Tabas vs. California Manufacturing Company Inc., [G.R. No. L-80680, January 26, 1989] Facts: The petitioners petitioned the National Labor Relations Commission for reinstatement and payment of various benefits, including minimum wage, overtime pay, holiday pay, thirteen-month pay, and emergency cost of living allowance pay, against the respondent, the California Manufacturing Company. California denied the existence of an employer-employee relation between the petitioners and the company and impleaded Livi Manpower Services, Inc. as a party-respondent. Petitioners were assigned to work as "promotional merchandisers" for California pursuant to a manpower supply agreement. The agreement provided that California "has no control or supervisions whatsoever over Livi's workers with respect to how they accomplishtheir work or perform California's obligation"; the Livi "is anindependent contractor and nothing herein contained shall be construed as creating between California and Livi . . . the relationship of principal-agent or employer-employee'; that "it is hereby agreed that it is the sole responsibility of Livi to comply with all existing as well as future laws, rules and regulations pertinent to employment of labor" and that "California is free and harmless from any liability arising from such laws or from any accident that may befall workers and employees of Livi while in the performance of their duties for California. It was further expressly stipulated that the assignment of workers to California shall be on a "seasonal and contractual basis"; that "cost of living allowance and the 10 legal holidays will be charged directly to California at cost "; and that "payroll for the preceding week shall be delivered by Livi at California's premises." The petitioners were then made to sign employment contracts with durations of six months, upon the expiration of which they signed new agreements with the same period. Pending proceeding they were notified by California that they would not be rehired. As a result, they filed an amended complaint charging California with illegal dismissal. Issue: Whether or not there exist an employee-employer relationship between petitioners and California Manufacturing Company Held: Yes. The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. Hence, the fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners' employer and had absolved the latter from anyliability as an employer, will not erase either party's obligations as an employer, if an employer-employee relation otherwise exists between the workers and either firm. At any rate, since the agreement was between Livi and California, they alone are bound by it, and the petitioners cannot be made to suffer from its adverse consequences. The Court has consistently ruled that the determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the putative employee's conduct. Of the four, the right-of-control test has been held to be the decisive factor. The fact that the petitioners have allegedly admitted being Livi's "direct employees" in their complaints is nothing conclusive. For one thing, the fact that the petitioners were (are), will not absolve California since liability has been imposed by legal operation. For another, and as the court indicated, the relations of parties must be judged from case to case and the decree of law, and not by declarations of parties. In the case at bar, Livi is admittedly an "independent contractorproviding temporary services of manpower to its client. " When it thus provided California with manpower, it supplied California with personnel, as if such personnel had been directly hired by California. Hence, Article 106 of the Code applies.
The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-avis the four barometers referred to earlier, since by fiction of law, either or both shoulder responsibility. The records show that the petitioners bad been given an initial six-month contract, renewed for another six months. Accordingly, under Article 281 of the Code, they had become regular employees-of-California-and had acquired a secure tenure. Hence, they cannot be separated without due process of law. The court reiterate that the petitioners are its employees and who, by virtue of the required one-year length-ofservice, have acquired a regular status.
COCA COLA BOTTLERS VS HINGPIT It appears that all the complainants except Delfin Hingpit and Gabriel Francisco, were originally recruited by PIONEER which detailed them, under its contract with COCA COLA, in the latter‟s Tagbilaran Plant, some being [9] assigned as utility workers, and other, as bottling crew members. members. Three years afterwards, they were absorbed by LIPERCON when it replaced PIONEER as COCA-COLA‟s COCA-COLA‟s labor supplier. It appears that Hingpit was recruited by LIPERCON for the Tagbilaran COCA COLA plant, and first assigned as bottling crew member on November 24, 1984. Sometime in 1988, Hingpit, being then involved in a labor case against his employer, sent a letter to then President Corazon C. Aquino asking that she help him obtain permanent employment in COCA COLA. This brought about a conciliation conference in the Bohol Labor Extension Office in Tagbilaran city; and there, an agreement was reached between Hingpit and COCA COLA, represented by its [10] Tagbilaran Personnel Officer, Ms. Suzette Gotera. According to Hingpit, Hingpit, Ms. Gotera had offered him “the position of driver-helper or security guard if I possess the necessary qualification f or or the aforesaid position,” and he had “accepted her offer as a basis of this amicable agreement, and after obtaining a clearance from Lipercon Services, Inc., Hingpit was hired by COCA COLA on a probationary basis for a period of six (6) months effective May 16, 1988. Hingpit was them required, among other things, to take examinations to qualify for permanent placement and to submit a police clearance. He submitted a police clearance issued by the Integrated National Police Command in Bohol which stated that he was a resident of Batuan, Bohol, and that he had no criminal record thereat. Unfortunately for him, not only did he obtain failing markes in the qualifying examinations, but the police clearance submitted by him was shortly afterwards revealed to be false, belied by a certification of the Office of the Fiscal of Tagbilaran City to the effect that he was then facing charges of physical injuries in no less than three (3) cases. As a result, his services – services – considered considered temporary or probationary – probationary – were were terminated on July 22, 1988, on the ground that he had (1) failed to measure up to the standards of the firm, having flunked the required qualifying tests, [11] and (2) been shown to be dishonest, for not disclosing that he had been charged with 3 counts of phy sical injuries. Gabriel Francisco originally worked as bottling crew member of San Miguel Corporation at its Tagbilaran Plant from 1971 until 1976. He was reemployed in 1979, and assigned assigned to the beer department of COCA COCA COLA. In 1980, he was hired by PIONEER, which was aforestated had concluded a contract to supply COCA COLA‟s manpower needs. He worked under this arrangement unitl PIONEER was replaced by LIPERCON, in December 1986. He [12] continued working as bottling crew member until he was separated from employment on December 15, 1988. 1988. The other complainant-employees – complainant-employees – Cecilio Cecilio Pinar, Jr., Abundio Balatero, Narito Manluluyo, Secero Zamora, Medardo Gabines, Enrique Bangalao, Julito Apat, Sotero Pandan, Nelson Umali – Umali – were, were, as already stated, found by the Labor Arbiter to have been first placed in the COCA COLA Tagbilaran plant by their recruiter, PIONEER, and after the latter‟s contract expired, were recruited by LIPERCON and again assigned at t he same Tagbilaran plant. [13]
The Executive Labor Arbiter‟s decision of February 7, 1995 1995 found that while PIONEER was a “labor only [14] contractor,” contractor,” LIPERCON – LIPERCON – which which had also undertaken to provide COCA COLA with manpower for such services as the repair and maintenance of machines, activities related to projects, yard cleaning, utility jobs; loading and
[15]
unloading of full and empty bottles -- was a legitimate labor contractor. It had substantial capital of its own; paid its recruited employees regularly even before receiving its stipulated fees from COCA-COLA; had control over complainants-workers who could not get inside the premises of COCA COLA without its written authority; attended to providing route helpers with requisition slips; kept the signed daily time records of its recruited employees; monitored their hours of work, and saw to it that they were at their places of work at the appointed hours of work, and saw to it that they were at their places of work at the appointed hours; and could receive, and act with finality on, complaints [16] concerning its recruited workers pr esented by COCA COLA‟s regular employees or supervisors. The Executive Labor Arbiter‟s decision declared that when the complainants were discharged from [17] LIPERCON, they signed documents of quitclaim and release, a fact “not refuted” by them. Consequently, LIPERCON was absolved from liability. The judgment was quick to point out, however, that “when LIPERCON entered into the picture” – after the lapse of COCA COLA‟s earlier contract with PIONEER – said complainants – “ ** were already regular employees of of the respondent firm (COCA COLA).” Its entry, even if viewed as a consequence of a legitimate business of a manpower servicing firm, resulted to (sic) the illegal termination of the complainants who at that point in time had already acquired regular status. The coming in of Lipercon did not deprive the complainants of the right to claim separation pay. Their severance from respondent firm, it appears, was forced upon them. It is only fair, thus, that they be given the benefits that they deserve while placed under Pioneer Multi-Services, Inc. Considering that their termination was not legal and valid, they should be paid one pay for every [18] year of service as reinstatement is no longer feasible.” For this reason, COCA COLA was sentenced “to pay the complainants the sum of Seventy One Thousand Six Hundred Fifty Six (P71,656.00) Pesos in concept of separation pay” in differing amounts. Respondent Commission saw the case differently. It opined that (1) LIPERCON was a labor-only, not an independent labor contractor; and (2) COCA COLA not having presented evidence t o establish any just cause for the termination of complainants‟ employment, such termination must be held illegal; and having, as well, failed to submit the payrolls corresponding to the complainants, its monetary liability to them should be increased. The Court will deal with Delfin Hingpit first. It seems fairly evident from the record that his services were validly terminated. As already narrated, on the basis of his compromise agreement with the Tagbilaran Personnel Officer of COCA COLA (entered into under the auspices of the Bohol Labor Extension Office), and after obtaining a clearance from LIPERCON, Hingpit was employed by COCA COLA on a probationary basis for a period of six (6) months effective May 16, 1988. However, Hingpit subsequently flunked the qualifying examinations for regular employment, and was later discovered to have misled COCA COLA by submitting a police clearance contradicted by the records of the Fiscal‟s Office of Tagbilaran City showing that he was then facing three (3) charges of physical injuries. Upon the facts, therefore, there can be be no question: first , of the propriety of his contract of probationary employment – not only executed before Labor officials, but also admitted by him as freely and voluntarily entered into – and second , of th fact that he had not only failed the qualifying examinations, but had also presented a false clearance. Hence, [19] his services were properly terminated on July 22, 1988, for (1) failing t o qualify for the job, and (2) for dishonesty. Turning to another point, respondent Commission reversed the Labor Arbiter‟s conclusion that LIPERCON was an independent labor contractor. It declared it instead to be a mere “labor -only” contractor, as the term is [20] [21] defined and described in the Labor Code and the Omnibus Rules Implementing said Code. On the basis it held that complainants were not employees of LIPERCON, but of COCA COLA. In so ruling respondent Commission unaccountably ignored the evidence on which the Labor Arbiter had based his contrary conclusion. That evidence, consisting chiefly of the testimony of Filomena Legaspi, Head of [22] LIPERCON‟s Accounting Division, is summarized by the Arbiter as follows:
“The Lipercon has indeed substantial capital of its own is proven by the testimony of its personnel in charge in Tagbilaran City, Filomena Legaspi. Legaspi affirmed the fact that Lipercon paid its employees (the complainants herein) regularly even before it is paid of its billing (TSN p. 49, September 2, 1992). She also testified that she had control over the complainants. Without her signature, they cannot get inside the premises of respondent firm. She signed her daily time records and monitored their hours of work. She saw to it that they were in their positions and places of work. And if the regular employees of CCBPI or their supervisors complain, they notify and inform her of these complaints. With regard to the route helpers, these were covered by requisition slips (TSN, p. 47, Sept. 2, 1992). In fact, after Lipercon‟s contract with repondent expired in December 1988, it was she who assigned some workers like Cecilio Pinar, Jr. and Abundio Balatero to SMC (TSN, pp. 34, 35, 42-49, September 2, 1992). The payrolls of Lipercon (Exhs. „1‟ and „2‟ for CCBPI) and the resignation letter addressed to Ms. Perla Cañete (Exh. „4‟) by Gabriel Francisco, Jr. points out that complainants were indeed employees of Lipercon. The aforecited facts were not refuted by the complainant “ ***
***
***
“ ** Lipercon proved to be an independent contractor. Aside from hiring its own employees and paying the workers their salaries, it also exercised supervision and control over them which is the most important aspect in determining employer-employee relations (Mafinco Trading Corp. v. Ople, 70 SCRA 139; Rosario Brothers Inc. vs. Ople, 131 SCRA 72). That it indeed has substantial capital is proven by the fact that it did not depend upon its billing on respondent regarding payment of workers‟ salaries. And when complainants were separated from Lipercon, they signed quitclaim and release documents. **.” While it is within respondent Commission‟s competence, as an appellate agency reviewing decisions of Labor Arbiters, to disagree with and set aside the latter‟s findings, it stands to reason that it should state an acceptable cause therefor. It would otherwise be a whimsical, capricious, oppressive, illogical, unreasonable exercise of quasi judicial prerogative, subject of invalidation by the extraordinary writ of certiorari. But that, regrettably, is precisely what respondent Commission appears to have done. It overturned the Labor Arbiter‟s factual determination regarding LIPERCON‟s being a legitimate independent contractor without stating the reason therefor, without any explanation whatever as to why the Arbiter‟s evidentiary premises were not worthy of credit, or why the inferences drawn therefrom were unacceptable, as a matter of law or logic. Respondent Commission grounded its reversal of the Arbiter‟s adjudgment solely on a 1989 judgment of this [23] Court, Guarin et al . v. Lipercon - in which LIPERCON had also been involved as a labor contractor of another [24] company. There, the Court held LIPERCON to be a “labor only” contractor; and declared that t he NLRC‟s finding – that it “was not a mere labor -only contractor because it has substantial capital or investment in the form of tools, equipment, machineries, work premises, **” - was “based on insubstantial evidence, as the NLRC (had merely) pointed out that „it (LIPERCON) claims to be possessed among others, of substantial capital and equipment essential to carry out its business as general independent contractor‟**.” In other words, in Guarin, LIPERCON was held to have failed to discharge its burden of proof that “it has substantial capital, investment, tools, etc.” Not so in the case at bar. Here, there is substantial evidence, detailed by the Labor Arbiter, to establish [25] LIPERCON‟s character as an independent contractor in the real sense of the word, which makes the Labor Arbiter‟s ruling more acceptable than respondent Commission‟s on the s ame matter, being founded solely on an inapplicable precedent. Also more deserving of assent is said Labor Arbiter‟s conclusion that the complainant‟s acceptance of employment in LEPERCON in December, 1986 – lasting for a period of some two years – effectively operated as a cessation of the prior relationship they had with PIONEER and COCA COLA in consequence of which they became entitled to separation pay from COCA COLA, PIONEER being merely its hiring agent.
The evidence therefore satisfactorily establishes that complainants were employees of LIPERCON. It was LIPERCON that terminated their services at which time, as f ound by the Labor Arbiter, the complainants “signed quitclaim and release documents” in favor of LIPERCON. COCA COLA was not privy either to that act of employment-termination or execution of “quitclaim and release documents,” or to the earlier act of crea tion of the employment relationship between the complainants and LIPERCON. COCA COLA was in no position to intervene in any manner in the creation or termination of the relationship between complainants and LIPERCON. It was therefore erroneous for respondent Commission to demand that COCA COLA present proof of just cause for the termination of the services of complainants, the latter not being its employees, but LIPERCON‟s. For the same reason, it was erroneous for the NLRC to expect COCA COLA to present its payrolls to show the salaries and wages of the complainants although, it must be mentioned, COCA COLA did cause presentation of LIPERCON‟s payrolls relative to its employees, including complainants. And it was grave error for respondent Commission to conclude that because proof of just cause for complainant‟s removal from their employment in LIPERCON was not presented by COCA COLA, said complainants had been dismissed without just cause and due process. What has been said make it unecessary to address the other substantive issues raised by COCA [26] COLA. And the adjective issue that it sets up – respecting the validity of Hingpit‟s having attempted to appeal from the Labor Arbiter‟s decision in behalf of the other complainants – appears to be too unsubstantial to merit consideration. All things considered, and except as regards Delfin Hingpit, the Court is satisfied that the Decision of the Executive Labor Arbiter fairly and reasonably disposed of the controversy, and is worthy of adoption as the ultimate adjudgment of this case. WHEREFORE, the petition for certiorari is GRANTED, and the challenged Decision of the Fifth Division of the National Labor Relations Commission promulgated on February 28, 1996 is NULLIFIED AND SET ASIDE. The Decision of the Executive Labor Arbiter, Cebu City, dated February 7, 1995 is REINSTATED and hereby AFFIRMED, with the sole modification that the complaint of DELFIN HINGPIT is dismissed, for lack of merit. No pronouncement as to costs. Insular Life vs NLRC (March 12, 1998) FACTS: Petitioner entered into an agency contract with respondent delos Reyes authorizing the latter to solicit for life insurance and he would be paid compensation in the form of commissions. It contained the stipulation that no ER-EE relationship shall be create. However, delos Reyes was prohibited by petitioner from working f or any other life insurance company and violation of this company was a ground of termination. Petitioner and private respondent entered into another contract where the latter was appointed as Acting Unit Manager under its office. One of the duties of delos Reyes is to supervise and coordinate the underwriters. It was similarly provided in the management contract that the relation of the acting unit manager and/or the agents of his unit to the company shall be that of independent contractor. Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner that his services were terminated. So, he filed a complaint on the ground of illegal dismissal and for not paying him salaries and separation pay. ISSUE: W/N ER-EE relationship exists between Insular Life and delos Reyes HELD: Yes.
Both petitioner and respondent NLRC treated the agency contract and the management contract entered into between petitioner and de los Reyes as contracts of agency. There exist major distinctions between the two arrangements. While the first has the earmarks of an agency contract, the second is far removed from the concepts of agency in that provided therein are conditionality that indicates an employer-employee relationship. Private respondent was appointed as Acting Unit Manager only upon recommendation of the District Manager. This indicates that private respondent was hired by petitioner because of the favorable endorsement of its duly authorized officer. Then, the very designation of the appointment of private respondent as “acting” unit manager obviously implies a temporary employment status which may be made permanent only upon compliance with company standards. On the matter of payment of wages, petitioner points out that respondent was compensated strictly on commission basis, the amount of which was totally dependent on his total output. B ut, the manager‟s contract, speaks differently. Under the contract, de los Reyes must meet with the manpower and production requirements as Acting Unit Manager. As to the matter involving the power of dismissal and control by the employer, respondent‟s duty to collect the company‟s premiums using company receipts is further evidence of petitioner‟s control over respondent. Thus, exclusivity of service, control of assignments and removal of agents under private respondent;s unit, collection of premiums, furnishing of company yfacilities and materials as well as capital described are but hallmarks of the management system in which herein private respondent worked. Private respondent de los Reyes was an employee of herein petitioner. Wherefore, petition of Insular Life is denied. FRANCISCO VS NLRC FACTS: 1995, Petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. 1996, petitioner was designated Acting Manager. Petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies, especially with the BIR, SSS and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. Kasei Corporation reduced her salary, she was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. Eventually she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted and that her services were only temporary in nature and dependent on the needs of the corporation. The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with modification the Decision of the Labor Arbiter. On appeal, CA reversed the NLRC decision. CA denied petitioner‟s MR, hence, the present recourse. ISSUES: 1. WON there was an employer-employee relationship between petitioner and private respondent; and if in t he affirmative, 2. Whether petitioner was illegally dismissed. RULING: 1. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employeremployee relationship. There are instances when, aside from the employer‟s power to control the employee, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. It is better, therefore, to adopt a two-tiered test involving: (1) the employer‟s power to control; and (2) the economic realities of the activity or relationship. The control test means that there is an employer-employee relationship when the pers on for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. There has to be analysis of the totality of economic circumstances of the worker. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer‟s business; (2) the extent of the worker‟s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker‟s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business By applying the control test, it can be said that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation‟s Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and t ax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement. Respondent corporation had the power to control petitioner with the means and methods by which the work is to be accomplished. Under the economic reality test , the petitioner can also be said to be an employee of respondent corporation because she had served the company for 6 yrs. before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from. When petitioner was designated General Manager, respondent corporation made a report to the SSS. Petitioner‟s membership in the SSS evinces the existence of an employer -employee relationship between petitioner and respondent corporation. The coverage of Social Security Law is predicated on the existence of an employer-employee relationship. 2. The corporation constructively dismissed petitioner when it reduced her. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. Petition is GRANTED. SUNRIPE COCONUT PRODUCTS CO., INC petitioner, vs. THE COURT OF INDUSTRIAL RELATIONS and SUNSHINE COCONUT WORKERS' UNION (CLO), respondents. The Court of Industrial Relation has relied upon the rule laid down in the case of Philadelphia Record Company, 69 N.L.R.B., 1232 (1946), to the effect that when a worker possesses some attributes of an employee and others off an independent contractor which make him fall within an intermediate area he may be classified under the category off an employee when the economic factsof the relation make it more nearly one of employment than one of independent business enterprise with to the ends sought to be accomplished. Counsel for the petitioner does not dispute the correctness or applicability of the rule but it is vigorously contended that in the case at bar the economic facts characteristic of the independent contractor far outweigh the economic facts indicative of an employee. We are not called upon to rule on the accuracyof petitioner's contention since the c onclusion of the Court of Industrial relation on the matter is binding this Court. In other word the ruling that the "parers" and "shellers" have the status of employee or laborers carries the factual verdict that economic facts showing such status outweigh those indicative of an independent contractor. Some facts expressly invoked by the Court of Industrial Relations are: That the "parers" and "shellers" work under some degree of control or supervision of the company if not under its absolute direction; that said " parers" and "shellers" form stable groups composed of matured m en and women who regularly work at shelling and paring nuts that for the most part they depend on their work in the Sunripe Coconut Products Co., Inc. For their livelihood; that they are admittedly working in the factory of said company alongside person who are indisputably employed by said company. As already stated whether these specific facts are outweighed as contended by the petitioner by facts demonstrative of the status of an independent contractor is a question decided adversely to the petitioner when the Court of Industrial Relations held that the "parers" and "shellers" are laborers or employees. It is also pretended for the petitioner for the petitioner t hat the Court of Industrial Relations departed from the definition of the word "employee" or "laborer" found in the Workmen's Compensation Law namely: " 'Laborer' is used as a synonym off employee,' and it means every person who has entered the employment of or works under a service or apprenticeship contract for an employer. . . ." (Section 39 [b], Workmen's Compensation Law as amended.) The Court of Industrial relation of course adverted to the following definition; "An employee is any person in the service of another under a contract for hire express or implied oral or written. " (Section 7, Labor Union by Dangle and Scriber, p. 7, citing McDermott's Case, 283 Mass. 74; Werner vs. Industrial Comm., 212 Wis., 76) In essence however the ruling of the Court of Industrial Relation does not run counter to the definition given in the Workmen's Compensation Law. Counsel for the petitioner have stressed the argument that the principal test in determining whether a worker is an employee or an independent contractor is the employer's right of control over the work and not merely the right to
control the result it being intimated that the "parers" and shellers" are controlled by t he petitioner only to the extent "that the nut are pared whole or that there is not much meat wasted." Even under the criterion adopted by the petitioner it would not be amiss to state thatthe requirement imposed on the "parers" and "shellers" to the effect that the nuts are pared whole or that there is not much meat wasted," in effect limits or that there is not much meat wasted," in effect limits or controls the means or details by which said workers are to accomplish their services.It is inconceivable that the "parers " and "shellers" in order to meet the requirement of the petitioners would not follow a uniform standard in the performance of their work. Petitioner also insists that the "parers" and "shellers" are piece-workers under the "pakiao" system. In answer, suffice it to observe that Commonwealth Act No. 103, as amended expressly provides that "A minimum wage or share shall be determined and fixed for laborers working by the hour day or month or by piece-work and for tenants sharing in the crop or paid by measurement unit. . . ." (Section 5.) The organic law of the Court of Industrial Relation therefore even orders that laborers may be paid by piece-work; and the facts that the "parers" and shellers" are paid a fixed amount for a fixed number of nuts pared or shelled does not certainly take them out of the purview of Commonwealth Act No. 103. It is unnecessary to discuss at length the other facts pointed out by the petitioner in support of the proposition that said "parers" and shellers" are independent contractors, because a ruling on the matter would necessarily involve a factual inquiry which we are not authorized to makeEven so we would undertake to advance the general remark that inn cases of this kind wherein laborers are usually compelled to work under condition and term dictated by the employer a reasonably wide latitude of action and judgment should be given to t he Court of Industrial Relations with a view to settling industrial disputes conformably to the intents and purposes of its organic law. Without in the least intimating that the relation between the "parers" and "shellers" on the one hand and the petitioner on the other as planned out by the latter was conceived knowingly to deprive said workersof the benefits accruing to workers who are admittedly employees or laborersunder Commonwealth Act No. 103 or the Workmen's Compensation law it is not difficult to surmise that a contrary decision is likely to s et a precedent that may tend to encourage the adoption of a similar scheme by many other or even all employers. The appealed decision of the Court of Industrial Relations is therefore affirmed with costs against the petitioner. So ordered. ZAMUDIO VS. NLRC GR NO. 76723 March 25, 1990 Facts: Petitioners rendered services essential for the cultivation of respondent‟s farm. While the services were not continuous in the sense that they were not rendered everyday throughout the year, as is the nature of farm work, petitioners had never stopped working for respondent from year to year from the time he hired them to the time he dismissed. Issue:
are to perform their work inside private respondents farm, the latter necessarily exercised control over the performed by petitioners. The seasonal nature of petitioner‟s work does not detract from the conclusion t hat employer – employee relationship exits. Seasonal workers whose work is not merely for the duration of the season, but who are rehired every working season are considered regular employees. The circumstances that petitioners do not apears in respondent‟s payroll does not destroy the employer – employee relationship between them. Omission of petitioners in the payroll was not within their control, they had no hand in t he preparation of the payroll. This circumstance, even if true, cannot be taken against petitioners.
PAGUIO vs. NLRC On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth tim e, into an agreement with 1 petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm. Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency advertisements based on gross revenues le ss agency commission and the corresponding withholding tax. The commissions, released every fifteen days of each month, were to be given to petitioner only after the c lients would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points raised by the parties had something to do with the following stipulations of the agreement; viz : "12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties. "13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) 2 days prior to effectivity of termination." On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from respondent firm "Dear Mr. Paguio, "Please be advised of our decision to terminate your s ervices as Account Executive of Manila Times effective September 30, 1992.
Are the petitioners considerdd as employees? 3
Ruling: The nature of their employment, i.e. “Pakyao” basis, does not make petitioner independent contractors. Pakyao workers are considered employees as long as the employer exercises control over the means by which such workers
"This is in accordance with our contract signed last July 1, 1992."
Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself,i.e., pirating clients from his co-executives and failing to produce results, no definite cause for petitioner's termination was given.
Aggrieved, petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages. In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the 4 Philippines. Asserting their right to terminate the contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other. The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the amount of P20,000.00. On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual relationship between the parties as being for a fixed-term employment. The NLRC declared a fixedterm employment to be lawful as long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the worker and absent any other circumstances 5 vitiating his consent." The finding of the NLRC was primarily hinged on the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a 6 day certain being understood to be that which (would) necessarily come, although it (might) not be known when." The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent company - was it or was it not one of regular employment? A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or the power to control t he employee with respect to the means or 8 methods by which his work is to be accomplished. The "control test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services are rendered under the control and supervision of the party contracting for the service, not only as to the result of the work but also as to the manner 9 and details of the performance desired. An indicum of regular employment, rightly taken into account by the labor arbi ter, was the reservation by respondent Metromedia Times Corporation not only of the right to control the results t o be achieved but likewise the manner and 10 the means used in reaching that end. Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the sales activities of petitioner.
The Labor Code, in Article 280 thereof, provides: "ART. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the 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, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against t hose which are undertaken for a specific project or are seasonal. Even in these latter cases, where such person has rendered at least one year of service, regardless of the nature of the activity performed or of whether it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he be first issued a regular appointment or be formally 11 declared as such before acquiring a regular status. That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on for more than a year, c ould hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once but five times, its contract with petitioner. Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon t he terms of their written or 12 oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform. The law affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation 13 in an agreement can be ignored as and when it is utilized to deprive the employee of his security o f tenure. The sheer inequality that characterizes employer-employee relations, where the scales generally tip against the employee, often scarcely provides him real and better options. The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be f or a just or authorized cause and must comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself with either of these requirements in terminating the services of petitioner. The notice of termination recites no valid or just cause f or the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense. The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted.
