
was evidently crafted by the legislature not only for
convenience and expediency in executing the
monetary judgments in favor of the employees but
also to prevent the employer from reporting to
delaying tactics when the judgment is executed by
pleading income earned by the employee before
reinstatement as proper deductions from
backwages. It is true that the dismissed employee
may also resort to the same delaying tactics but
when we consider the by and large inherent
inequality of resources between employer andemployee, the legislative formula would seem to be
equitable. Besides and this we cannot over-stress -
given the language of the law, the Court appears to
have no alternative but to award such full
backwages without deduction or qualification. Any
other interpretation opens the Court to the charge
of indulging in judicial legislation.
I therefore vote to award private respondents Roland Picart and
Lucia Chan full backwages from time of their unjust dismissal totheir actual reinstatement, without deduction or qualification in
accordance with the mandate of the law. (Rep. Act No. 6715)."
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO,
respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private
respondent.
NARVASA,J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply
called the Company) and Melecio T. Basiao entered into acontract
1by which:
1. Basiao was "authorized to solicit within the
Philippines applications for insurance policies and
annuities in accordance with the existing rules and
regulations" of the Company;
2. he would receive "compensation, in the form of
commissions ... as provided in the Schedule of
Commissions" of the contract to "constitute a partof the consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its
Agent's Manual, as well as all its circulars ... and
those which may from time to time be promulgated
by it, ..." were made part of said contract.
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The contract also contained, among others, provisions governing
the relations of the parties, the duties of the Agent, the acts
prohibited to him, and the modes of termination of the
agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be
free to exercise his own judgment 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 Agent and the Company. However, the
Agent shall observe and conform to all rules and
regulations which the Company may from time to
time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent isprohibited from giving, directly or indirectly, rebates
in any form, or from making any misrepresentation
or over-selling, and, in general, from doing or
committing acts prohibited in the Agent's Manual
and in circulars of the Office of the Insurance
Commissioner.
TERMINATION. The Company may terminate the
contract at will, without any previous notice to the
Agent, for or on account of ... (explicitly specifiedcauses). ...
Either party may terminate this contract by giving to
the other notice in writing to that effect. It shall
become ipso facto cancelled if the Insurance
Commissioner should revoke a Certificate of
Authority previously issued or should the Agent fail
to renew his existing Certificate of Authority upon
its expiration. The Agent shall not have any right to
any commission on renewal of premiums that may
be paid after the termination of this agreement for
any cause whatsoever, except when the
termination is due to disability or death in line of
service. As to commission corresponding to any
balance of the first year's premiums remaining
unpaid at the termination of this agreement, the
Agent shall be entitled to it if the balance of the first
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.
ASSIGNMENT. No Assignment of the Agency herein
created or of commissions or other compensationsshall be valid without the prior consent in writing of
the Company. ...
Some four years later, in April 1972, the parties entered into
another contract an Agency Manager's Contract and to
implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while
concurrently fulfilling his commitments under the first contract with
the Company.2
In May, 1979, the Company terminated the Agency Manager's
Contract. After vainly seeking a reconsideration, Basiao sued the
Company in a civil action and this, he was later to claim, prompted
the latter to terminate also his engagement under the first contract
and to stop payment of his commissions starting April 1, 1980.3
Basiao thereafter filed with the then Ministry of Labor a
complaint4
against the Company and its president. Without
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contesting the termination of the first contract, the complaint
sought to recover commissions allegedly unpaid thereunder, plus
attorney's fees. The respondents disputed the Ministry's jurisdiction
over Basiao's claim, asserting that he was not the Company's
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.5
The Labor Arbiter to whom the case was assigned found for Basiao.
He ruled that the underwriting agreement had established an
employer-employee relationship between him and the Company,
and this conferred jurisdiction on the Ministry of Labor to
adjudicate his claim. Said official's decision directed payment of his
unpaid commissions "... equivalent to the balance of the first year's
premium remaining unpaid, at the time of his termination, of all the
insurance policies solicited by ... (him) in favor of the respondentcompany ..." plus 10% attorney's fees.
6
This decision was, on appeal by the Company, affirmed by the
National Labor Relations Commission.7
Hence, the present petition
for certiorariand prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao
asserts, he had become the Company's employee by virtue of the
contract invoked by him, thereby placing his claim for unpaid
commissions within the original and exclusive jurisdiction of theLabor Arbiter under the provisions of Section 217 of the Labor
Code,8
or, contrarily, as the Company would have it, that under said
contract Basiao's status was that of an independent contractor
whose claim was thus cognizable, not by the Labor Arbiter in a labor
case, but by the regular courts in an ordinary civil action.
The Company's thesis, that no employer-employee relation in the
legal and generally accepted sense existed between it and Basiao, is
drawn from the terms of the contract they had entered into, which,
either expressly or by necessary implication, made Basiao the
master of his own time and selling methods, left to his judgment the
time, place and means of soliciting insurance, set no
accomplishment quotas and compensated him on the basis of
results obtained. He was not bound to observe any schedule of
working hours or report to any regular station; he could seek and
work on his prospects anywhere and at anytime he chose to, and
was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit
conditions of Basiao's contract with the Company, the respondents
contend that they do not constitute the decisive determinant of the
nature of his engagement, invoking precedents to the effect that
the critical feature distinguishing the status of an employee from
that of an independent contractor is control, that is, whether or notthe party who engages the services of another has the power to
control the latter's conduct in rendering such services. Pursuing the
argument, the respondents draw attention to the provisions of
Basiao's 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
qualifications of applicants for insurance, processed their
applications and determined the amounts of insurance cover to be
issued as indicative of the control, which made Basiao, in legal
contemplation, an employee of the Company.
9
It is true that the "control test" expressed in the following
pronouncement of the Court in the 1956 case ofViana vs. Alejo Al-
Lagadan10
... In determining the existence of employer-
employee relationship, the following elements are
generally considered, namely: (1) the selection and
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engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the
power to control the employees' conduct
although the latter is the most important element
(35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly
recent.11
Indeed, it is without question a valid test of the character
of a contract or agreement to render service. It should, however, be
obvious that not every form of control that the hiring party reserves
to himself over the conduct of the party hired in relation to the
services rendered may be accorded the effect of establishing an
employer-employee relationship between them in the legal or
technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual
contractor is not to vanish altogether. Realistically, it would be arare contract of service that gives untrammelled freedom to the
party hired and eschews any intervention whatsoever in his
performance of the engagement.
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 fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employer-employeerelationship unlike the second, which address both the result and
the means used to achieve it. The distinction acquires particular
relevance in the case of an enterprise affected with public interest,
as is the business of insurance, and is on that account subject to
regulation by the State with respect, not only to the relations
between insurer and insured but also to the internal affairs of the
insurance company.12
Rules and regulations governing the conduct
of the business are provided for in the Insurance Code and enforced
by the Insurance Commissioner. It is, therefore, usual and expected
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 requires or prohibits. Of such a character are
the rules which prescribe the qualifications of persons who may be
insured, subject 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 agent's contractual
prerogative to adopt his own selling methods or to sell insurance at
his own time and convenience, hence cannot justifiably 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 Basiao to be independent contractors, instead ofemployees of the parties for whom they worked. In Mafinco Trading
Corporation vs. Ople,13
the Court ruled that a person engaged to sell
soft drinks for another, using a truck supplied by the latter, but with
the right to employ his own workers, sell according to his own
methods subject only to prearranged routes, observing no working
hours fixed by the other party and obliged to secure his own
licenses and defray his own selling expenses, all in consideration of
a peddler's discount given by the other party for at least 250 cases
of soft drinks sold daily, was not an employee but an independent
contractor.
In Investment Planning Corporation of the Philippines us. Social
Security System14
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 were: (a) paid compensation in the form of
commissions based on percentages of their sales, any balance of
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commissions earned being payable to their legal representatives in
the event of death or registration; (b) required to put up
performance bonds; (c) subject to a set of rules and regulations
governing the performance of their duties under the agreement
with the company and termination of their services for certain
causes; (d) not required to report for work at any time, nor to
devote their time exclusively to working for the company nor to
submit a record of their activities, and who, finally, shouldered their
own selling and transportation expenses.
More recently, in Sara vs. NLRC,15
it was held that one who had
been engaged by a rice miller to buy and sell rice and palay without
compensation except a certain percentage of what he was able to
buy or sell, did work at his own pleasure without any supervision or
control on the part of his principal and relied on his own resources
in the performance of his work, was a plain commission agent, anindependent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's
contract with the Company bound him to observe and conform to
such rules and regulations as the latter might from time to time
prescribe. No showing has been made that any such rules or
regulations were in fact promulgated, much less that any rules
existed or were issued which effectively controlled or restricted his
choice of methods or the methods themselves of selling
insurance. Absent such showing, the Court will not speculate thatany exceptions or qualifications were imposed on the express
provision of the contract leaving Basiao "... free to exercise his own
judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of
having been connected with the Company for twenty-five years.
Whatever this is meant to imply, the obvious reply would be that
what is germane here is Basiao's status under the contract of July 2,
1968, not the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him,
Basiao 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 Arbiter erred in taking cognizance of, and adjudicating,
said claim, being without jurisdiction to do so, as did the respondent
NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for
commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor
Relations Commission is set aside, and that complaint of private
respondent Melecio T. Basiao in RAB Case No. VI-0010-83 isdismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.
G.R. No. L-12582 January 28, 1961
LVN PICTURES, INC., petitioner-appellant,
vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.
x---------------------------------------------------------x
G.R. No. L-12598 January 28, 1961
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SAMPAGUITA PICTURES, INC., petitioner-appellant,
vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.
Nicanor S. Sison for petitioner-appellant.
Jaime E. Ilagan for respondent-appellee Court of Agrarian Relations.
Gerardo P. Cabo Chan for respondent-appellee Philippine Musicians
Guild.
CONCEPCION,J.:
Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc.
seek a review by certiorariof an order of the Court of Industrial
Relations in Case No. 306-MC thereof, certifying the Philippine
Musicians Guild (FFW), petitioner therein and respondent herein, asthe sole and exclusive bargaining agency of all musicians working
with said companies, as well as with the Premiere Productions, Inc.,
which has not appealed. The appeal of LVN Pictures, Inc., has been
docketed as G.R. No. L-12582, whereas G.R. No. L-12598 is the
appeal of Sampaguita Pictures, Inc. Involving as they do the same
order, the two cases have been jointly heard in this Court, and will
similarly be disposed of.
In its petition in the lower court, the Philippine Musicians Guild
(FFW), hereafter referred to as the Guild, averred that it is a dulyregistered legitimate labor organization; that 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,
without which a motion picture is incomplete; that ninety-five (95%)
percent of all the musicians playing for the musical recordings of
said companies are members of the Guild; and that the same has no
knowledge of the existence of any other legitimate labor
organization representing musicians in said companies. Premised
upon these allegations, 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. The lower court, however, rejected this
pretense and sustained the theory of the Guild, with the result
already adverted to. 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.
Apart from impugning the conclusion of the lower court on the
status of the Guild members as alleged employees of the film
companies, the LVN Pictures, Inc., maintains that a petition for
certification cannot be entertained when the existence of employer-
employee relationship between the parties is contested. However,
this claim is neither borne out by any legal provision nor supported
by any authority. So long as, after due hearing, the parties are found
to bear said relationship, as in the case at bar, it is proper to pass
upon the merits of the petition for certification.
It is next urged that a certification is improper in the present case,
because, "(a) the petition does not allege and no evidence was
presented that the alleged musicians-employees of the respondents
constitute a proper bargaining unit, and (b) said alleged musicians-
employees represent a majority of the other numerous employees
of the film companies constituting a proper bargaining unit under
section 12 (a) of Republic Act No. 875."
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The absence of an express allegation that the members of the Guild
constitute a proper bargaining unit is fatal proceeding, for the same
is not a "litigation" in the sense in which this term is commonly
understood, but a mere investigation of a non-adversary, fact
finding character, in which the investigating agency plays the part of
a disinterested investigator seeking merely to ascertain the desires
of employees as to the matter of their representation. In connection
therewith, the court enjoys a wide discretion in determining the
procedure necessary to insure the fair and free choice of bargaining
representatives by employees.1
Moreover, it is alleged in the
petition that the Guild it a duly registered legitimate labor
organization and that ninety-five (95%) percent of the musicians
playing for all the musical recordings of the film companies involved
in these cases are members of the Guild. Although, in its answer,
the LVN Pictures, Inc. denied both allegations, it appears that, at the
hearing in the lower court it was merely the status of the musiciansas its employees that the film companies really contested. Besides,
the substantial difference between the work performed by said
musicians and that of other persons who participate in the
production of a film, and the peculiar circumstances under which
the services of that former are engaged and rendered, suffice to
show that they constitute a proper bargaining unit. At this juncture,
it should be noted that the action of the lower court in deciding
upon an appropriate unit for collective bargaining purposes is
discretionary (N.L.R.B. v. May Dept. Store Co., 66 Sup. Ct. 468. 90 L.
ed. 145) and that its judgment in this respect is entitled to almostcomplete finality, unless its action is arbitrary or capricious
(Marshall Field & Co. v. N.L.R.B. [C.C.A. 19431, 135 F. 2d. 891),
which is far from being so in the cases at bar.
Again, the Guild seeks to be, and was, certified as the sole and
exclusive bargaining agency for the musicians working in the
aforesaid film companies. It does not intend to represent the other
employees therein. Hence, it was not necessary for the Guild to
allege that its members constitute a majority of all the employees of
said film companies, including those who are not musicians. The
real issue in these cases, is whether or not the musicians in question
are employees of the film companies. In this connection the lower
court had the following to say:
As a normal and usual course of procedure employed by the
companies when a picture is to be made, the producer
invariably chooses, from the musical directors, one who will
furnish the musical background for a film. A price is agreed
upon verbally between the producer and musical director
for the cost of furnishing such musical background. Thus,
the musical director may compose his own music specially
written for or adapted to the picture. He engages his own
men and pays the corresponding compensation of the
musicians under him.
When the music is ready for recording, the musicians are
summoned through 'call slips' in the name of the film
company (Exh 'D'), which show the name of the musician,
his musical instrument, and the date, time and place where
he will be picked up by the truck of the film company. The
film company provides the studio for the use of the
musicians for that particular recording. The musicians are
also provided transportation to and from the studio by the
company. Similarly, the company furnishes them meals atdinner time.
During the recording sessions, the motion picture director,
who is an employee of the company, supervises the
recording of the musicians and tells what to do in every
detail. He solely directs the performance of the musicians
before the camera as director, he supervises the
performance of all the action, including the musicians who
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appear in the scenes so that in the actual performance to be
shown on the screen, the musical director's intervention has
stopped.
And even in the recording sessions and during the actual
shooting of a scene, the technicians, soundmen and other
employees of the company assist in the operation. Hence,
the work of the musicians is an integral part of the entire
motion picture since they not only furnish the music but are
also called upon to appear in the f inished picture.
The question to be determined next is what legal
relationship exits between the musicians and the company
in the light of the foregoing facts.
We are thus called upon to apply R.A. Act 875. which issubstantially the same as and patterned after the Wagner
Act substantially the same as a Act and the Taft-Hartley Law
of the United States. Hence, reference to decisions of
American Courts on these laws on the point-at-issue is
called for.
Statutes are to be construed in the light of purposes
achieved and the evils sought to be remedied. (U.S. vs.
American Tracking Association, 310 U.S. 534, 84 L. ed.
1345.) .
In the case ofNational Labor Relations Board vs. Hearts
Publication, 322 U.S. 111, the United States Supreme Court
said the Wagner Act was designed to avert the 'substantial
obstruction to the free flow of commerce which results
from strikes and other forms of industrial unrest by
eliminating the causes of the unrest. Strikes and industrial
unrest result from the refusal of employers' to bargain
collectively and the inability of workers to bargain
successfully for improvement in their working conditions.
Hence, the purposes of the Act are to encourage collective
bargaining and to remedy the workers' inability to
bargaining power, by protecting the exercise of full freedom
of association and designation of representatives of their
own choosing, for the purpose of negotiating the terms and
conditions of their employment.'
The mischief at which the Act is aimed and the remedies it
offers are not confined exclusively to 'employees' within the
traditional legal distinctions, separating them from
'independent contractor'. Myriad forms of service
relationship, with infinite and subtle variations in the term
of employment, blanket the nation's economy. Some are
within this Act, others beyond its coverage. Large numberswill fall clearly on one side or on the other, by whatever test
may be applied. Inequality of bargaining power in
controversies of their wages, hours and working conditions
may characterize the status of one group as of the other.
The former, when acting alone may be as helpless in dealing
with the employer as dependent on his daily wage and as
unable to resist arbitrary and unfair treatment as the latter.'
To eliminate the causes of labor dispute and industrial
strike, Congress thought it necessary to create a balance offorces in certain types of economic relationship. Congress
recognized those economic relationships cannot be fitted
neatly into the containers designated as 'employee' and
'employer'. Employers and employees not in proximate
relationship may be drawn into common controversies by
economic forces and that the very dispute sought to be
avoided might involve 'employees' who are at times
brought into an economic relationship with 'employers',
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who are not their 'employers'. In this light, the language of
the Act's definition of 'employee' or 'employer' should be
determined broadly in doubtful situations, by underlying
economic facts rather than technically and exclusively
established legal classifications. (NLRB vs. Blount, 131 F [2d]
585.)
In other words, the scope of the term 'employee' must be
understood with reference to the purposes of the Act and
the facts involved in the economic relationship. Where all
the conditions of relation require protection, protection
ought to be given .
By declaring a worker an employee of the person for whom
he works and by recognizing and protecting his rights as
such, we eliminate the cause of industrial unrest andconsequently we promote industrial peace, because we
enable him to negotiate an agreement which will settle
disputes regarding conditions of employment, through the
process of collective bargaining.
The statutory definition of the word 'employee' is of wide
scope. As used in the Act, the term embraces 'any
employee' that is all employees in the conventional as well
in the legal sense expect those excluded by express
provision. (Connor Lumber Co., 11 NLRB 776.).
It is the purpose of the policy of Republic Act 875; (a) To
eliminate the causes of industrial unrest by protecting the
exercise of their right to self-organization for the purpose of
collective bargaining. (b) To promote sound stable industrial
peace and the advancement of the general welfare, and the
best interests of employers and employees by the
settlement of issues respecting terms and conditions of
employment through the process of collective bargaining
between employers and representatives of their employees.
The primary consideration is whether the declared policy
and purpose of the Act can be effectuated by securing for
the individual worker the rights and protection guaranteed
by the Act. The matter is not conclusively determined by a
contract which purports to establish the status of the
worker, not as an employee.
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.
In other words, to determine whether a person whoperforms 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. (United Insurance
Company, 108, NLRB No. 115.).
Thus, in said similar case of Connor Lumber Company, theSupreme Court said:.
'We find that the independent contractors and
persons working under them are employees' within
the meaning of Section 2 (3) of its Act. However, we
are of the opinion that the independent contractors
have sufficient authority over the persons working
under their immediate supervision to warrant their
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exclusion from the unit. We shall include in the unit
the employees working under the supervision of the
independent contractors, but exclude the
contractors.'
'Notwithstanding that the employees are called
independent contractors', the Board will hold them to be
employees under the Act where the extent of the
employer's control over them indicates that the relationship
is in reality one of employment. (John Hancock Insurance
Co., 2375-D, 1940, Teller, Labor Dispute Collective
Bargaining, Vol.).
The right of control of the film company over the musicians
is shown (1) by calling the musicians through 'call slips' in
'the name of the company; (2) by arranging schedules in itsstudio for recording sessions; (3) by furnishing
transportation and meals to musicians; and (4) by
supervising and directing in detail, through the motion
picture director, the performance of the musicians before
the camera, in order to suit the music they are playing to
the picture which is being flashed on the screen.
Thus, in the application of Philippine statutes and pertinent
decisions of the United States Courts on the matter to the
facts established in this case, we cannot but conclude thatto effectuate the policies of the Act and by virtue of the
'right of control' test, the members of the Philippine
Musicians Guild are employees of the three film companies
and, therefore, entitled to right of collective bargaining
under Republic Act No. 875.
In view of the fact that the three (3) film companies did not
question the union's majority, the Philippine Musicians
Guild is hereby declared as the sole collective bargaining
representative for all the musicians employed by the film
companies."
We are fully in agreement with the foregoing conclusion and the
reasons given in support thereof. Both are substantially in line with
the spirit of our decision in MaligayaShipWatchmen Agency vs.
Associated Watchmen and Security Union, L-12214-17 (May 28,
1958). In fact, the contention of the employers in
theMaligaya cases, to the effect that they had dealt with
independent contractors, was stronger than that of the film
companies in these cases. The third parties with whom the
management and the workers contracted in theMaligaya cases
were agencies registeredwith the Bureau of Commerce and duly
licensed by the City of Manila to engage in the business of supplying
watchmen to steamship companies, with permits to engage in saidbusiness issued by the City Mayorand the Collector of Customs. In
the cases at bar, the musical directors with whom the film
companies claim to have dealt with had nothing comparable to the
business standing of said watchmen agencies. In this respect, the
status of said musical directors is analogous to that of the alleged
independent contractor in Caro vs. Rilloraza, L-9569 (September 30,
1957), with the particularity that the Carocase involved
the enforcement of the liabilityof an em
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