This is the Labor Code, taken from various laws but the ultimate origin is the American law.

Labor Standards part is taken

from the Labor Standard Act. Labor Relations part is taken from the labor relations law in the US.
Declaration of Policy: Art. 3 says "The State shall afford protection to labor, promote full employment, ensure
equal opportunities regardless of sex, race and creed, and regulate the relations between workers and
employers; The State shall assure the rights of workers to self organization, collective bargaining, security of
tenure and just and humane conditions at work."
The first sentence is composed of policies. The 2nd sentence is composed of laws. But actually the whole of that
is policy. Why? Because the enumeration in the second sentence, although law, is rights enumeration. This enumeration
is NOT found in the bill of rights, this is found in Art. 13, Sec. 3 of your constitution. So, it has to be implemented. They,
therefore fall in the same level as the enumeration in the first sentence: the principle of protection of labor, principle of full
employment; the principle of equal work opportunities regardless of sex (of course we do not mean sex as the action
word), gender, race or creed and regulate the relations between workers and emmployees.
So I brought up to you the issue why does labor have to have protection when Sec. 1, Art. 3 already provides
equal protection? Does labor then enjoy a double protection? The notion of equal protection is equal protection before the
law. We discussed this ages ago, why law and justice is symbolized by a woman (the goddess of justice) who is
blindfolded The protection is against the ordinary biases of society. The ordinary biases that comes with considering
factors that come with other than the merits of the case which should not be included in the deliberation.
So gender, race or creed, if they are not included in the merits of the case should not be part of the consideration.
"..ensure equal work opportunities" you will later on find out the laws in the US, as they are concentrating now in
discrimination, they are now away from labor standards since the same has been already achieved.The emphasis is now
on discrimination, for instance equal rights amendment in all the 51 states decree that if you have a work place, the same
must mirror the racial composition of your labor market. So in MI, especially in Detroit, the black population is higher than
the national population. So it must be mirrored in the shock floor of lets say, GM. There is a debate on what is the rule of
the racial composition of the market. And there is this rule in economics that your labor market becomes more and more
local if your labor is less and less skilled. But if your labor is skilled then it becomes not just local, but regional and even
national. So if the shock floor has less blacks than the racial population in the neighborhood, then the company will be
penalized, and they will be given time to bring it up to the same composition in Detroit. Assuming that the company will not
be able to bring it up, it will be severely fined and if assuming it cannot still comply with the requirement, it will be closed.
But here, that is not the case yet. But we do have a rule with respect to gender, race or creed. We are still
catching up on the gender side, not to discriminate on women. We have now laws on women's rights. But there is this
emerging gender: the so-called emphasis on gay rights. Because the law merely rules on the general insight of human
acumen; on the universal understanding of what is human. Before, to be gay was abnormal then in the 60's, to be gay
was not normal or abnormal. To be gay was like catching acold, it was a disease over vwhich the subject has no control.
Then in the 80's they realized that being gay is just another way of being human. So, if you are gay, it should not be taken
against you. But what happens if official policies is still against being gay? In the US Armed Forces, for as long as you do
not speak out, its all right. But once you say you are gay, then you are out of the service.
Unless gender is the very determinative factor of a job, then you cannot use gender as the consideration for
hiring, promoting, advancing, firing. But suppose gender is the determinative factor of a job, then you cannot insist that
your application as a lingerie model must be accepted if you are male. Because it is supposed to be female, it is the
female anatomy that brings out the qualities this product. So if you file an application and it goes straight to the waste
basket, that is not discrimination. Unless gender is part and parcel of the issue of the particular position, it does not enter
into the consideration. And if you make that part of the decision, it means discrimination.
Lets talk about the problem of full employment policy. There is now works and researches saying that
unemployment cannot be brought lower to zero. Why? Because in a modern economy, unemployment is structural in
nature, because economy will not progress unless there is unemployment. It does not mean that unemployment
contributes in the progress, rather it is an index that an economy is improving because there is unemployment. For
example, before to cook rice, people use colon to cook rice. After awhile, somebody invented the calderos. So what
happens to the workers who are still making colons? They run out of jobs, but there is progress, because instead of
colons, there is couldron. Then after cauldrons, there was the aluminum kettle, so the makers of cauldron are out of jobs
since everybody switches to this aluminum kettle. Then there is this wonder of wonders, pyrex! So its always like that.
Unemployment is built into the economy, because without it, it means that the economy does not progress. So if you have
full employment, it means that there is nothing new in that economy. So, the policy should not promote full employment,
rather it should have a statement of safety nets, to catch those who will be unemployed because unemployment is a
permanent ingredient of a progressive economy.
Now, lets go to the rights. There are more rights mentioned in Art. 13, Sec. 3 than what is mentioned here. Right
to self organization, collective bargaining. In Sec. 3, it says right of collective bargaining and negotiating. Right of security
of tenure, just and humane condition of work. Many of the rights mentioned there (Art. 13, Sec. 3). Now and again you will
read from the decisions of the SC when the SC almost calls these rights as constitutional rights of workers. Now, I will say
that the best way to understand the SC decisions calling these rights constitutional rights is that yes, they are
constitutional rights in the broad sense, and not in the sense that you study them in political law because the only
constitutional rights that you study are the Bill of Rights. The Bill of Rights are the true constitutional rights because they
do not need implementing legislation. They are constitutional because not even Congress has the power to abolish such
rights. These rights (rights mentioned in Art. 13, Sec. 3) are statutory. They need implementing legislation. The
enumeration in Art. 13, Sec. 3 is not a source of right. So you cannot say that the right to self organization was suddenly
abolished by Congress, that that is unconstitutional. The remedy, if the law is done, is not to go to court and say that such

was unconstitutional. Your remedy is political. It is to elect people who will enact laws to enact these rights. Because they
are not constitutional rights in the sense of the Bill of Rghts. (NB: Bill of Rights is rights against the State)
Sec. 8, Art. 3 says that the right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies, for purposes not contrary to law shall not be abridged. "..including thos in the public
sectors.." when they say that, does that mean that the right to form a union is now a constitutional right? No, because you
have to interpret this particular provision with other provisions in the Constitution. Other provisions says that government
office is a public trust. In other words, the basis of your work in the government is not a contract between you and the
government, as your employer. No. The basis is that you have been entrusted with a duty of which you are answereable
to the people. So, the basis of your engagement in government is law, not a contract. Even if you are appointed or elected
(NB: these are the only two ways you can be in government service). So if you have been stirring coffee for the office of
Mayor Duterte since his first office term. Contractual employee ka for 30 years but you have not been given regular
employment, you cannot say that this office is yours by prescription.
Because if you have been with somebody, you are tolerated, in the words of the Labor Code..."suffered or
permitted to work", which brings out the idea that there is no explicit agreement on the part of the employer to engage you
for some job. You are just tolerated, your work is just accepted. Are you entitled to pay, yes. Are you considered a regular?
Yes. Under the law, engagements where there is no terms issued is a regular employee. But that is not so in the case of
the goverment, no matter how long you have been in the Mayor's Office, you cannot claim regularity of employment.
So, government may form unions, but can they negotiate their wage? No, because the basis of wage is not
contract. It is law. That is why in Art. 13, Sec. 3 it says collective bargaining and negotiations. The second term
(negotiations) is for government employees, not collective bargaining.
Article 4: CONSTRUCTION IN FAVOR OF LABOR: All doubts in the implementation and interpretation of
the provisions of this Code including its implementing rules and regulations, shall be resolved in favor of labor.
Its not only contracts and labor laws that are interpreted in favor labor in case of doubt, it is also labor standards.
As I've told you before, this does not abbrogate the rules of statutory construction. This is just an additional rule in
construction and applies only in labor standards. This does not apply to non-labor provisions. So, if you have to rip up into
elements Art. 4, the first element is labor legislation, second there is a doubt in that labor legislation or its implementation.
The doubt may be textual doubt or factual doubt (doubts on the facts upon which the law is to be applied.) An
example of textual doubt: Appeals shall be within 10 days from the decision of the Labor arbiter. Are those days calendar
days or working days? There is a doubt because the terminology is vague. How do you resolve the doubt? First, you ask
how many interpretations. If there is an interpretation in favor of labor, then the trier of facts will have to accept that
interpretation because of this provision. Factual doubt: Suppose an employee files a claim for overtime and yet he cannot
produce an authorization to do an overtime. And there is this company regulation that states that all OTs must be
approved before the work is rendered. Then he says that I did the work but it was not approved because the tractor broke
down and it was raining and we had to repair it even if it was way passed the regular hours of working. Even if there is no
approval of the previous work you have, you have to pay the overtime pay because it has to be assumed that it (the OT
work) redounded to the benefit of the employer. If the OT is not paid, the employer is unjustly enriching himself.
You know this provision is a narrowing of the discretion to judge a case by the SC because once you can create a
doubt, the doubt has to be resolved in favor of labor. But a word of caution, if in the exam every number you answer that
"in case of doubt, doubt is resolved in favor of labor..", then you invite the examiners to a primordial doubt. This is not a
catch all phrase, for short.
ART. 5: THE DEPARTMENT OF LABOR AND EMPLOYMENT AND OTHER GOVERNMENT AGENCIES
CHARGED WITH THE ADMINISTRATION AND ENFORCEMET OF THIS CODE OR ANY OF ITS PARTS SHALL
PROMULGATE THE NECESSARY IMPLEMENTING RULES AND REGULATIONS. SUCH RULES AND
REGULATIONS SHALL BECOME EFFECTIVE 15 DAYS ATER ANNOUNCEMET OF THEIR ADOMPTION IN
NEWSPAPERS OF GENERAL CIRCULATION.
This is an example of crash and equestrian legislation (?!). Because when we say the "department of labor and
employment.. shall promulgate the necessary implementing rules and regulations.." who will sign these rules? Can the
janitor of the DOLE promulgate such rules and regulations? Who? The President through his/her alter ego, which is the
Secretary of DOLE. By saying the department, it means all has the power to promulgate rules.
ART. 6: ALL RIGHTS AND BENEFITS GRANTED TO WORKERS UNDER THIS CODE SHALL, EXCEPT AS
MAY OTHERWISE BE PROVIDED HEREIN, APPLY ALIKE O ALL WORKES, WHETHER AGRICULTURAL OR NONAGRICULTURAL
Applicability: The issue is does this labor code apply to both workers and non-workers? Or do you have to be a
worker? And for that matter, must there exist an employer-employee relationship? NO.
July 14 Lecture
case: Perez vs. Pomar: As you can see from the date of the case, it was before the 1935 Constitution. The 1935 Consti is
the first time that the protection of labor clause appears and the social justice thrust becomes prominent in our jurisdiction.
Before that, we were governed by the Civil Code. In other words, under the CC, there is no assumption that there are
underprivileged sector in the society. Under the CC, each one is free to enter into contract. And if you enter into a contract
it is assumed that you are in equal footing with the party which you are contracting. Now, this is not so under the 1935

Constit, that is no longer the premise. Under this Consti, there are these people who have no choice but to rent out their
labor because they do not have the mental capability and no property. Precisely because they have less in life, they must
be given more in law. But that is not the premise under the CC. This is the background with which you should read this
case.
Perez vs Pomar
1. CONTRACTS; CONSENT.-Contracts resulting from an implied consent of the parties are valid and enforceable.
2. ID.; ID.; HIRING.-Where one has rendered services to another, and these services are accepted by the latter, in the absence of proof that the service was
rendered gratuitously, an obligation results to pay the reasonable worth of the services rendered upon the implied contract of hiring.
3. ID.; ID.; ID.-Although no fixed amount may have been determined as the consideration for the contract of hiring, the contract is nevertheless valid if the amount of
the implied compensation can be determined by custom or frequent use in the place where the services were rendered.
Facts:
Perez, on various occasions render Don Eugenio Pomar services as interpreter of English and that he obtained passes and accompanied the defendant upon his
journeys to some of the towns in the Province of Laguna. It does not appear from the evidence, however, that the plaintiff was constantly at the disposal of the
defendant during the period of six months, or that he rendered services as such interpreter continuously and daily during that period of time.
Don Eugenio Pomar, as general agent of the Compaia General de Tabacos in the said province, verbally requested the plaintiff on the 8th of December, 1901, to
act as interpreter between himself and the military authorities; that after the date mentioned the plaintiff continued to render such services up to and including May
31, 1902; that he had accompanied the defendant, Pomar, during that time at conferences between the latter and the colonel commanding the local garrison, and
with various officers and doctors residing in the capital, and at conferences with Captain Lemen in the town of Pilar, and with the major in command at the town of
Pagsanjan, concerning the shipment of goods from Manila, and with respect to goods shipped from the towns of Santa Cruz, Pilar, and Pagsanjan to this city; that
the plaintiff during this period of time was at the disposal of the defendant, Pomar, and held himself in readiness to render services whenever required; that on this
account his private business, and especially a soap factory established in the capital, was entirely abandoned; that to the end that such services might be punctually
rendered.
Issue: Is compensation owing to the one who rendered service absent any written or verbal agreement as to compensation.
Held: Yesir!
Although it does not appear that any written contract was entered into between the parties for the employment of the plaintiff as interpreter, or that any other
innominate contract was entered into; but whether the plaintiff's services were solicited or whether they were offered to the defendant for his assistance, inasmuch
as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of the services. This
gives rise to the obligation upon the person benefited by the services to make compensation therefore, since the bilateral obligation to render service as interpreter,
on the one hand, and on the other to pay for the services rendered, is thereby incurred.
Notwithstanding the denial of the defendant, it is unquestionable that it was with his consent that the plaintiff rendered him services as interpreter, thus aiding him at
a time when, owing to the existence of an insurrection in the province, the most disturbed conditions prevailed. It follows, hence, that there was consent on the part
of both in the rendition of such services as interpreter. Such service not being contrary to law or to good custom, it was a perfectly licit object of contract, and such a
contract must necessarily have existed between the parties.
The consideration for the contract is also evident, it being clear that a mutual benefit was derived in consequence of the service rendered. It is to be supposed that
the defendant accepted these services and that the plaintiff in turn rendered them with the expectation that the benefit would be reciprocal. The compensation owing
must be based on the customs of the place absent any clear stipulation.

This is the same principle as quasi-contracts which is based on the principle that one cannot unjustly enrich
himself even though unrequested for as long as it redounds to one's benefit. For example you have a heart attack and a
doctor who was present at that time timely gave you a shot and you live to see another day, di na madala ug "salamat
doc". You have to pay because the service is normally compensated. Suppose you come to class and you pass by the
store of Lucci and you light your cigarette in her store without paying. You do that everyday, then one day she decides to
charge you for the frequent lighting of your cigarette, can she do that? No, because the service is not normally
compensated.
This doctrine applies in this case. If the service is not normally compensated, then Perez vs. Pomar doctrine does
not apply. In labor, you will come across the phrase "suffered or permitted to work.." (Art. 84). If for instance you are
building a house, and you have a neighbor who is a carpenter. He then gets his tools and works for the foreman. And you
were happy kay matabangun ang imong silingan, so you suffer and permit him to work. But on the 15th he lines up and
asks for his salary, you cannot say "Pasaylua ko kay wa man ta nagsabot nga bayran ka, abi nako sinilingan ning imong
pagtabang.." Does this change the equation just because you are neighbors? Do you have a right to suppose that this
was neighborly charity? No, applying the Perez vs. Pomar doctrine. Perez and Pomar were friends! But the court has
ruled that it was not neighborly kindness that he invited Pomar to interpret. That is not what the law intends. For as long as
the service is compensable naturally, then this service of interpreting must be compensated.
How much will the service be compensated when there is no agreement? As much as the reasonable value of his
service merits. So, the measure of reasonable value (quantum meruit). He cannot charge the rate of an expert translator,
he cannot also be paid the rate of a house helper. His rate is somewhat the regular rate, in between the two. This is
without ER-EE relationship ha! Because in the CC there are provisions for lease of services without employer and
employment relationship. (Basta remember, under CC to kasi before the 1935 Constitution pa)
LVN vs. Film Musicians
Facts: PMG (Phil. Musicians Guild) applied for certification as teh sole and exclusive bargainng agency for all musicians
working in LVN and Sampaguita Pictures. LVN et al, are engaged in the making of motion pictures and in the processing
and distribution thereof.
LVN opposed the application stating that PMG are not their employees, they are merely (under the CC) lessors of
services. Why? Because of the four requisites of ER-EE relationship. (MEMORIZE)

1. selection and hiring: Who selects and hires is the employer

2. payment of wages: who pays the wages is the employer
3. power to dismiss: who has the power to dismiss is the employer
4. power to control: The one who controls not only the ends to be achieved but also the means to be used employed is the
employer.
These are the four elements. LVN is not a landmark case because it enunciates the four elements in an er-ee
relationship. It is a landmark case because the SC says even if the majority of these four requisites are not complied with,
for as long as the power of control test is met, there is an er-ee relationship. As in this case:
1. selection and hiring: Who selects and hires? It is the musical director.. is he an employee of LVN? No, he is
contracted by LVN. The producer who is employee of LVN, looks for a musical director (MD) who is paid for a lump sum
price. And then MD starts looking for his musicians
2. payment of wages: MD pays the musicians depending on his or her expertise. If you are the expert violinist, you will
be paid higher of course.
3. power to dismiss: If you do not show up or go to practices, it is the MD who will dismiss you.
So why does the SC say that the MD is NOT the employer? This is because, the power of control is shown by the ff.
instances:
In the final pick of the music that will go in the film, the musicians will be called by call slips, and the call slips have
the name of the movie company. The call slip assigns them to a place where they will be picked up by the bus of the
movie company. This is an index of control ha.
Where they practice is an index of control. They practice within the premises of the movie company. Who feeds
them when it comes to meal times? It is the movie company, not the MD.
When the final take of the music is to be done, the MD disappears and the movie director takes over and directs
the very playing itself of the music. The movie director is already an employee of the movie company. And that is very
telling that it is the movie company who dictates the very means and methods and not just the ends the movie.
This is contrasted with Vda. de Cruz vs. Manila Hotel SC held that Vda de Cruz is wrong since Manila Hotel is an
employer since it merely directed the ends to be achieved, which is to please the clients. How you (the musicians) it is up
to you, Manila Hotel doesn't care about the means and the method. So that is the difference with LVN. Because in LVN
during the final take, it is the movie director who directs the musicians HOW TO PLAY, i.e. play the drums louder, or violin
softer, etc.
Take note that is one of the main doctrines of LVN. There are other doctrines that will come out of this case in
labor relations. Read this case inside out. Because on one hand the SC says, ESSENTIAL REQUISITES.. but then it
says, if you fulfill the power of control test, there is er-ee relationship. Also, in the four requisites, how come the rendition
of service is not mentioned?
In Dy Keh Beng vs. ILMUP case, the SC says that in the power of control test, it is not necessary to prove that
there was actual exercise of power of control. It is not necessary to prove that the putative employer exercises control.
What is essential is the reservation of the power. All you have to prove that is that he has the power of control, that he
reserves that right, not necessarily that he exercise that right.
Dy Keh Beng also argues that the fact that they are paid on a piece rate basis shows that there was no er-ee
relationship. When you hire on a pakyaw (piece rate) basis, all you have to do is to finish the work. You are free to
determine the ways and means for as long as you finish the work. How do you know that you've finished the work? The
fact that you are paid, in fact you are paid on the basis of the work that you finish. But in this case, the SC said that they
have a right to be represented by International Labor because they are employees of Dy Keh Beng. The argument that
they are paid on a piece rate basis proves that there is no er-ee relationship is incorrect. Because piece rate payment
neither affirms, nor denies er-ee relationship. It is neutral.What does it prove? It proves only payment. It does not prove
the legal characterization of the relationship.
The fact that they did not show proof that they were actually supervised is not what is essential. What is essential
is the proof given that DK Beng had the right to control; reserved the right to control. How is this proven? This is proven by
the fact that there are specified dimensions they have to achieve. They could not just bring any size basket. No proof need
be given for the exercise the right to control because there was no need to exercise it in view of the specifications given.
So actual exercise of control is not as important as reservation of the right to control.

Dy Keh Beng vs. ILMUP

Fx: Beng, proprietor of a basket factor, dismissed Carlos Solano and Recardo Tudla because of their union activities.
A case was filed in the Court of Industrial Relations for in behalf of the International Labor and Marine Union of the Philippines and two of its members, Solano and
Tudla.
Dy Keh Beng contended that he did not know Tudla and that Solano was not his employee because the latter came to the establishment only when there was work
which he did on pakiaw basis, each piece of work being done under a separate contract.
The CIR held that an employee-employer relationship was found to have existed between Dy Keh Beng and complainants Tudla and Solano, although Solano was
admitted to have worked on piece basis.
According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and Tudla became employees of Dy Keh Beng from May 2,
1953 and July 16, 1955, respectively, and that except in the event of illness, their work with the establishment was continuous although their services were
compensated on piece basis. Evidence likewise showed that at times the establishment had eight (8) workers and never less than five (5); including the
complainants, and that complainants used to receive P5.00 a day sometimes less.
According to Dy Keh Beng, however, Solano was not his employee for the following reasons:
"(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the order given him by Dy;
(3) When there were no orders needing his services there was nothing for him to do;
(4) When orders came to the shop that his regular workers could not fill, it was then that Dy went to his address in Caloocan and fetched him for these orders; and
(5) Solaro's work with Dy's establishment was not continuous."
Petitioner really anchors his contention of the non-existence of employee-employer relationship on the control test that the private respondents "did not meet the
control test in the light of the ... definition of the terms employer and employee, because there was no evidence to show that petitioner had the right to direct the
manner and method of respondent's work." Moreover, it is argued that petitioner's evidence showed that "Solano worked on a pakiaw basis" and that he stayed in
the establishment only when there was work.
Issue: W/N there existed E-E relationship between beng and the two respondents. Is Beng in "control"?
Held: Yes yes yo!!
While this Court upholds the control test under which an employer-employee relationship exists "where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to be used in reaching such end," it finds no merit with petitioner's arguments as stated above. It
should be borne in mind that the control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right.
The establishment of Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, "it is natural to expect that those working under Dy would have to
observe, among others, Dy's requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy as the making of the kaing would be
subject to Dy's specifications. Parenthetically, since the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily
exercise control on the men he employed.
It is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Pares who penned the decision in "Sunripe Coconut Products Co. v. Court of
Industrial Relations" opined that:
"judicial notice of the fact that the so-called 'pakyaw' system mentioned in this case as generally practiced in our country, is, in fact, a labor contract between
employers and employees, between capitalists and laborers."
Sterling vs. Sol
Facts: Loreta C. Sol charged the herein petitioners Sterling Products International and its Radio Director V. San Pedro with having committed an unfair labor practice
act. In her complaint she alleged among others that she has been a regular Radio Monitor of respondents-petitioners; that on January 8, 1960, she filed a complaint
against the said firm for underpayment, money equivalent of her vacation leave from 1952 to 1959, and Christmas bonus for 1959, equivalent to one month salary.
The complaint resulted in her dismissal, without just cause, on December 16, 1960.
Petitioners alleged that Sol is an independent contractor whose services were restrained by petitioners to submit reports of radio monitoring work performed outside
of their office. Because the petitioners no longer need such services, they gave Sol notice of termination and executed it.
The Court of Industrial Relations in a decision dated October 8, 1960 held that the complainant is not an employee of the respondent firm but only an independent
contractor and that respondent firm was justified in dismissing the complainant due to economic reasons.
The lower court reversed the ruling that complainant was an employee and not an independent contractor, and ordered her reinstatement with back wages. The
lower Court further ruled that respondent firm was guilty of unfair labor practice. In arriving at this ruling it considered the following circumstances: (1) Complainant
was given an identification card stating that "Bearer Loreta C. Sol is a bonafide employee of this Company;" (2) when she applied for purchase of a lot from the
PHHC, she was given a certificate to show that she was indeed an employee of the respondent company for the last five years or six years; and (3) as such
employee, she enjoyed the privilege of borrowing money from the Employees Loan Association of the firm. The court further found that the company's control over
respondent's work is shown by the fact that she can not listen to broadcasts other than those that were contained in the schedule given to her by the company.
Supervision and control of her work could be done by checking or verifying the contents of her reports on said broadcasts. The company not only hired and fired
Mrs. Sol, without third party intervention, but also reserved to itself, possessed and exercised its right to control 'the end to be achieved and the means' to be used in
reaching such end, namely, the schedule and other instructions by which the monitor shall be guided, and the reports with specifications by which the company
observes and verifies the performance of her work." In Ruling that Sol was not an independent contractor, the SC
Held: Respondent Sol was directed to listen to certain broadcasts, directing her, in the instructions given her, when to listen and what to listen, petitioners herein
naming the stations to be listened to, the hours of broad., casts, and the days when listening was to be done. Respondent Sol had to follow these directions. The
mere fact that while performing the duties assigned to her she was not under the supervision of the petitioners does not render her a contractor, because what she
has to do, the hours that she has to work and the report that she has to submit-all these are according to instructions given by the employer. It is not correct to say,
therefore, that she was an independent contractor, for an independent contractor is one who does not receive instructions as to what to do, how to do, without
specific instructions. The very act of respondent Sol in demanding vacation leave, Christmas bonus and additional wages Shows that she considered herself an
employee. A contractor is not entitled to a vacation leave or to a bonus nor to a minimum wage. This act of hers in demanding these privileges are inconsistent with
the claim that she was an independent contractor.

The control test is met even if you are physically separated from the employer. There are three corroborating
evidences that led the SC to say that there was power of control, i.e. Sol was given an ID that says she was an employee;
he was given a certification that she was an employee when she applied to buy a lot; she was allowed to apply for a loan.
So these evidences strengthened the SC's ruling based on the control test. Because she was handed a schedule
determining the times she has to listen; because she was not free to listen to any other broadcast except those
specifically given her; because she has to make reports; these are indices of control.
Doctrine: So, physical proximity to the employer is not essential for control because that can be surmounted by
pre-determined instructions.
RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING CORPORATION vs NLRC and Boticario et. al.
Facts:
Petitioners are principally engaged in deep-sea fishing business. sice 1978, private respondents were employed by them as stevedores at Navotas Fish Port for the unloading
of tuna fish catch from petitioners' vessels and then loading them on refrigerated vans for shipment abroad.
On March 27, 1981, private respondents Antonio Boticario, and thirty (30) others, upon the premise that they are petitioners' regular employees, filed a complaint against
petitioners for non-payment of overtime pay, premium pay, legal holiday pay, emergency allowance under P.D. Nos. 525, 1123, 1614, 1634, 1678, 1713, 1751, 13th month pay
(P.D. 851), service incentive leave pay and night shift differential.
They were dismissed afterwards by the Petitioners.
Claiming that they were dismissed from employment on March 29, 1981 as a retaliatory measure for their having filed the said complaint, private respondents filed on April 21,
1981 another complaint against petitioners for Illegal Dismissal and for Violation of Article 118 of the Labor Code, as amended. The two cases were consolidated.
Here, petitioners contend that private respondents are contract laborers whose work terminated upon completion of each unloading, and that in the absence of any boat
arrivals, private respondents did not work for petitioners but were free to work or seek employment with other fishing boat operators.
the Labor Arbiter upheld petitioners' position ruling that the latter are extra workers, who were hired to perform specific tasks on contractual basis; that their work is intermittent
depending on the arrival of fishing vessels; that if there are no fish to unload and load, they work for some other fishing boat operators; that private respondent Antonio
Boticario had executed an employment contract under which he agreed to act as a labor contractor and that the other private respondents are his men; that even assuming
that private respondents are employees of petitioners, their employer-employee relation is co-terminous with each unloading and loading job; that in the same manner,
petitioners are not under any obligation to hire petitioners exclusively, hence, when they were not given any job on March 29, 1981, no dismissal was effected but that they
were merely not rehired.
NLRC reversed the decision of the Labor Arbiter and helt that there existed a \n E-E relationship.
Issue: W/N there is in fact.
Held: Yesir. There exists E-E relationship...
As respondent NLRC had found:
We further find that the employer-employee relationship between the parties herein is not co-terminus with each loading and unloading job. As earlier shown, respondents are
engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents' activity of catching fish is a continuous process and
could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents' vessels and
then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the employment of complainants a regular
one, in the sense that it does not depend on any specific project or seasonal activity.
Indeed 'that during the temporary layoff the laborers are considered free to seek other employment is natural, since the laborers are not being paid, yet must find means of
support' and such temporary cessation of operations 'should not mean starvation for employees and their families'."
Suffer and Permitted to work - Indeed, considering the length of time that private respondents have worked for petitioner - since 1978 - there is justification to conclude that
they were engaged to perform activities usually necessary or desirable in the usual business or trade of petitioners and are, therefore, regular employees. As such, they are
entitled to the benefits awarded them by respondent NLRC.
"WHEREFORE, in view of the foregoing considerations, the Decision appealed from is hereby set aside and another one entered, directing respondents-appellees: (1) to
reinstate complainants-appellants to their former work, without loss of seniority rights and other privileges appertaining thereto; (2) to pay complainants-appellants full
backwages computed from the date they were dismissed up to the date they are actually reinstated; (3) to pay complainants-appellants legal holiday pay, emergency living
allowance and 13th month pay in accordance with law; and (4) to pay complainants-appellants who are entitled to incentive leave pay, as herein above determined, according
to law.

Issue: W/N control necessitates continuity

Doctrine: No. The SC gave weight to the argument of the stevedores because of the nature of their work was
such that they could finish early, you cannot blame them for looking for extra work, but they were actually workers of RJL.
And this is by way of exception that they go to other boats to unload other boats.
Summary:
Locational separation does not prove the non existence of control (Sterling vs. Sol); Actual exercise of control is not
necessary to prove that there is control (Dy Keh Beng); There is no need to establish the continuity of control for the
control test to be met (RJL).
However, it is not also correct to say that the control test is the only test you have to meet. For example, you are here, and
I (as a professor) exercise the power of control over you, but does that mean that I am your employer? No. So it is the
ultimate test, the test par excellence, but it is not the only/exclusive test. (VIP!)
DISTINCTIONS BETWEEN ER-EE RELATIONSHIPS AND OTHER CONTRACTS
ER-EE versus

1. INDEPENDENT CONSTRUCTION CONTRACTOR.

2. ROVING INDEPENDENT PEDDLERS
3. INDEPENDENT SALESMEN
4. AGENCY
5. AGRICULTURAL TENANCY
6. ER-EE CREATED BY LAW
I. INDEPENDENT CONSTRUCTION CONSTRUCTOR
The problem for instance is you want to make an extension to your house. You do not hire an architect or
engineer, you look for an experienced foreman. What is your relationship with the foreman? Is he your employee? If he
brings along other carpenters, what is your relationship to the people that he hires?
Carro vs. Rillaroza (VIP case)
Fx: Caro was sentenced to pay one Rilloraza for the injuries he suffered while constructiong the window of the building managed by the former (as the building
belonged to Caro's wife, Ramon Caro being only the administrator) Caro maintains that Rilloraza was not his employee within the purview of the Workmen's
Compensation Act as the latter was hired by one Daniel de la Cruz, who allegedly, is an independent contractor. Caro insists that relationship between him and
Rillaroza was casual. Caro maintains that there was a contract entered into between him and dela Cruiz wherein the latter assumed all responsibility for whatever
accident that may happen to his laborers engaged in the jobs.
Issue: W/N there exists er-ee relationship as to render Caro liable under WCA
Held: Yes. There exists an er-ee relationship because Caro's business was to rent out the building and he necessarily has to maintain them (bldgs.) in habitable
conditions.
The contracts entered into by dela Cruz and Caro pertains only to Dela Cruz as the window railing constructed by Rillaroza was not covered by said contract.
Furthermore, the evidence indicate that dela Cruz was not an idependent contractor. The general nature of the work to be undertaken indicates that the floor joists
mentioned in the contract were to be changed under the direction and control of Mr. Caro. Dela Cruiz does not appear to have any office or business establishment,
or even a license to engage in business as a building contractor. He would seem to be merely a free lancig carpenter with some experience in carpentry work, who
goes around looking for minor repair construction jobs for he has no capital or money to pay his laborers or to comply with his obligations to them.
Anent the issue of contractual relationship between Caro and Rillaroza, it has been held that employment is causal when it is irregular, unpredictable,
sporadic and brief in nature. Under this test, most maintenance and repair activities, as well as even remodelling and incidental construction, have been held to be
within the usual course of a business.
In the instant case, the building in which Rilloraza worked was found to be intended or usef for rental purposes. Caro had control of such building as
manager and administrator. Obviously, the repair of said building his part of the usual business of the administration of teh aforesaid properties so that the same may
be suitable for the gainful purpose above referred to. Consequently, even even if Rilloraza, who did the repair work thereof, were a casual laborer, engaged directly
by De la Cruz, acting as an independent contractor, which he is not, the former would still be an employee of petitioner herein, within the purview of the Workmen's
Compensation Act, and, hence, would be entitled to demand compensation from him.
Uy Chao Vs Aguilar and Ramos
Facts:
In trying to maintain the beauty of his store, Petitioner hired Ramos as independent contractor to fix the eaves of the store of the former who in turn sent Aguilar to do the job.
It appears that at about 10:00 o'clock in the evening of 24 November 1953, respondent Aguilar suffered physical injury as a result of the sudden fall of the whole eave of a
glassware store known as La Boda de Plata and owned by the petitioner Uy Chao, while he (respondent Aguilar) together with two other laborers was on top of said eave
removing the galvanized iron sheets covering the frame of the eave.
Aguilar asked for Workmans Compensation and the Commission granted the same.
Issue: W/N E-E existed.
Held: Nope..
The employment of respondent Aguilar to help in the repair or replacement of the eave of a commercial store owned by petitioner Uy Chao was purely casual, because such
work would occur only when the said structure should be damaged or broken. When it would be broken and repaired, nobody could foresee. It may safely be stated that the
work on the eave would not be made at fixed intervals. The employment of a carpenter and a tinsmith for its repair or replacement was therefore only occasional, sporadic and
for a short time.
It is clear that the repair or dismantlement of the eave was not for the purpose of the petitioner's occupation or business. The petitioner was a glassware dealer. He bought and
sold glassware. It is difficult, to see the connection of the repair or dismantlement with the buying and selling of glassware.
Even if the services of respondent Aguilar were engaged by petitioner Uy Chao directly or through an agent or contractor, still respondent Aguilar, the injured laborer, is not
entitled to compensation for the simple reason that his employment was purely casual and was not for the purposes of the petitioner's business or occupation.
Aguilar is not covered by the Workman's Compensation act with respect to Uy. Because:
Section 39 (b) of Act No. 342S as amended, known otherwise as the workmen's Compensation Act, provides that (b) 'Laborer' is used as a synonym of 'Employee' and means
every person who has entered the employment of, or works under a service or apprenticeship contract for an employer. It does not include a person whose employment is
purely casual and is 'not for the, purposes of occupation or business of the employer.
Decision of the Workmens Compensation Commission is reversed.

There is no er-ee relationship because of the nature of the business of Uy Chao. Uy Chao was not engaged in
real property business, he was engaged in selling glass. His need for a carpenter is on a casual basis. Ramos and Aguilar
are independent contractors. So that's the difference between Caro case and Uy Chao.

Cabe vs Tamayo
Facts:
Samuel Tamayo agreed in March, 1979 to construct for the spouses Ronald Cabe and Purita Cabe their residential house for P106,000 in accordance with the plans and
specifications prepared by an architect.
Tamayo started the work. The Cabes dispensed with his services when he allegedly made certain deviations from the plans. The house was finished by other persons.
Tamayo on June 28, 1979 sued the Cabes in the Regional Office of the Department of Labor in Laoag City for the recovery of P7,000 as payment of labor and materials. He
filed the case as head carpenter of his 18 co-workers, whose wages he had advanced and for reimbursement of materials which he had purchased.
The Assistant Regional Director for Arbitration ordered the Cabes to pay Tamayo P6,400 as contractual wages and P600 as reimbursement of materials.
Issue:
W/N Cabe is liable.
Held: No
We hold that Tamayo was an independent contractor and not an employee of the Cabes. The Labor Regional Office and the National Labor Relations Commission had no
jurisdiction over his claim. Their Jurisdiction is confined to claims arising from employer-employee relationship Tamayo's claim is cognizable by the municipal trial court.
WHEREFORE, the decision of respondent Assistant Regional Director Tumang is reversed and set aside.

The construction contractor asked for reimbursement of materials, therefore there is no er-ee relationship. That is
not within the jurisdiction of labor courts. That's why the SC said it should have never been entertained by the DOLE. That
shows that he was an independent contractor because he assumed some of the materials.
If dili gani trabaho, pure and simple nga trabaho lang, but apil ang materyales, the materials take you out of the
er-ee relationship. Because if it were not so, you would be giving the labor courts jurisdiction to decide on property issues
which is beyond their jurisdiction. Remember that labor courts are tribunal with limited jurisdiction.
Snow White case- At issue here is payment under the Workmens Compensation. Remember the old law, workmens compensation
was the responsibility of the employer just like in New York, we followed NY until the Labor code was amended effective Nov.1, 1974.
Now it is the Employees Compensation, the State Insurance Fund that answers for contingencies such as work-related injuries ,
sickness or death. Here what happened was death which began with work-related injury.
Snow White Ice Cream and Ice Drop Factory vs Garcia
Facts:
Emilio Garcia began working with the respondent as an ice drop vendor in 1953. He was paid on commission basis of P0.02 per ice drop that he sold, thereby earning
approximately P7.00 a day, seven days a week. As such vendor, his duties consisted mainly of breaking into small pieces the block of ice given to him, and placing them in the
ice drop pushcart to prevent the ice drops from melting. Claimant, when not selling ice drops, repaired broken down pushcarts belonging to the respondents, being also a
carpenter by occupation.
It appears that on July 27, 1960, while preparing the pushcart assigned to him for peddling, a block of the ice he was carrying fell on his right foot, smashing three of his [toes].
After a week of medication, he resumed his work despite the fact that he was still limping; that while pushing the ice drop pushcart along Solis Street, Tondo, Manila, his
swollen right foot was hit by a barbed wire.
Claimant, however, continued working until August 27, 1960 when he stopped as he could no longer withstand the pain and chilling sensation that he suffered. He was brought
to the North General Hospital where his right foot was amputated below the knee, the abscess having already become gangrenous. He remained in said hospital until
September 16, 1960. Dr. V. Roldan, a private physician, continued treatment on the claimant while at home until the amputation wound was completely healed nine months
thereafter. Claimant alleged that he spent the total amount of P700.00 for said treatment.
Issue:
W/N E-E relationship existed between Garcia and Snow White Ice cream Factory.
Held: Yesir!!!
The criterion is whether the person or firm alleged to be the employer can direct or require the party assertedly enjoying the employee status to do a certain kind of work and to
specify the means and methods by which the same is to be accomplished.
The logic of the situation indeed dictates that where the element of control is absent; where a person who works for another does so more or less at his own pleasure and is
not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the
relationship of employer and employee exists.
Since disposition of the product is normally an inherent part of any business, there is an increasing tendency to indulge a presumption that salesman, distributors, and
deliverymen who fall short of the status of businessmen holding themselves out to the public as such are employees. The circumstance that the salesman is devoting his entire
time to the distribution of the one employer's product is, in most lines, an indication that he is an employee.

There is ER-EE relationship because 1. who owns the cart? SW, the ice? SW, who provided the ice pick? SW. Finally up to
issue WoN the ice drop that has been sold, was it Garcias or SW? SW. because he could still return it if it were unsold. If it were really
his and there were still ice drops at the end of the day, he could no longer return it. The fact that he can return it means that the title
does not pass to him, it remains with SW. now, corroborating evidence, when Garcia could no longer push the cart anymore because
his foot is injured, he was repairing the push carts, it means that he is an employee of SW. This is the corroborating evidence which
convinced the court that he was an employee of SW.
So we go to Mafinco Trading, if we parallel this case with SW, instead of an ice cream cart, what do we have? A softdrinks
truck. Instead of ice drop, what do we have? Softdrink. At what price did he sell the softdrink? He sold it at the recommended price of
the trading company, Mafinco, the exclusive distributors of Cosmos, the original name of Pop Cola. If he could not sell the softdrink
could they return it? Yes. There is almost a very faithful parallelism with SW, the only difference is there is a written contract. The
peddlers contract which provides among other things that: 1. that the peddler shall secure the peddling license, 2. that the peddler puts
up a bond for the payment to his helpers or driver, because it is suggested that he hire a helper or a driver, but he could drive it himself.
Aside from the 1st bond, there was a 2nd bond that he had to put up. To answer for the proceeds if he does not remit the proceeds of the
softdrinks that he sold. So 2 kinds of bonds. The SC says that this is not a question of ER-EE relationship. The characterization of the
relationship should be determined by the four corners of that contract. Why? Because the SC says that ER-EE relationship now is a

question of what is written down regardless of the facts. Why all of a sudden you disregard the 4 requisites for the establishment of EREE relationship? The SC says because to rule otherwise would in effect give the labor tribunal jurisdiction over other contracts provided
for in that written peddlers contract. If it is governed by the relationship, then that means the labor arbiter will have jurisdiction over a
nominate contract which is provided for in the peddlers contract, what is that contract, then ominate contract of surety which is under
the jurisdiction of the regular court. That is why the court has no choice but to rule that it is not an ER-EE relationship. Question of
jurisdiction. Labor tribunals are tribunals of limited jurisdiction - ER-EE relationship that is its jurisdiction. The regular courts are courts
of general jurisdiction it is just a question of amount that differentiate the jurisdiction of specific courts from that of the RTCs because
the jurisdiction is supposed to be general in nature.
Mafinco vs Ople
Facts:
Rodrigo Repomanta and Rey Moralde entered into peddling contracts with MAFINCO, sole distributor of Cosmos soft drinks.
One of the stipulations of the contracts was that either party might terminate it upon five days prior notice to the other. In accordance with this stipulation, MAFINCO terminated
the aforesaid contracts, in view of' which, Moralde and Repomanta, thru their union, filed a complaint with the National Labor Relations Commission (NLRC).
MAFINCO filed a motion to dismiss on the ground that the NLRC had no jurisdiction because complainants were not its employees but were independent contractors. Referred
to a fact finder, the latter recommended dismissal of the complaint on the ground that complainants were indeed not employees. By reason thereof, the NLRC dismissed the
complaint. The Secretary of Labor reversed the order of NLRC, holding that complainants were employees of MAFINCO and therefore NLRC had jurisdiction.
Issue: W/N there is E-E relationship.
Held: No!!!
An independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to
control of his employer except as to the result of the work. A person who has no capital or money of his own to pay his laborers or to comply with his obligations to them, who
files no bond to answer for the fulfillment of his contract with his employer, falls short of the requisites or conditions necessary to classify him an independent contractor.
Those tests to determine the existence of an employer-employee relationship or whether the person doing a particular work for another is an independent
contractor cannot be satisfactorily applied in the instant case. It should be obvious by now that the instant case is a penumbral, sui generis case lying on the shadowy
borderline that separates an employee from an independent contractor.
In determining whether the relationship is that of employer and employee or whether one is an independent contractor, "each case must be determined on its own
facts and all the features of the relationship are to be considered". We are convinced that on the basis of the peddling contract, no employer-employee relationship was
created. Hence, the old NLRC had no jurisdiction over the termination of the peddling contract.
The Supreme Court held that the complainants were independent businessmen. The SC set aside the order and resolution of the Secretary of Labor and affirmed
the order of the NLRC dismissing the case for lack of jurisdiction.

SSS case, again this is peddlers. In la swerte, you have to pick up the goods that are to be sold by the peddler, the brands of cigarettes
that are the products of la swerte cigar. Once again, the court said there is a contract. The peddler here is not at liberty to determine the
price at which he would sell the cigarette. He is not at liberty to choose the brands to sell. He is not at liberty to depart from his area, he
is given an area, you can only sell here. All these things are indexes of control but there is no surety, there is no bond. That is why the
court is very brave in saying that there is no ER-EE relationship. That is why you can see all the more that that made the difference is
Mafinco is the bond, the 2 kinds of bonds.
SSS vs CA and quality Tobacco Corp.
Facts:
QTC, formerly U.S. Tobacco Corporation, is a firm engaged in the manufacture and sale of cigarettes. On August 12, 1972, QTC, as VENDOR, entered into an agreement with
CARREON, as VENDEE.
The contract with CARREON was terminated by QTC on December 18, 1972.
On April 29, 1974, CARREON filed a petition with the Social Security Commission alleging that he was an employee of QTC, and asking that QTC be ordered to report him for
coverage under the Social Security Law. QTC answered claiming that CARREON has not been an employee but was an 'Independent businessman.' The Social Security
System intervened and, taking the side of CARREON, also asked that QTC be ordered to pay Social Security contributions in respect of CARREON. On January 21, 1976, the
Social Security Commission resolved CARREON's petition, finding him to be an employee of QTC.
The CA reversed the decision of SS Commission.
Issue:
whether or not Romeo Carreon is an employee or an independent contractor
Held: Yesir!!!
The elements to be generally considered in determining the existence of an employer-employee relationship, as follows:
a) selection and engagement of the employee;
b) the payment of wages;
c) the power of dismissal; and d) the employer's power to control the employee with respect to the means and method by which the work is to be accomplished.
The last which is the so-called "control test" is the most important element. Where the element of control is absent; where a person who works for another does so more or less
at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his effort, the relationship of employeremployee does not exist.
Thus, after a study of the records and applying the "control tests," there appears to be no question that the existence of an employer-employee relationship
between Romeo Carreon and QTC has been established, based on the following "undisputed" facts as pointed out by the Solicitor General, to wit: (a) QTC assigned a definite
sales territory for Romeo Carreon; (b) QTC provided Romeo Carreon with a delivery truck for the exclusive use of the latter in his sales activities; (c) QTC dictated the price of
the cigarettes sold by Romeo Carreon; (d) QTC prescribed what brand of cigarettes Romeo Carreon could sell; (e) QTC determined the persons to whom Romeo Carreon
could sell, (f) QTC issued circulars and memoranda relative to Romeo Carreon's sales activities; (g) QTC required Romeo Carreon to submit to it daily, weekly and monthly
reports; (h) QTC grounded Romeo Carreon for six months in 1966; (i) Romeo Carreon was supervised by sales coordinators of QTC; (j) Romeo Carreon was subject to
payment of damages and loss even of accrued rights for any violation of instructions made by QTC in relation to his sales activities; and (k) Romeo Carreon was paid an
allowance by QTC. All these indicate control and supervision over Carreon's work.

II. INDEPENDENT SALESMAN

Independent salesman, remember that he does not carry with him what he sells, that is what the peddler does. The peddler he carries
with him what he sells and he brings with him that which he sells. They are selling what they are carrying.

Ysmael case the salesmen wants to form a union, Ysmael says they are not our employees. 1. they do not follow the same procedure
of hiring as our regular employees, they do not submit themselves to a regular medical check up. 2. they do not have a regular salary,
they may be given transportation allowance but they do not have regular salary. 3. they have no regular office hours, they report at 8
but after that they punch in and are given their general instructions, they disappear and after that they dont have to come back. Accdg,
to Ysmael how can they be our employees? No definite hours of work, no definite salary, when they were hired they were not even
given a medical checkup just like all our regular employees.
JUAN YSMAEL & COMPANY, INC. vs. CIR, YC Salesmen's Union
Facts:
On November 27, 1957, the petitioning Union, a legitimate labor organization duly registered with the Department of Labor, filed a petition praying for the aforesaid certification,
upon the ground that it is a labor organization composed of all the salesmen working for the Ysmael Steel Manufacturing Co., which is operated by the Company, as a
subsidiary thereof, both of which are employers of the aforementioned salesmen; that there are in the Company two (2) other labor unions, namely, the Ysmael Steel Labor
Organization (PAFLU), the membership of which is composed mainly of manual factory workers (non- supervisors), and the Ysmael Steel Employees Union, the membership
of which is composed of supervisors, non-supervisors who are technical employees, office non-technical employees and clerical factory workers, and that the members of
petitioning Union are not included in or represented by any of said two (2) unions in their collective bargaining agreement with the Company, for the economic factors affecting
the members of petitioning Union are different and they constitute a separate and distinct union for an appropriate bargaining unit.
At the hearing of this case on February 11, March 12, 26 and May 5, 1958, the following facts appear to have been established in evidence: That the petitioning Union is duly
registered by the Department of Labor and is, therefore, a legitimate labor organization within the meaning of Section 2(f) of the Act; that the Company is a corporation
engaged in the manufacture of steel equipment, machines, etc., owned and operated by the Juan Ysmael & Company, Inc.; that at the time of the instant petition for
certification was filed, there were twenty (20) salesmen or commission agents working for the Company, but that as of March 26, 1958, only fourteen (14) of them were left;
and that neither of the two unions existing in the Company, namely the Ysmael Steel Labor Organization (PAFLU) and the Ysmael Steel Employees' Union, represents the
members of the petitioning Union in any of their respective collective bargaining agreement with the Company.
The Company maintains the negative upon the ground that the members of petitioning Union are mere commission agents or sales representatives, whose form of selection
and engagement is different from that of the employees of the Company, for unlike such employees, commission agents are not required to undergo physical examination, to
submit a police clearance, and to punch the bundy clock, and are not provided with identification cards. It is further urged that commission agents are paid neither wages nor
salaries, but are granted commissions, the amount of which depends on their sales, and that their conduct as agents is not subject to the control or supervision of the
Company, which, moreover, has no power of dismissal over them.
Issue:
whether the members of petitioning Union are employees of the Company, for purposes of certification of the former as the sole and exclusive bargaining representative of all
the salesmen of the latter.
Held: Yesir.
The aforementioned difference in the manner of "selection and engagement" does not prove, however, the alleged absence of employer- employee relationship. Most business
enterprises have employees of different classes, necessarily requiring different methods of selection and contracts of services of various types, without detracting from the
existence of said relationship.

There is an ER-EE relationship. Why? Because the distinction that they were not given medical check up may be otherwise explained
by the fact that they do not expose themselves with the factory conditions that may be the cause of contagious disease or aggravation
of an existing disease. There is no need for them to undergo regular check up before they are regularized. The fact that there is no
basic wage does not mean that there is no ER-EE relationship, because they are paid on a commission basis. And in fact, they are
controlled as to the particular means by the withdrawal of their transportation allowance. That is how that employer controls the
behavior of the salesmen under it. And finally, the fact that they have to make a report is an index of control. Who did you visit? How
many times? Initial pleading, follow up pleading, concluding pleading. What is the product that is introduced to the particular potential
customer? They are already written down and that is how Ysmael controls its salesmen.
Investment Planning: They want them to be enrolled in the SSS but the employer investment planning refused on the grounds that
there is no ER-EE relationship. Of course the SSS, the said that there must be ER-EE relationship. So the SSS answered that there is
ER-EE relationship. What is the explanation why the courts say that there is none? 1st, no regular hours. 2nd, there is no exclusivity
agreement. Nowhere does it state that investment planning require its salesperson to sell its plan and nothing else. So the salesmen
could sell other plan, other securities belonging to other entity not investment planning. That would show that they are independent.
They are paid on commission, there is no basic. What is more is that they can already deduct their commission from the proceeds that
they collect. So what they would have to remit to investment planning is already the net of their commission. It shows that they are
independent. 3rd, they have no quotas. They have no quotes to make. How many customers have you visited today? There is no quota.
Its up to you. Actually you are rewarded by the commensurate energy that you put in your performance. Bisitahon nimo ang daghang
customer, mahalinan jud ka. That is a kind of independent salesmen, rather than an employee salesmen.
Investment Planning Corp of the Phil. vs SSS
Facts:
These representatives are in reality commission agents, The uncontradicted testimony of petitioner's lone witness, who was its assistant sales director, is that these agents are
recruited and trained by him particularly for the job of selling "Filipinas Mutual Fund" shares, made to undergo a test after such training and, if successful, are given license to
practice by the Securities and Exchange Commission. They then execute an agreement with petitioner with respect to the sale of FMF shares to the general public. Among the
features of said agreement which respondent Commission considered pertinent to the issue are:
(a) an agent is paid compensation for services in the form of commission;
(b) in the event of death or resignation lie or his legal representative shall be paid the balance of the commission corresponding to him;
(c) he is subject to a set of rules and regulations governing the performance of his duties under the agreement;
(d) he is required to put up a performance bond: and
(e) his services may be terminated for certain causes.
That the agents "are not required to report (for work) at any time; they do not have to devote their time exclusively to or work solely for petitioner; the time and the effort they
spend in their work depend entirely upon their own will and initiative; they are not required to account for their time nor submit a record of their activities; they shoulder their
own selling expenses as well as transportation; and they are paid their commission based on a certain percentage of their sales." The record also reveals that the commission
earned by an agent on his sales is directly deducted by him from the amount he receives from the investor and turns over to the company the amount invested after such
deduction is made. The majority of the agents are regularly employed elsewhere - either in the government or in private enterprises.
On August 27, 1960 petitioner, through counsel, applied to respondent Social Security Commission for exemption of its so-called registered representatives from the
compulsory coverage of the Social Security Act. The application was denied in a letter signed by the Secretary to the Commission on January 16, 1961.
Petitioner submits that its commission agents, engaged under the terms and conditions already enumerated, are not employees but independent contractors

10

Issue: W/N petitioner's registered representatives are employees within the meaning of the Social Security Act defining the term "employee" - "any person who performs
services for an 'employer' in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer-employee
relationship."
Held: Nopers.
It must be noted that even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he would not necessarily be entitled to
compensation therefor. His right to compensation depends upon and is measured by the tangible results he produces.
The significant factor in determining the relationship of the parties is the presence or absence of a supervisory power to control the method and detail of performance of the
service, and the degree to which the principal may intervene to exercise such control, the presence of such power of control being indicative of an employment relationship and
the absence of such power being indicative of the relationship of independent contractor.
The logic of the situation indeed dictates that where the element of control is absent; where a person who works for another does so more or less at his own pleasure and is
not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the
relationship of employer and employee exists.

Sara case the situation of a nurse employed by Dr. Sara, he is so successful in his doctoring he put up a rice mill. He convinced her to
quit nursing, dont go the US, buy palay for me and sell rice for me at commission. Wala kay pang-capital, panghulam, I will guarantee
the capital. There is misunderstanding born out of labor, Agarrado sues the former boss, the doctor couple for unpaid commission.
Does the labor arbiter have jurisdiction? Of course the labor arbiter said yes. And the NLRC also affirmed. When it reached the SC, the
SC said that it should have never have reached the court because this is not ER-EE relationship. Agarrado, the moment that she
resigned from nursing, became an independent salesperson. Why is she independent? The fact that the doctor has guaranteed her
loan, shows you that they are not one and the same enterprise. That is why you need to guarantee because your standing is not
enough. That is what the court ruled in Sara vs. Agarrado. Remember that the SC did not consider that Agarrado was formerly
employed. The court perceived that there was a complete break, why? It is not included in the nature of work that she assumed, it is
now buying and selling palay and milled rice. It is different from nursing.
Sara vs Agarrado
Facts:
Private respondent Cerila Agarrado was an attendant in the clinic of petitioner Dr. Renato Sara. She quit her job in 1973.
Four years later, petitioners Dr. Sara and Romeo Araa, being owners of a rice mill and having begun to engage in the buy and sell of palsy and nee, entered into a verbal
agreement with private respondent Agarrado whereby it was agreed that the latter would be paid P2.00 commission per sack of milled rice sold as well as a commission of
10% per kilo of palsy purchased. It was further agreed that private respondent would spend her own money for the undertaking, but to enable her to carry out the agreement
more effectively, she was authorized to borrow money from other persons, as in fact she did, subject to reimbursement by petitioners.
In 1982, private respondent filed with the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. XI, Cotabato City, a complaint against petitioners for
unpaid commission of P4,598.00 on milled rice sold, P2,982.80 on palsy sold, reimbursement of P17,500.00 which she had borrowed from various persons and P1,749.00 of
her own money which petitioners allegedly had not reimbursed
On January 17, 1973, Labor Arbiter Magna C. Cruz rendered a decision in favor of private respondent ordering petitioners to pay all the claims amounting to P26,397.80. which
was affirmed by nlRC.
Issue:
W/N an employer-employee relationship exists between petitioners and private respondent as to warrant cognizance by the Labor Arbiter
Held: NO. Private respondent was an independent contractor, who exercising independent employment, contracted to do a piece of work according to her own method and
without being subject to the control of her employer except as to the result of her work. She was paid for the result of her labor, unlike an employee who is paid for the labor he
performs.
To determine the existence of an employer-employee relationship, this Court in a long line of decisions5 has invariably applied the following four-fold test: [1] the selection and
engagement of the employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the employee's conduct.
-The arrangement thus was explicitly on a commission basis dependent on the volume of sale or purchase. Private respondent was not guaranteed any minimum
compensation nor was she allowed any drawing account or advance of any kind against unearned commissions.
-The power to terminate the relationship was mutually vested upon the parties. Either may terminate the business arrangement at will, with or without cause.
-We observe that the means and methods of purchasing and selling rice or Paley by private respondent were totally independent of petitioners' control.
The absence of control is made more evident by the fact that private respondent was not even obliged to sell the palay she purchased to petitioners. She was at liberty to sell
the palay to any trader offering higher buying rates. She was thus free to sell it to anybody whom she pleased.
Moreover, private respondent worked for petitioners at her own pleasure and was not subject to definite hours or conditions of work. She could even delegate the task of
buying and selling to others, if she so desired, or simultaneously engaged in other means of livelihood while selling and purchasing rice or palay.

III. AGENCY
Guardex case Guardex sells firefighting equipment. Tries to get somebody who will represent with rubberworld their number 1 product
which is the fire truck. They wanted to sell the fire truck to rubberworld. One person responds to their advertisement is immediately
already hired. Go to rubberworld, convince them that they need to get the fire truck. You will be given a commission, pila may
commission. Not stated. Not considerable because a fire truck is quite a sum.
This particular person commissioned to sell the fire truck disappeared. So the it is the manager who now follows up with rubberworld
the sale of the fire truck. Rubberworld is finally convinced to buy the fire truck, and just as they were about to sign the contract of sale,
the particular worker who has disappeared suddenly appeared. And now claims his unpaid commission. Guardex said that the
commission is conditioned upon your closing the deal. You did not close it, we had to close the deal. That is why he claimed that he
need not close it because he is an employee. Every effort that I put in whether they accept it or not should be rewarded and paid
because he is an employee. Is that correct? That is why the sc said that this case should have never been entertained by NLRC
because this is not a case of ER-EE relationship but agency. What is the difference?
Guardex Enterprises vs. NLRC
FACTS:
Marcelina A. Escandor was engaged, under the name of Guardex Enterprises, in the manufacture and sale of fire-fighting equipment and the building or
fabrication of fire trucks; while Jumbee Orbeta was a "freelance" salesman. Orbeta learned that Escandor had offered to fabricate a fire truck for Rubberworld (Phil.)
Inc. He wrote to Escandor inquiring about the amount of commission for the sale of a fire truck. Escandor wrote back on the same day to advice that it was P15,
000.00 per unit. Four days later, Orbeta offered to follow-up Escandor's pending proposal to sell a fire truck to Rubberworld, and asked for P250.00 as representation
expenses. Escandor agreed and gave him the money.

11

When no word was received from Orbeta after 3 days, she herself inquired in writing from Rubberworld about her offer of sale of a fire truck. In the meantime, Orbeta
sold to other individuals some of Escandor's fire extinguishers, receiving traveling expenses as well as the corresponding commissions. He then dropped out of sight.
About 7 months afterwards, Escandor herself finally concluded a contract with Rubberworld for the purchase of a fire truck. The transaction was consummated with
the delivery of the truck and full payment by Rubberworld. Orbeta suddenly reappeared and asked for his commission for the sale of the fire truck to Rubberworld.
Escandor refused, saying that he had had nothing to do with the offer, negotiation and consummation of the sale.
Insisting that he was entitled to the commission, Orbeta filed a complaint against Escandor with the Ministry of Labor. The Labor Arbiter rendered judgment in his
favor. That judgment was affirmed by the National Labor Relations Commission. It is claimed that an implied agency had been created between Escandor and Orbeta
on the basis of the following circumstances:
1) the alleged verbal authority given to him to offer a fire truck to Rubberworld;
2) the alleged written authority to sell the truck contained in a letter of Escandor
3) Escandor's having given Orbeta P250.00 as representation expenses; and
4) Orbeta's submission of a price quotation to Rubberworld and his having arranged a meeting between Escandor and Rubberworld's Purchasing Manager.
ISSUE:

W/N an er-ee relationship exists? NO

W/N Orbeta is Escandor's agent as regards the sale of a fire truck to Rubberworld? NO

RULING:
Months prior to Orbeta's approaching Escandor, the latter had already made a written offer of a fire truck to Rubberworld. All that she consented to was for
Orbeta to "follow up" that pending offer. It does not even appear that it was Orbeta who undertook the promised follow-up. He reported nothing of his efforts or their
fruits to Escandor. It was Escandor who determinedly pushed the Rubberworld deal. Orbeta was simply nowhere to be found. Furthermore, the "representation
allowance" of P250 was meant to cover the expenses for the "follow-up" offered by Orbeta - an ambiguous fact which does not of itself suggest the creation of an
agency and is not at all inconsistent with the theory of its absence in this case.
Granting that a contract of agency had indeed been constituted, nothing in the record tends to prove that he succeeded in carrying out its terms or even as much as
attempted to do so. The terms of Escandor's letter, assuming that it was indeed an "authority to sell," as Orbeta insists are to the effect that entitlement to the
P15,000 commission is contingent on the purchase by a customer of a fire truck, the implicit condition being that the agent would earn the commission if he was
instrumental in bringing the sale about. Orbeta certainly had nothing to do with the sale of the fire truck, and is not therefore entitled to any commission at all.
Even if Orbeta is considered to have been Escandor's agent for the time he was supposed to "follow up" the offer to sell, such agency would have been deemed
revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having in the meantime abandoned all efforts to secure the deal in
Escandor's behalf.
Given the sole issue raised by the parties concededly from the case's inception, the competence to resolve the controversy did not pertain to either the Labor Arbiter
or the NLRC. The jurisdiction vested in them by the Labor Code extends only to cases arising from employer-employee relationships. What has all along been at
issue here is the existence of a contract of agency not employment or lease of services.
How can you distinguish it from ER-EE relationship? The common denominator is services, in agency services are rendered for
purposes of representation. In ER-EE relationship, services are rendered for the enterprise of the employer. In the first case, the
rendition of services in agency is reparatory to further contracts because you do really represent your employer. But the services
rendered in ER-EE relationship are an end in themselves. You render the service to the enterprise to the owner who is your employer.
Services in agency is rendered in representation, services in ER-EE relationship is rendered accdg. to the purpose of the enterprise of
the employer. That is that main difference between agency and ER-EE relationship.
Carungcong case remember carungcong, he filed an agreement with sun life. You are in charge of a particular territory, you will be
given a lump sum, you hire, you train people to sell insurance. And then you have overriding commission. The insurance salesperson is
the person to have a first commission, the supervisor has an overriding commission of the commission. Here it is the agent. He spends
for the training, he spends for his expenses that have been paid. The insurance most of those agents are not insurance --, because you
must still pass an exam.
In Carungcong, the SC says this is an agent. There is no ER-EE relationship so NLRC is mistaken in assuming jurisdiction of the case
because what happened to Carungcong? The salesmen operating under her, complained to the office in manila because they are
supposed to be given a Christmas party and they are asking for a lechon, e wala sila gihatan ug lechon nasuko sila. The agents
contract was cancelled that is why he sued sun life for millions for unpaid insurance, unpaid commission. That is why the SC there is no
ER-EE relationship, if he were an employee he would not make millions. This is an agency.
Carungcong vs. NLRC
FACTS: Susan Carungcong began her career in the insurance industry as an agent of Sun Life Assurance Company of Canada. She signed an "Agent's Agreement"
with Sun Life in virtue of which she was designated the latter's "agent to solicit applications for its insurance and annuity policies." The contract set out in detail the
terms and conditions particularly those concerning the commissions payable to her under which her relationship with the company would be governed.
This contract was superseded some five years later when she signed 2 new agreements. The first, denominated "Career Agent's (or Unit Manager's) Agreement,"
dealt with agent's commissions, obligations, limitations on authority, and termination of the agreement by death, or by written notice "with or without cause." It
declared that the "Agent shall be an independent contractor and none of the terms of the Agreement shall be construed as creating an employer-employee
relationship."
The second was titled, "MANAGER'S Supplementary Agreement." Said second contract explicitly described as a "further agreement, contained provisions
regarding remuneration, limitation of authority, and termination of the agreement by written notice "without cause."
Subsequently, Carungcong and Sun Life executed another Agreement by which the former was named New Business Manager. Like the "Career Agent's (or Unit
Manager's) Agreement" first signed by Carungcong, this latest Agreement stressed that the "New Business Manager shall be considered an independent contractor
and not an employee of Sun Life," and that "under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life."
Ms. Eleizer Sibayan, Manager of Sun Life's Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong and other New
Business Managers. Ms. Sibayan drew up a report after having examined and analyzed the pertinent records, and interviewed the unit managers and agents
mentioned in the receipts presented by Carungcong to support her claims for reimbursement of expenses for 1987, 1988 and 1989. Carungcong was confronted with
and asked to explain the discrepancies set out in Sibayan's report. On January 11, 1990, she was given a letter which advised of the termination of her relationship
with Sun Life.

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Carungcong promptly instituted proceedings in the Arbitration Branch of the NLRC. The Labor Arbiter found that there existed an employer-employee relationship
between her and Sun Life. On appeal, the NLRC reversed the Arbiter's judgment. It affirmed that no employment relationship existed between Carungcong and Sun
Life.
ISSUE:

W/N complainant Carungcong is a regular employee of Sun Life? NO

RULING: The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly provided that said agreements were terminable by either party by
written notice with or without cause. A subsequent agreement by which she was named New Business Manager similarly provided for termination of relation by notice
in writing with or without cause. This last agreement emphasized, like the "Career Agent's (or Unit Manager's) Agreement" first signed by her, that in the performance
of her duties defined herein, Carungcong would be considered an independent contractor and not an employee of Sun Life," and that under no circumstance shall
the New Business Manager and/or his employees be considered employees of Sun Life."
It is true that Carungcong's duties and functions derived from existing agreements/contracts were made subject to rules and regulations issued by respondent
company, and for that matter, have likewise been made subject of certain limitations imposed by said respondent company. Nonetheless, these are not sufficient to
accord the effect of establishing employer-employee relationship in this case. This is so because the insurance business is not just any other ordinary business. It is
one that is imbued with public interest hence, it must be governed buy the rules and regulations of the state.
The SC in the case of Insular Life Assurance Co. Ltd. v. NLRC and Basiao held that:
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 to 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-employee relationship 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 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. 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.
Complainant having admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so where in spite of the controls
imposed by respondents, she suffered no interference whatsoever in relation to the manner and methodology she used for her to achieve her desired results.
Complainant admitted that her remunerations were based on her levels of production. She admitted she could solicit insurance anywhere or at any time she deemed
convenient. She never accounted for her working time or that daily working hours were never applicable to her situation. She gave unequivocal testimony that she
performed her duties as a New Business Manager at her own time and convenience.
Complainant alleged that respondent company issued rules and regulations to which she should conform. However, no showing has been made that such rules and
regulations effectively and actually controlled or restricted her choice of methods in performing her duties as New Business Manager.
Insular life case when you arrive at insular life, its almost the same case. its just that when he is terminated he sues for unpaid wage
and commission. SC says that you are paid because you are not an agent, you are an employee. The only difference in these to cases
is that the SC admittedly has introduced a variable and that is the amount of the claim somehow is an index of ER-EE relationship. If
the amount is stupendous, it cannot be ER-EE relationship. The SC has introduced a variable here, that when it comes to a certain
amount, it is no longer ER-EE relationship.
Insular life vs. NLRC
FACTS:
Petitioner entered into an agency contract with respondent Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life
insurance and annuities for which he would be paid compensation in the form of commissions. The contract contained the stipulation that no employer-employee
relationship shall be created between the parties and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance.
De los Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for
termination of the contract.
Petitioner and private respondent entered into another contract where the latter was appointed as Acting Unit Manager under its office - the Cebu DSO V (157). 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. If the appointment was terminated for any reason other than for cause, the acting unit manager would be reverted to agent status and
assigned to any unit.
Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner on 18 November 1993 that his services were terminated
effective 18 December 1993. On 7 March 1994 he filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not paid
his salaries and separation pay.
Petitioner filed a motion to dismiss the complaint of De los Reyes for lack of jurisdiction, citing the absence of employer-employee relationship. It reasoned out that
based on the criteria for determining the existence of such relationship or the so-called "four-fold test," i.e., (a) selection and engagement of employee, (b) payment
of wages, (c) power of dismissal, and, (d) power of control, De los Reyes was not an employee but an independent contractor.
The motion of petitioner was granted by the Labor Arbiter and the case was dismissed on the ground that the element of control was not sufficiently established since
the rules and guidelines set by petitioner in its agency agreement with respondent De los Reyes were formulated only to achieve the desired result without dictating
the means or methods of attaining it.
Respondent NLRC determined that respondent De los Reyes was under the effective control of petitioner in the critical and most important aspects of his work as
Unit Manager. This conclusion was derived from the provisions in the contract which appointed private respondent as Acting Unit Manager, to wit: (a) De los Reyes
was to serve exclusively the company, therefore, he was not an independent contractor; (b) he was required to meet certain manpower and production quota; and,
(c) petitioner controlled the assignment to and removal of soliciting agents from his unit.
ISSUE:

W/N an er-ee relationship exists between Insular Life and de los Reyes? YES

RULING:
It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and
providing therein that the "employee" is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person
is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the "four-fold test" on
employment earlier mentioned has to be applied.
Petitioner contends that De los Reyes was never required to go through the pre-employment procedures and that the probationary employment status was reserved
only to employees of petitioner. It insists that the first requirement of selection and engagement of the employee was not met.

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The provisions of the contract show that 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. 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 such as those enumerated in the management contract.
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.
The payment of compensation by way of commission does not militate against the conclusion that private respondent was an employee of petitioner. Under Art. 97 of
the Labor Code, "wage" shall mean "however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, price or
commission basis .
As to the matter involving the power of dismissal and control by the employer, the latter of which is the most important of the test, petitioner asserts that its
termination of De los Reyes was but an exercise of its inherent right as principal under the contracts and that the rules and guidelines it set forth in the contract
cannot be deemed as an exercise of control over the private respondent as these were merely directives that fixed the desired result without dictating the means or
method to be employed in attaining it.
The following factual findings of the NLRC however contradict such claims. A perusal of the appointment of complainant as Acting Unit Manager reveals that:
1. Complainant was to "exclusively" serve respondent company.
2. Complainant was required to meet certain manpower and production quotas.
3. Respondent (herein petitioner) controlled the assignment and removal of soliciting agents to and from complainant's unit
The ruling in Insular Life Assurance Co., Ltd. v. NLRC and Basiao is not applicable in the present case. Unlike Basiao, herein respondent De los Reyes was
appointed Acting Unit Manager, not agency manager. There is no evidence that to implement his obligations under the management contract, De los Reyes had
organized an office. Petitioner in fact has admitted that it provided De los Reyes a place and a table at its office where he reported for and worked whenever he was
not out in the field. Under the managership contract, De los Reyes was obliged to work exclusively for petitioner in life insurance solicitation and was imposed
premium production quotas. De los Reyes could only be promoted to permanent unit manager if he met certain requirements and his promotion was recommended
by the petitioner's District Manager and Regional Manager and approved by its Division Manager. As Acting Unit Manager, De los Reyes performed functions beyond
mere solicitation of insurance business for petitioner. As found by the NLRC, he exercised administrative functions which were necessary and beneficial to the
business of INSULAR LIFE.
In Great Pacific Life Insurance Company v. NLRC which is closer in application than Basiao to this present controversy, we found that "the relationships of the Ruiz
brothers and Grepalife were those of employer-employee. First, their work at the time of their dismissal as zone supervisor and district manager was necessary and
desirable to the usual business of the insurance company. They were entrusted with supervisory, sales and other functions to guard Grepalife's business interests
and to bring in more clients to the company, and even with administrative functions to ensure that all collections, reports and data are faithfully brought to the
company. A cursory reading of their respective functions as enumerated in their contracts reveals that the company practically dictates the manner by which their jobs
are to be carried out.
IV. AGRICULTURAL TENANCY
Kanang imong sakop ug kanang imong empleyado sa farm, unsa man ang kalain nila?remember 5727, tenancy is supposed to be
abolished. Theres no more tenancy. Shared tenancy has been abolished. In the tenancy, you have to be full tenant, di kanang share
tenancy, magbahin mo sa tahop. Thats supposed to be gone under the comprehensive agrarian reform law. Wala na unta but you and I
know that hantod karon naa gihapon tenancy. The law may say that it may no longer in existence but the reality is it still is.
Landmark case of De los Reyes
Here is coconut land, the owner hires an encargado, go there, take care of my land, just give me what rightfully belongs to me after
deducting all of the expenses. Now the caretaker goes there and he too, likes to be the landlord, he also asks people na kamo sa puyo
diha, bantayi ninyo na walay lain magpuyo dinha, kamoy harvest, bahin ta. One of the most lazy kind of job, maghulat ka lang ug 3 ka
bulan na mahulog ang lubi. Pagsayo mahulog, la ka nay paaboton.
So when the landlord goes there and discovers that the foreman is not there, who are these people living here? He fires the encargado
and now he has to settle the occupancy. And that is the policy, the occupant run for protection to the DAR and claims unpaid shares. So
what is the claim now of the landlord, he claims ER-EE relationship. He is the one claiming that there is ER-EE relationship so he does
not have to pay his shares. Nabali ni. He is now claiming that they are not my tenants, they are employees. Why are they your
employees? Because I asked them to be my watchers. That is the task accdg to the landlord. Did the SC buy that? If you are an
employee, and you are tasked to watch you are given a period, unsa man ka 7-3, 3-11, 11-7? Kana imong watch wala may kinutuban.
Delos Reyes vs. Espineli
FACTS:Petitioner Geronimo de los Reyes is the owner of a 200-hectare coconut plantation located in Calauan, Laguna. In 1958 his overseer ("katiwala") therein was
Gonzalo Belarmino, who took into the land the 17 respondents under an agreement that the latter were to receive 1/7 portion of every coconut harvest. Sometime in
October, 1962, the petitioner dismissed Belarmino, upon the suspicion that the latter had been deceiving him, in connivance with respondents.
Ruperto Alcantara, et al., and Gregorio Espineli (respondents here) filed separate petitions (subsequently amended) against De los Reyes in the Court of Agrarian
Relations, seeking the delivery to them of the difference between the 1/7 share which the petitioner had been giving them and the 30% share to which they, as share
tenants, were allegedly entitled. Upon the finding that the respondents were mere agricultural workers of the petitioner, the CAR ordered the latter to retain them as
such and to pay them the sum of P4, 559.07. Upon respondents' appeal, the Court of Appeals modified the decision of the CAR, by declaring the respondents
tenants of the petitioner and ordering the latter to pay them "the difference between the one-seventh (1/7) share of the crops and the thirty (30%) per cent provided
for in the Tenancy Law.
ISSUE:

Whether the relationship is that of agricultural share tenancy or that of farm employer and agricultural laborer?

RULING:
"Agricultural tenancy" is the physical possession by a person of land devoted to agriculture belonging to, or legally possessed by, another for the purpose
of production through the labor of the former and of the members of his immediate farm household, in consideration of which the former agrees to share the harvest
with the latter, or to pay a price certain or ascertainable, either in produce or in money, or in both. " Share tenancy" exists whenever two persons agree on a joint
undertaking for agricultural production wherein one party furnishes the land and the other his labor, with either or both contributing any one or several of the items of
production, the tenant cultivating the land personally with the aid of labor available from members of his immediate farm household, and the produce thereof to be
divided between the landholder and the tenant in proportion to their respective contributions. And a "share tenant" is a person who, himself and with the aid available

14

from within his immediate farm household, cultivates the land belonging to or possessed by another, with the latter's consent, for purposes of production, sharing the
produce with the landholder.
The characteristics of a share tenancy contract are: (1) the parties are a landholder, who is a natural or juridical person and is the owner, lessee, usufructuary or legal
possessor of agricultural land, and a tenant who, himself and with the aid available from within his immediate farm household, cultivates the land which is the subjectmatter of the tenancy; (2) the subject-matter is agricultural land; (3) the purpose of the contract is agricultural production; and (4) the cause or consideration is that
the landholder and the share tenant would divide the agricultural produce between themselves in proportion to their respective contributions.
. A "farm worker" is "any agricultural wage, salary or piece worker but is not limited to a farm worker of a particular farm employer unless the Agricultural Land Reform
Code explicitly states otherwise, and any individual whose work has ceased as a consequence of, or in connection with, a current agrarian dispute or an unfair labor
practice and who has not obtained a substantially equivalent and regular employment." The term includes "farm laborer and/or farm employees." An "agricultural
worker" is not a whit different from a "farm worker."
In determining the existence of an employer-employee relationship, the elements that are generally considered are the following: (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's conduct. It is this last element that
constitutes the most important index of the existence of relationship.
We are here primarily interested in the basic differences between a farm employer-farm worker relationship and an agricultural sharehold tenancy relationship. Both
are leases, but there the similarity ends. In the former, the lease is one of labor, with the agricultural laborer as the lessor of his services, and the farm employer as
the lessee thereof. In the latter, it is the landowner who is the lessor, and the sharehold tenant is the lessee of agricultural land. As lessee he has possession of the
leased premises. But the relationship is more than a mere lease. It is a special kind of lease, the law referring to it as a "joint undertaking." For this reason, not only
the tenancy laws are applicable, but also, in a suppletory way, the law on leases, the customs of the place and the civil code provisions on partnership. The share
tenant works for that joint venture. The agricultural laborer works for the farm employer, and for his labor he receives a salary or wage, regardless of whether the
employer makes a profit. On the other hand, the share tenant participates in the agricultural produce. His share is necessarily dependent on the amount of the
harvest.
The record is devoid of evidentiary support for the notion that the respondents are farm laborers. They do not observe set hours of work. The petitioner has not laid
down regulations under which they are supposed to do their work. The argument tendered is that they are guards. However, it does not appear that they are under
obligation to report for duty to the petitioner or his agent. They do not work in shifts. Nor has the petitioner prescribed the manner by which the respondents were and
are to perform their duties as guards. We do not find here that degree of control and supervision evincive of an employer-employee relationship
ISSUE:

W/N there was an agricultural share tenancy contract? YES

The crucial factors are that the tenant must have physical possession of the land for the purpose of production and he must personally cultivate the land. If the tenant
does not cultivate the land personally he cannot be considered a tenant even if he is so designated in the written agreement of the parties. "Cultivation" is not limited
to the plowing and harrowing of the land. It includes the various phases of farm labor described and provided by law, the maintenance, and repair and weeding of
dikes, paddies and irrigation canals in the holding. Moreover, it covers attending to the care of the growing plants.
The Court of Appeals made some essential findings of fact. The respondents were called "kasama." They have plowing implements. Almost all of the respondents
have banana plantations on the land. They live in the landholding. They are charge with the obligation to clean their respective landholdings. The appellate court was
correct in concluding that "kasama" means "tenant," not worker or laborer, which is translated into our national language as "manggagawa."
The petitioner clearly expected the respondents to perform the duties of a tenant, especially, to maintain the land clean and clear "at all times," which not only would
facilitate harvesting but, more importantly, would necessarily result in greater production.
In this case, the SC goes into the long distinction of tenancy vis--vis an ER-EE relationship.
What is tenancy?
1.Tenancy is the joint production agreement. The subject matter is agricultural land. Landlord and tenants are partners upon the subject
matter of agricultural land for production purposes. ER-EE relationship, there is no joint production. There is only one producer and that
is the employer. The others are workers. That is the difference. Tenancy is joint, ER-EE relationship it is not joint.
2. Second, as to the possession of land, it is said that the relationship of tenancy with the landlord is tenurial, it is tied to the land. Once
you become a tenant, you have a right to the land. Dili na imuha, you have a right to possess the land. You have a right to put up a
small hut, and around that small lot is your own lot and whatever you grow in that small lot you do not have to share with your landlord.
You possess the land, you cannot be driven out.
You have taken up eminent domain, suppose the land is taken over by the govt for public use. You know that the landlord is paid for the
land. How about the tenant? The tenant is also paid. He is paid for disturbance fee part of his compensation, because he has a real
right. That means right tied to real property. So he has a right to be in possession, he cannot be driven. How about the employee in the
farm, the farm worker, he has no right to stay in the farm. So as to possession, the farm worker has no right, the tenant has a right to
possession.
3. As to the labor, in tenancy, it is not just the tenant that renders labor, it is his entire family. So the entire family helps. When you are a
farm worker in ER-EE relationship, you are not obligated to bring your wife and your children to your work. it is only you. That is the
difference. Is the landlord obligated to pay the wife and the children? No. that is part of the set up, part of the arrangement.
4. As to the compensation, what is the compensation of the tenant? It is the share of the harvest. It is contingent in the existence of the
harvest. How big should the share be? The share of the tenant is contingent on the size of the harvest. The tenant has a big share.
How about the farm worker in the ER-EE relationship, he is paid every 15 th and 30th of the month, regardless of whether they have a
harvest or not. It is not a conditional compensation, unlike that of the tenant wherein the tenants compensation is unconditional.
5. As to power of control, as farm worker, the farm owner has absolute control. He decides what to plant, when to plant, how much to
plant. How about in tenancy? Who decides when to plant? It is the tenant? How much to plant? It is the tenant. What is the control of
the landowner? The control of the landowner is by way of inspection (or exception?). He can veto something that the tenant does which
is clearly in contravention with the accepted farm practices of that locality. He controls it by way of exception, when he intervenes when
the tenant embarks on a practice that is not accepted in the locality.
Can an encargado fine the landlord by bringing in tenants? SC says yes.

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V. LEASE CONTRACTS
Citizens League case Davao case in 1969. This involves the auto-calesa. Now the drivers here decide to form a union and inform the
citizens league, that is their union. If a pedestrian understanding the relationship between them and the operator, it is Abas. Later on he
develops his own boundary, everyday you will pay the operator not less than this amount. The operator calls -- because he does not
want to know what he ---. Bahala ka kung matulog ka ba o magminatay kag drive basta ka tapusan sa adlaw ihatag nimo ang boundary.
Is that rental, is the relationship a lessor and lessee? Is the operator the lessor and the drives the lessee? The SC says that it is not
lease. It is in part ER-EE relationship. And if you read the case the SC does not even bother to explain because it is obvious. That is to
say that if you go to a company that is a rent a car company. You take the daily rate plus the mileage. Per kilometer plus the additional
rate. And then you return it to the rent a car company full tank because you got it full tank. Bahala ka how much gas you consume. That
is the condition of the rent a car. The daily rate plus the mileage. Now what is the theorem? The difference is you can go anywhere. But
the driver of the operator is not free to go out of the franchise route. He has to go back and forth that route. So therefore he is operating
on the franchise of the operator. He is an employee of the operator. And his boundary is just a sure way of calculating that the gross
proceeds and the expenses of fuel and other items will lead him is equivalent to the minimum wage of his hours of work. that is why it is
obvious. This is reiterated in the case of Jardin.
CITIZENS LEAGUE v ABBAS
FACTS:It appears that on March 11, 1963, respondents-spouses (Teofilo Geronimo and Emerita Mendez), owners and operators of auto-calesas in Davao City, filed
a complaint with the CFI of Davao to restrain the Union (Citizens' League of Freeworkers) and its members, who were drivers of the spouses in said business, from
interfering with its operation, from committing certain acts complained of in connection therewith, and to recover damages.
The complaint alleged that the defendants named therein used to lease the auto calesas of the spouses on a daily rental basis; that, unable to get the spouses to
recognize said defendants as employees instead of lessees and to bargain with it on that basis, the Union declared a strike and since then had paralyzed plaintiffs'
business operations through threats, intimidation and violence. The complaint also prayed for the issuance of a writ of preliminary injunction ex-parte restraining
defendants therein from committing said acts of violence and intimidation during the pendency of the case. The respondent judge granted the writ prayed for.
Meanwhile, on March 12, 1963, petitioners filed a complaint for unfair labor practice against the respondents-spouses with the Court of Industrial Relations on the
ground, among others, of the latter's refusal to bargain with them.
On March 18, 1963, petitioners filed a motion to declare the writ of preliminary injunction void on the ground that the same had expired by virtue of Section 9 (d) of
Republic Act 875. In his order of March 21, 1963, however, the respondent judge denied said motion on the ground that there was no employer-employee
relationship between respondents-spouses and the individual petitioners herein and that, consequently, the Rules of Court and not Republic Act No. 875 applied to
the matter of injunction.
ISSUE:

W/N an er-ee relationship exists? YES

RULING: In the case of Isabelo Doce vs. Workmen's Compensation Commission et al., upon a similar if not an altogether identical set of facts, SC held:
"This case falls squarely within our ruling in National Labor Union vs. Dinglasan, wherein this Court held that a driver of a jeep who operates the same under the
boundary system is considered an employee within the meaning of the law and as such the case comes under the jurisdiction of the Court of Industrial Relations. In
that case, Benedicto Dinglasan was the owner and operator of TPU jeepneys which were driven by petitioner under verbal contracts that they will pay P7.50 for 10
hours use under the so-called 'boundary system.' The drivers did not receive salaries or wages from the owner. Their day's earnings were the excess over the P7.50
they paid for the use of the jeepneys. In the event that they did not earn more, the owner did not have to pay them anything.
In holding that the er-ee relationship existed between the owner of the jeepneys and the drivers even if the latter worked under the boundary system, this Court said:
'The only features that would make the relationship of lessor and lessee between the respondents owner of the jeeps, and the drivers, members of the petitioner
union, are the fact that he does not pay them any fixed wage but their compensation is the excess of the total amount of fares earned or collected by them over and
above the amount of P7.50 which they agreed to pay to the respondent, and the fact that the gasoline burned by the jeeps is for the account of the drivers. These two
features are not, however, sufficient to withdraw the relationship, between them from that of employer-employee, because the estimated earnings for fares must be
over and above the amount they agreed to pay to the respondent for a ten-hour shift or ten-hour a day operation of the jeeps. Not having any interest in the business
because they did not invest anything in the acquisition of the jeeps and did not participate in the management thereof, their service as drivers of the jeeps being their
only contribution to the business, the relationship of lessor and lessee cannot be sustained.'"
JARDIN vs. NLRC
FACTS:Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners
used to drive private respondent's taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned
an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners' daily earnings the amount of P30.00 supposedly for the
washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on
succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners
filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees.
The labor arbiter dismissed said complaint for lack of merit. On appeal, the NLRC reversed and set aside the judgment of the labor arbiter. The labor tribunal
declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process.
Private respondent's first motion for reconsideration was denied. Private respondents filed another motion for reconsideration. This time, public respondent granted
aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee
relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code.
ISSUE:

W/N an er-ee relationship exists? YES

RULING: In a number of cases decided by the Court, it was ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the
other under the boundary system is that of employer-employee and not of lessor-lessee.
As explained in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise
he would be responsible for the damages to the lessor.

16

In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the
owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and
the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they
pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the above
stated doctrine to the relationships between bus owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently between taxi
owners/operators and taxi drivers. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are
usually necessary or desirable in the usual business or trade of their employer.
As consistently held by this Court, termination of employment must be effected in accordance with law. Hence, petitioners, being employees of private respondent,
can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no
valid cause to terminate the employment of petitioners. Neither was there two (2) written notices sent by private respondent informing each of the petitioners that they
had been dismissed from work. This lack of valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the
illegality surrounding petitioners' dismissal.
VI. INDUSTRIAL PARTNERSHIP
Industrial partnership can be found in the civil code art. 1769, par.4, subsub paragraph B.
Ruga case the SC summarizes the status of two lines of cases. These are fishermen cases. Mostly here the employers are involved
in deep sea fishing. They have a deep sea fishing boat and sail. He chooses his route. They are given ice, given fish nets, and sail out
at sea and when they come back the catch of fish or tuna is sold. The gross proceeds from where is is deducted the 10%, so you have
the net proceeds, the net proceeds is right away divided into two. goes to the owner of the vessels, the other half is divided among
the crew and the share of the patron is double. If you are 6 all in all, the half of the crew is divided into 7 because the patron has double
share.
Are those crew men industrial partners of the deep fishing operator or are they employees? The SC in Ruga says that they are two
lines of cases. One line says that they are employees, the other line says that they are not employees, they are partners. The question
is how do you know that this kind of crew are partners and this kind of crew are employers? The SC says power of control test. If the
operator decides when he goes. If the operator maintains contact with the boat, radio or satellite, if the operator feeds the boat with
satellite data, then there is ER-EE relationship. But if there is no control, as when it is the patron where, how far will it go, that is
industrial partnership. That is not ER-EE relationship. Remember that this is not just crew for purposes of fishing.
Ruga vs. NLRC
FACTS:
Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by private respondent De Guzman
Fishing Enterprises which is primarily engaged in the fishing business.
Upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police station for investigation on the
report that they sold some of their fish-catch at midsea to the prejudice of private respondent. During the investigation, no witnesses were presented to prove the
charge against petitioners, and no criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the
fishing vessel to resume their work on the same day.
Petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay, emergency cost of living allowance and service incentive pay,
with the Ministry of Labor and Employment. They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job.
Private respondent submitted its position paper denying the employer-employee relationship between private respondent and petitioners on the theory that private
respondent and petitioners were engaged in a joint venture.
The Labor Arbiter rendered a joint decision dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of employer-employee
relationship existed between private respondent and petitioners. On appeal, the National Labor Relations Commission promulgated its resolution affirming the
decision of the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners.
Petitioners stress that there is an employer-employee relationship between them and private respondent: that they were directly hired by private respondent through
its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman; that they had been employed by private respondent from 8 to 15 years
in various capacities; that private respondent, through its operations manager, supervised and controlled the conduct of their fishing operations as to the fixing of the
schedule of the fishing trips, the direction of the fishing vessel, the volume or number of tubes of the fish-catch, the time to return to the fishing port, which were
communicated to the patron/pilot by radio that they were not allowed to join other outfits even the other vessels owned by private respondent without the permission
of the operations manager; that they were compensated on percentage commission basis of the gross sales of the fish-catch which were delivered to them in cash by
private respondent's cashier, Mrs. Pilar de Guzman; and that they have to follow company policies, rules and regulations imposed on them by private respondent.
ISSUE:
Enterprises? YES

W/N the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing

RULING:
We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the
following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee with respect to the means and methods by which the work is to be accomplished. The employment relation arises from contract of hire, express or implied.
In the absence of hiring, no actual employer-employee relation could exist.
From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test where the person for whom the services are performed reserves
a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the
manner of doing the work, not the actual exercise of the right..
The conduct of the fishing operations was undisputably shown by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the control and
supervision of private respondent's operations manager. Matters dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were
shown to be the prerogative of private respondent. While performing the fishing operations, petitioners received instructions via a single-side band radio from private
respondent's operations manager who called the patron/pilot in the morning. They are told to report their activities, their position, and the number of tubes of fishcatch in one day. Clearly thus, the conduct of the fishing operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible
for disseminating the instructions to the crew members.

17

Records show that herein petitioners were directly hired by private respondent, through its general manager, Arsenio de Guzman, and its operations manager,
Conrado de Guzman and have been under the employ of private respondent for a period of 8-15 years in various capacities. While tenure or length of employment is
not considered as the test of employment, nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual business or trade of
private respondent for a period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor Code as they were indeed
engaged to perform activities usually necessary or desirable in the usual fishing business or occupation of private respondent.
Aside from performing activities usually necessary and desirable in the business of private respondent, it must be noted that petitioners received compensation on a
percentage commission based on the gross sale of the fish-catch, i.e. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude oil
consumed during the fishing trip, otherwise only 10% of the proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage" as
defined under Article 97(f) of the Labor Code.
Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at midsea without the knowledge and consent of
private respondent, petitioners were unjustifiably not allowed to board the fishing vessel on September 11, 1983 to resume their activities without giving them the
opportunity to air their side on the accusation against them unmistakably reveals the disciplinary power exercised by private respondent over them and the
corresponding sanction imposed in case of violation of any of its rules and regulations.
Even on the assumption that petitioners indeed sold the fish-catch at mid-sea, the act of private respondent virtually resulting in their dismissal evidently contradicts
private respondent's theory of "joint fishing venture" between the parties herein. A joint venture, including partnership, presupposes generally a parity of standing
between the joint co-venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed and where each party exercises
equal rights in the conduct of the business It would be inconsistent with the principle of parity of standing between the joint co-venturers as regards the conduct of
business, if private respondent would outrightly exclude petitioners from the conduct of the business without first resorting to other measures consistent with the
nature of a joint venture undertaking. Instead of arbitrary unilateral action, private respondent should have discussed with an open mind the advantages and
disadvantages of petitioners' action with its joint co-venturers if indeed there is a "joint fishing venture" between the parties. But this was not done in the instant case.
Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against them.
Besa case Aside from shoes, they have shoeshine boys. Some people go there just to have their shoes shined. These boys are approved by management.
Because sometimes they could not pay to the cashier, and sometimes the cashier just calls the boys and gives them their share, they say that they are employees. Is
that correct? Are they employees or are they partners? The index that they used to prove that there is ER-EE relationship is the selection and hiring. We were
selected, we were hired. There is power of control. Not anybody can shined it because we are already pre-directed as to how we should shine. Power of dismissal,
muhawa gain ka dinha then you are no longer admitted. Then there is payment of wage only it is specific.
Now question, is there ER-EE relationship? The SC says there is none. The testing for standard cannot be confused with selection and hiring. Precisely because it is
a partnership, you would like to know if your partner is worthy to be trusted. Second, there is no specific rule that you are paid in wage, the client has the option
whether to pay the cashier and the cashier will give to the shoeshine boy his share or the client will pay the shoeshine boy and the shoeshine boy will give the
management its share. In the first, normally the client pays the standard payment and cashier gives the share and normally the client gives the shoeshine boy a tip.
In the other way of payment, when you give to the shoeshine boy, you normally give more than the standard amount and the shoeshine boy gives his partner his
share. So there is no payment of wages. And finally the question of dismissal is not power to dismiss but the maintenance of standard.
VILLAVILLA v CA
FACTS:Arturo Villavilla, son of petitioners, was employed as "tripulante" (crew member) of the fishing boat "F/B Saint Theresa" when the boat sank off Isla Binatikan,
Taytay, Palawan. Arturo was not among the known survivors of that sinking and had been missing since then.
Petitioners Andres Villavilla and Ester Gadiente Villavilla, parents of Arturo, filed a petition with the Social Security Commission against Reynaldo Mercado and
Marcelino Cosuco, owners of the ill-fated fishing boat, for death compensation benefits of Arturo whom respondents failed to register as their employee.
Respondent Cosuco filed his answer denying all allegations in the petition and claiming that he already sold the fishing boat to respondent Mercado on December 10,
1975, and from then on he did not participate anymore in the operation and management of the boat or in the hiring of its crewmembers.
Respondent Social Security Commission issued an Order dismissing the petition for lack of cause of action. On appeal, respondent Court of Appeals affirmed the
questioned Order of respondent Commission there being no reversible error.
ISSUE:

W/N there was an er-ee relationship between petitioners' deceased son, Arturo Villavilla, and herein private respondents? NO

Petitioners argue that it was private respondent Reynaldo Mercado who recruited Arturo Villavilla sometime in 1974 to be a crew member of the fishing boat "F/B
Saint Theresa" with a daily wage of P20.00. The boat was then owned by private respondent Marcelino Cosuco and operated by Reynaldo Mercado. On December
10, 1975, Cosuco sold the fishing boat to Mercado.
Invoking Negre vs. Workmen's Compensation Commision, petitioners assert that "fishermen-crew members are individual employees and not industrial partners as in
the case at bar" so that the "mere presence of Arturo Villavilla in the fishing boat of Mercado makes him an employee of the employer, Mercado." Further citing RJL
Martinez Fishing Corporation vs. NLRC, petitioners posit that "the main factor that determines whether a person is an employee of the employer is the kind of work
being performed by that person. If the work of the laborer is part of the regular business or occupation of the employer, the said laborer is a regular employee of the
employer." Petitioners thus contend that since Arturo was recruited by Mercado himself sometime in 1974 as one of his fishermen-crew members and that the crew
members were uniformly paid by Mercado, there can be no other conclusion but that Arturo was an employee of Mercado at the time his fishing boat sank.
RULING:It is clear that the arrangement between the boat owner and the crew members partook of the nature of a joint venture: the crew members did not receive
fixed compensation as they only shared in their catch; they ventured to the sea irrespective of the instructions of the boat owners, i.e., upon their own best judgment
as to when, how long, and where to go fishing; the boat owners did not hire them but simply joined the fishing expedition upon invitation of the ship master, even
without the knowledge of the boat owner. In short, there was neither right of control nor actual exercise of such right on the part of the boat owner over his crew
members.
Respondent Court of Appeals is correct in upholding the application by respondent Social Security Commission of the ruling in Pajarillo v. Social Security System
where We held:
" an employee is defined as a 'person who performs services for an employer in which either or both mental and physical efforts are used and who
receives compensation for such services, where there is an employer-employee relationship'.
In the present case, neither the pilots nor the crew-members receive compensation from boat-owners. They only share in their own catch produced by their own
efforts. There is no showing that outside of their one third share, the boat-owners have anything to do with the distribution of the rest of the catch among the pilots
and the crew-members. The latter perform no service for the boat-owners, but mainly for their own benefit.
The boat-owners are not responsible for the wage, salary, or fee of the pilot and crew-members. Their sole participation in the venture is the furnishing or delivery of
the equipment used for fishing, after which, they merely wait for the boat's return and receive their share in the catch, if there is any. The undertaking is in the nature

18

of a joint venture, with the boat-owner supplying the boat and its equipments, and the pilot and crew-members contributing the necessary labor, and the parties
getting specific shares for their respective contributions.
Certainly, petitioners' reliance on Negre v. Workmen's Compensation Commission and RJL Fishing Corp v. NLRC is misplaced. The case of Jose Negre vs.
Workmen's Compensation will show that it made referral to the case of Abong vs. Workmen's Compensation Commission, wherein this Court stated:
'As pointed by the Commission's finding, the fundamental bases showing that petitioner Dr. Agustino R. Abong is the employer, are present, namely, the
selection and engagement of the employee; the payment of wages; the power of dismissal and the employer's power to control the employees conduct. These
powers were lodged in petitioner Abong, thru his agent, Simplicio Panganiban, whom he alleges to be his partner.
The aforementioned fundamental bases for the existence of employer-employee relationship are not present in the case at bar. As mentioned earlier, private
respondent Reynaldo Mercado had no connection with the selection and engagement of Arturo Villavilla; exercised no power of dismissal over Arturo Villavilla;
neither had he any power of control or had reserved the right to control Arturo Villavilla as to the result of the work to be done as well as the means and methods by
which the same is to be accomplished, and there was no such uniform salary involved
It is clear that there was no employer-employee relationship between petitioner's son Arturo and private respondent Mercado, much less private respondent Cosuco.
As such, Arturo could not be made subject of compulsory coverage under the Social Security Act; hence, private respondents cannot be said to have violated said
law which they did not register him with the Social Security System. Respondents as well as intervenor are not answerable to petitioners for any death benefits under
the law.
BESA v TRAJANO
FACTS:
Private respondent Kaisahan ng Manggagawang Pilipino (KAMPIL) a legitimate labor union duly registered with the Ministry of Labor and Employment
(MOLE), filed a Petition for Certification Election, in the National Labor Relations Division of the National Capital Region. Petitioner opposed it alleging that there is no
employer-employee relationship between Besa's and the petitioners-signatories to the petition.
The Med-Arbiter issued an order declaring that there was an employer-employee relationship between the parties and directed that an election be conducted.
Petitioner appealed the order to the Director of BLR. Appeal was dismissed by the Director of BLR, upholding the finding of the Med-Arbiter that supervisors were
appointed to oversee the bootblacks' performance.
ISSUE:

W/N an er-ee relationship exists between petitioner and the 17 shoeshiners-members of the respondent union? NO

RULING:
The records of the case reveal that an employer-employee relationship does not exist between the 17 shoeshiners and petitioner.
The shoe shiner is distinct from a piece worker because while the latter is paid for work accomplished, he does not, however, contribute anything to the capital of the
employer other than his service. It is the employer of the piece worker who pays his wages, while the shoe shiner in this instance is paid directly by his customer. The
piece worker is paid for work accomplished without regard or concern to the profit as derived by his employer, but in the case of the shoe shiners, the proceeds
derived from the trade are always divided share and share alike with respondent Besa. The shoe shiner can take his share of the proceeds everyday if he wanted to
or weekly as is the practice of Besa's. The employer of the piece worker supervises and controls his work, but in the case of the shoe shiner, respondent Besa does
not exercise any degree of control or supervision over their person and their work. All these are not obtaining in the case of a piece worker as he is in fact an
employee in contemplation of law, distinct from the shoe shiner in this instance who, in relation to respondent Mamerto B. Besa is a partner in the trade.
Entitlement of the minimum requirements of the law particularly on wages and allowances presupposes the existence of employer-employee relationship which is
determined by the concurrence of the following conditions:
1. right to hire
2. payment of wages
3. right to fire; and
4. control and supervision
The most important condition to be considered is the exercise of control and supervision over the employees. These shoe shiners are not employees of the company,
but are partners instead. This is due to the fact that the owner/manager does not exercise control and supervision over the shoe shiners. That the shiners have their
own customers from whom they charge the fee and divide the proceeds equally with the owner, which make the owner categorized them as on purely commission
basis.
Case of Manila Golf the caddy of manila golf also thought that they were employees. But the SC said that you are not employees. You
are partners.
These caddies say that manila golf exercises control over them. They are tested whether they know how to caddy. And then accdg to
the caddy, we are regulated as to the attire. We have to come in collared shirt. We come in shoes and we cannot come in shoes without
socks. And our behavior is controlled. So accdg to the caddies that is evidence that we controlled not only to the goal that we have to
achieve but also as to the means. Is that correct? The SC says that these are not indexes of control. Why? Because if it were indexes
of control then the members of the manila golf are also employees of the manila golf because they are also subject to the same
regulations. They also cannot come in collarless shirts.
So accdg to the SC, if all these rules indicate ER-EE relationship then the members are also employees because they are subject to
the same rules. But the truth of the matter is you even though you are assigned that day to be present in order that you be ready to
caddy, if somebody comes around who is your favorite customer and asks you to come with him in another golf course and you
accompany him, the management cannot do anything, they will have to pick another caddies who are on standby to pick up your place.
Because in golf you have a favorite caddy.
Those are the cases with respect to industrial partnership.
There is this question, is ER-EE relationship a question of fact or is it a question of law? Why is that a question? Because the SC in
SSS vs. CA, says that ER-EE relationship is a question of fact. But then in 1989, in ---, SC says that ER-EE relationship is a question of
law. So what is it? Is it a question of fact or question of law?

VII.ER-EE Relationship imposed by law

Indirect Employer

19

There used to be three ee-er rel imposed by law. Art.107 is contracting and subcontracting and there are 2 sub kinds there
namely: those contracted bona fide, in which case the contractor has (1) sufficient capital for investment by way of
machinery, equipment and the (2) control
for activities which are not directly related to the business of the
indirect employer. Should the contractor fail to pay the wages and benefits then the indirect employer becomes viable
for the extent of nonpayment or underpayment of the employees. That is the extent of liability. That is limited ee-er
relationship.
However, if the contractor does not have sufficient capital and or investment by way of equipment, office, machinery
and he is made to perform activities which are directly related to the principal business of the indirect employer then the
law dictates that the contractor is disregarded and there is only one employer viz the indirect employer and he is the
employer not only to the extent of the underpayment but for all labor and social legislation purposes. So even for SSS and
Pag-ibig, the indirect employer becomes liable.
Now the landmark case of course is Philippine Bank of Communications v NLRC. That messenger is not a
messenger! He is working with the premises of the bank where no outsider can go in. what was in the mind to think that
he is not an employee when he is under the direction of the officers of the bank. Naa ba gud tugotan mag laroy2x diha sa
sulod sa bank., privy to confidential papers, even to the vault of the bank. So he is engaged to perform activities in the
bank which are usual and necessary to the business of the bank. He is not made to do contractual work which has
nothing to do with the business of the bank so therefore he is controlled of the bank thus he is an employee of the bank
not of the agency. That is the doctrine in Phil bank of communications v NLRC.
However, in Kimberly Clark (independent labor union v Drilon), the SC said that the court takes judicial notice that
there is common mark list in the private and public sector of sub contracting
1. Security services
2. Maintenance
3. Janitorial
(NB: Judicial notice means that you do not have to present proof, the court accepts it as it is as a fact. Example: There are
24 hours in a day)
SC said this practice of contracting of security, maintenance, and janitorial services are taken judicial notice of by
the SC. why does the SC say that? Because if you go to the website of the SC, one of the pages there has
subcontracting. The SC asks for bid to hire contractors to do the janitorial and security services of the different court s all
over the country so even the SC is engaged in sub contracting. Thats why the SC says this court takes judicial notice.
So there is limited ee-er rel in case of failure ,non-payment of the contractor and wages of the employee and
there is unlimited ee-er relationship between the indirect employer and the contractor if the contractor does not have
sufficient capital etc and is engaged to perform activities which are directly related to the business of the employer.
Now, subsequently in 1993 Neri V NLRC. The SC reinstated the ruling in Kimberly Clark but there are other
categories. This court takes judicial notice a widespread practice in both private and public sector in subcontracting and
not only janitorial, security, maintenance but also technical service. What is the service in Neri that was an issue? There
was a telephone operator which the SC held may be contracted out by the banana operation farm in Panabo. The case
of Neri v NLRC.
KIMBERLY CLARK v DRILON
FACTS:Kimberly-Clark Philippines, Inc. (KIMBERLY) executed a three-year collective bargaining agreement (CBA) with United Kimberly-Clark Employees UnionPhilippine Transport and General Workers' Organization (UKCEUPTGWO) which expired on June 30, 1986.
Some members of the bargaining unit formed another union called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor
Association in Line Industries and Agriculture (KILUSAN-OLALIA)."
On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election w/ the Ministry of Labor and Employment (MOLE). KIMBERLY and UKCEU-PTGWO did
not object to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed
through an independent contractor, Rank Manpower Company (RANK), as among the qualified voters.
Med-Arbiter Bonifacio I. Marasigan issued an order declaring the regular rank-and-file laborers/employees, casuals who have worked at least six (6) months and
Contractual employees who are allegedly in the employ of an independent contractor as eligible to vote in the certification election.
During the pre-election conference, 64 casual workers were challenged by KIMBERLY and UKCEU-PTGWO on the ground that they are not employees of
KIMBERLY but of RANK. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated and subject to
challenge proceedings.
KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count Challenged Votes" on the ground that the 64 workers are employees of
KIMBERLY within the meaning of Article 212(e) of the Labor Code. KIMBERLY filed an opposition to the protest and motion, asserting that there is no employeremployee relationship between the casual workers and the company.
Then Minister Sanchez rendered a decision:
1. The service contract for janitorial and yard maintenance services between KIMBERLY and RANK was declared legal;
2. The other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is
prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision (November
13, 1986, and, therefore, they were not entitled to vote in the certification election);
3. UKCEU-PTGWO, having garnered more votes than KILUSAN-OLALIA, was certified as the exclusive bargaining representative of KlMBERLY's employees;
Former Labor Minister Franklin Drilon denied both motions for reconsideration filed by KIMBERLY and KILUSAN-OLALIA. The new CBA executed between
KIMBERLY and UKCEU-PTGWO was signed.

20

ISSUE:

W/N said workers, not performing janitorial or yard maintenance service, became regular employees of KIMBERLY? YES

RULING:The Labor Code defines who are regular employees, as follows:

"ART. 280. Regular and Casual Employment. The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements 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 preceding 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."
The law thus provides for two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in
which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the
mechanics, electricians, machinists, machine shop helpers, warehouse helpers, painters, carpenters, pipe fitters and masons.
It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the petition for certification election by
KILUSAN-OLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were
employed by KIMBERLY through RANK.
As a consequence of their status as regular employees, those workers not perforce janitorial and yard maintenance service were performance entitled to the payment
of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to regular employees under the CBA, from the day immediately
following their first year of service in the company. These regular employees are likewise entitled to vote in the certification election held in July 1, 1986.
Neri vs NLRC
Facts:Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by, respondent BCC, a corporation engaged in providing technical
maintenance, engineering, housekeeping, security and other specific services to its clientele. They were assigned to work in the Cagayan De Oro City Branch of
respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri as radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1
April 1989.
On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment
to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC
employees with similar length of service.
Respondent BCC was considered by the LA as an independent contractor because it proved it had substantial capital. Thus, petitioners were held to be regular
employees of BCC, not FEBTC.
Issue: W/N the petitioners are employees of FEBTC.
Held: It is well-settled that there is "labor-only" contracting where: (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.
BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may be no evidence that it has investment in the form of tools,
equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC.
The Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent
contractors to perform special services. These services range from janitorial, security and even technical or other specific services such as those performed by
petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary
in the conduct of the principal business of the employer.
Besides, petitioners do not deny that they were selected and hired by BCC before being assigned to work in the Cagayan de Oro Branch of FEBTC. BCC likewise
acknowledges that petitioners are its employees. The record is replete with evidence disclosing that BCC maintained supervision and control over petitioners through
its Housekeeping and Special Services Division: petitioners reported for work wearing the prescribed uniform of BCC; leaves of absence were filed directly with BCC;
and, salaries were drawn only from BCC.
The determination of employer-employee relationship involves factual findings.
VINOYA vs. NLRC
FACTS:
Petitioner Alexander Vinoya claims that he applied and was accepted by RFC as sales representative and on the same date, a company identification card
was issued to him by RFC. Petitioner alleges that he reported daily to the office of RFC in Pasig City. During his employ, he was assigned to various supermarkets
and grocery stores where he booked sales orders and collected payments for RFC. For this task, he was required by RFC to put up a monthly bond of P200.00 as
security deposit to guarantee the performance of his obligation as sales representative. Petitioner contends that he was under the direct control and supervision of
Mr. Dante So and Mr. Sadi Lim, plant manager and senior salesman of RFC, respectively.
He was transferred by RFC to Peninsula Manpower Company, Inc. ("PMCI"), an agency which provides RFC with additional contractual workers pursuant to the
Contract of Service for the supply of manpower services. After his transfer to PMCI, petitioner was allegedly reassigned to RFC as sales representative.
Subsequently, he was informed by Ms. Susan Chua, personnel manager of RFC that his services were terminated and he was asked to surrender his ID card.
Petitioner was told that his dismissal was due to the expiration of the Contract of Service between RFC and PMCI.
Consequently, petitioner filed a case against RFC before the Labor Arbiter for illegal dismissal and non-payment of 13th month pay.
Private respondent Regent Food Corporation, on the other hand, maintains that no er-ee relationship existed between petitioner and itself. It insists that petitioner is
actually an employee of PMCI, allegedly an independent contractor, which had a Contract of Service with RFC.

21

The Labor Arbiter rendered a decision in favor of petitioner. The Labor Arbiter concluded that RFC was the true employer of petitioner for the following reasons: (1)
Petitioner was originally with RFC and was merely transferred to PMCI to be deployed as an agency worker and then subsequently reassigned to RFC as sales
representative; (2) RFC had direct control and supervision over petitioner; (3) RFC actually paid for the wages of petitioner although coursed through PMCI; and, (4)
Petitioner was terminated per instruction of RFC.
RFC appealed the adverse decision of the Labor Arbiter to the NLRC. The NLRC reversed the findings of the Labor Arbiter. The NLRC opined that PMCI is an
independent contractor because it has substantial capital and, as such, is the true employer of petitioner. The NLRC, thus, held PMCI liable for the dismissal of
petitioner.
RFC alleges that PMCI is an independent contractor on the sole ground that the latter is a highly capitalized venture. RFC presents a copy of the Articles of
Incorporation and the Treasurer's Affidavit submitted by PMCI to the SEC showing that it has an authorized capital stock of P1, 000,000.00, of which P300, 000.00 is
subscribed and P75, 000.00 is paid-in. According to RFC, PMCI is a duly organized corporation engaged in the business of creating and hiring a pool of temporary
personnel and assigning them to its clients for such duration as said clients may require. RFC further contends that PMCI has a separate office, permit and license
and its own organization.
ISSUE:

W/N PMCI is a labor-only contractor? YES

W/N an er-ee relationship exists between Vinoya and RFC? YES

RULING:
Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor 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:
(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and
responsibility;
(b) The employees recruited, supplied or placed by such contractor or subcontractors are performing activities which are directly related to the main business of the
principal.
On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or
subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting
if the following conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under
its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance
of the work except as to the results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and
(c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.
The Court agreed with the conclusion of the Labor Arbiter that PMCI is engaged in labor-only contracting.
First, PMCI does not have substantial capitalization or investment in the form of tools, equipment, machineries, and work premises, among others, to qualify as an
independent contractor. While it has an authorized capital stock of P1, 000,000.00, only P75, 000.00 is actually paid-in, which cannot be considered as substantial
capitalization with the current economic atmosphere in the country.
Second, PMCI did not carry on an independent business nor did it undertake the performance of its contract according to its own manner and method, free from the
control and supervision of its principal, RFC. The evidence shows that the workers assigned by PMCI to RFC were under the control and supervision of the latter.
The Contract of Service itself provides that RFC can require the workers assigned by PMCI to render services even beyond the regular eight hour working day when
deemed necessary.
Third, PMCI was not engaged to perform a specific and special job or service, which is one of the strong indicators that an entity is an independent contractor. As
stated in the Contract of Service, the sole undertaking of PMCI was to provide RFC with a temporary workforce able to carry out whatever service may be required by
it. Apart from that, no other particular job, work or service was required from PMCI.
Lastly, in labor-only contracting, the employees recruited, supplied or placed by the contractor perform activities which are directly related to the main business of its
principal. In this case, the work of petitioner as sales representative is directly related to the business of RFC.
Even granting that PMCI is an independent contractor, a perusal of the Contract of Service entered into between RFC and PMCI reveals that petitioner is actually not
included in the enumeration of the workers to be assigned to RFC. The following are the workers enumerated in the contract:
1. Merchandiser
2. Promo Girl
3. Factory Worker
4. Driver
The above enumeration does not include the position of petitioner as sales representative. This only shows that petitioner was never intended to be a part of those to
be contracted out.
In determining the existence of employer-employee relationship the following elements of the "four-fold test" are generally considered, namely: (1) the selection and
engagement of the employee or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee. Of these four, the
"control test" is the most important.
The ID card is enough proof that petitioner was previously hired by RFC prior to his transfer as agency worker to PMCI. With respect to the payment of wages, even
though the wages were coursed through PMCI, the funds actually came from the pockets of RFC. Thus, RFC is still the one who paid the wages of petitioner albeit
indirectly.
As to the third element, the Contract of Service gave RFC the right to terminate the workers assigned to it by PMCI without the latter's approval. RFC requested
PMCI to terminate petitioner from his employment with the company. In response to the request of RFC, PMCI terminated petitioner from service. As to the fourth
element, RFC already admitted that it exercised control and supervision over petitioner.

22

Now, I would like to bring out to you a 2005 case of indirect employer. That is National Food Authority v
Magpala Security (March 8, 2005) 453 SCRA 70. This is a bona fide contracting out of security services. Theres a wage
order which specifically says that any increase is born out by the order account by the direct employer and not the agency.
So the agency asks for reimbursement from the indirect employer in line with what the wage order says. As to the
increases of the minimum wage to give the security guards. No questions about that? The security agency is further
asking for the differential in terms of overtime. Because if your rate goes up, your overtime also goes up! 13 th month pay
also goes up if the wage goes up and the premium pay for work done on days which work should not be done! What is
the ruling of the SC? The SC says the indirect employer is only liable for the increase not for the roll up costs! (the
consequent increase in overtime) now take note that the indirect employer here is the NFA and NFA is government
owned and controlled corporation with orig charter. So this is the only instance where a government entity acting an
employer subject to the labor code, if it becomes an employer by the force of law. What is that law? 107 of the labor code.
You are an indirect employer. The direct employer is the agency and if the contractor fails to pay wages you are to pay the
wages! It is the law itself that makes you an employer that is why it is called ee-er relationship imposed by law! So please
read this case because this case makes a government entity become a private employer liable under the LC and
secondly it limits the liability and it has the passion as to defy common sense. And the SC says if you dont agree with
the judgment your remedy is to elect people who will change the law because the SC merely interprets the law strictly,
liberally! Ok we will take that up further when we go to ee-er from 105 to 107.
NFA v MASADA SECURITY AGENCY
FACTS:
Respondent MASADA Security Agency, Inc., entered into a one year contract to provide security services to the various offices, warehouses and installations of
NFA within the scope of the NFA Region I. Upon the expiration of said contract, the parties extended the effectivity on a monthly basis under same terms and
condition.
Meanwhile, the Regional Tripartite Wages and Productivity Board issued several wage orders mandating increases in the daily wage rate. Respondent requested
NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well as the
corresponding raise in their overtime pay, holiday pay, 13th month pay, holiday, rest day pay, Social Security System (SSS) and Pag-ibig premiums. NFA, however,
granted the request only with respect to the increase in the daily wage and denied the same with respect to the other benefits and remunerations.
Respondent filed with the RTC of Quezon City, a case for recovery of sum of money against NFA. The complaint sought reimbursement of the amounts allegedly
paid by respondent to the security guards.
The trial court rendered a decision in favor of respondent holding that NFA is liable to pay the security guards wage related benefits pursuant to RA 6727, because
the basis of the computation of said benefits, like overtime pay, holiday pay, SSS and Pag-ibig premium, is the increased minimum wage.
NFA appealed to the Court of Appeals but the same was dismissed. The appellate court sustained the ruling of the trial court that NFA is under obligation to pay the
administrative costs and margin and the wage related benefits of the respondents security guards. The Court of Appeals likewise denied NFAs motion for
reconsideration.
ISSUE:
W/N the liability of principals in service contracts under Section 6 of RA 6727 (Wage Rationalization Act) and the wage orders issued by the
Regional Tripartite Wages and Productivity Board is limited only to the increment in the minimum wage? YES
RULING:
Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. Sec. 6 of RA 6727, however, expressly lodged said obligation
to the principals or indirect employers in construction projects and establishments providing security, janitorial and similar services. Section 6 of RA 6727, provides:
SEC. 6. In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed increases in the wage rates of the workers
shall be borne by the principals or clients of the construction/service contractors and the contract shall be deemed amended accordingly. In the event, however, that
the principal or client fails to pay the prescribed wage rates, the construction/service contractor shall be jointly and severally liable with his principal or client.
NFA claims that its additional liability under the aforecited provision is limited only to the payment of the increment in the statutory minimum wage rate, i.e., the rate
for a regular eight (8) hour work day.
The term wage as used in Sec. 6 of RA 6727 pertains to no other than the statutory minimum wage which is defined under the Rules Implementing RA 6727 as
the lowest wage rate fixed by law that an employer can pay his worker. The basis thereof under Section 7 of the same Rules is the normal working hours, which shall
not exceed eight hours a day. Hence, the prescribed increases or the additional liability to be borne by the principal under Sec. 6 of RA 6727 is the increment or
amount added to the remuneration of an employee for an 8-hour work.
Since the increase in wage referred to in Sec. 6 pertains to the statutory minimum wage as defined herein, principals in service contracts cannot be made to pay the
corresponding wage increase in the overtime pay, night shift differential, holiday and rest day pay, premium pay and other benefits granted to workers.
Moreover, the law secures the welfare of the workers by imposing a solidary liability on principals and the service contractors. Under the second sentence of Sec. 6
of RA 6727, in the event that the principal or client fails to pay the prescribed wage rates, the service contractor shall be held solidarily liable with the former. Articles
106, 107 and 109 of the Labor Code likewise provide the same rule.
Based on the foregoing interpretation of Sec. 6 of RA 6727, the parties may enter into stipulations increasing the liability of the principal. So long as the minimum
obligation of the principal, i.e., payment of the increased statutory minimum wage is complied with, the Wage Rationalization Act is not violated.
The parties acknowledged the application to their contract of the wage orders issued by the RTWPB pursuant to RA 6727. There being no assumption by NFA of a
greater liability than that mandated by Sec. 6 of the Act, its obligation is limited to the payment of the increased statutory minimum wage rates which had already
been satisfied by NFA.
*Other cases:

RABAGO v NLRC
FACTS:

23

In 1981, Ace Building Care and the Philippine Tuberculosis Society entered into a contract under which the former would provide the latter with janitorial
and allied services. The contract was renewed yearly until 1985, when the services were placed under public bidding and a new contract was awarded to another
company, which then took over from ABC.
The 41 janitors ABC had earlier detailed to PTS filed a complaint with the NLRC against both ABC and PTS for unpaid wage differentials under Wage Order Nos. 5
and 6, holiday premium pay, damages and attorney's fees, reimbursement of cash bond, incentive leave pay and bonus and separation pay.
ABC filed a cross-claim against PTS, contending that the latter was liable for the statutory increases, while PTS moved to dismiss on the ground that it belonged to
the public sector and was not covered by the Labor Code.
The Labor Arbiter held that the complainants were not entitled to legal holiday pay and to reimbursement of cash bond or separation pay except for five of them who
were allowed separation pay. The Labor Arbiter also held ABC and PTSI jointly and severally liable for payment of the wage differentials under Wage Orders Nos. 5
and 6.
Both ABC and PTSI appealed to the NLRC, which affirmed the decision with respect to the award of separation pay and service incentive leave with pay but held that
it was ABC alone that should pay the wage differentials under Wage Orders Nos. 5 and 6.
ISSUE:

W/N both ABC and PTS are solidarily liable for the payment of wage differentials? YES

RULING:
The Court held in Eagle Security Agency, Inc. vs. NLRC:
Petitioners' solidary liability for the amounts due the security guards finds support in Articles 106, 107 and 109 of the Labor Code which state that:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of
the contractor and of the latters' subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such employees to the extent that he is liable to employees directly employed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not
being an employer, contracts with an independent contractor for the performance of any work, task, job or project.
Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of this Code. For purposes of determining the extent of the civil liability under this Chapter, they shall be considered as
direct employers.
The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractor's employees
for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of
the workers' performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution.
The conclusion is that Ace Building Care and the Philippine Tuberculosis Society are solidarily liable to the complainants for their differential pay under Wage Orders
Nos. 5 and 6, PTS being considered in the circumstances of this case to be the indirect employer of workers in the private sector. ABC is liable for the payment of the
separation pay and incentive leave pay of the complainants mentioned in the challenged decisions.
Filipinas vs NLRC
Facts:
On 4 April 1991 FILSYN, a domestic corporation engaged in the manufacture of polyester fiber, contracted with DE LIMA for the performance of specific janitorial services at
the former's plant. Pursuant to the agreement Felipe Loterte, among others, was deployed at FILSYN to take care of the plants and maintain general cleanliness around the
premises.
On 24 February 1992 Loterte sued FILSYN and DE LIMA as alternative defendants for illegal dismissal, underpayment of wages, non-payment of legal holiday pay, service
incentive leave pay and 13th month pay alleging that he was first assigned to perform janitorial work at FILSYN in 1981; that when a movement to demand increased wages
and 13th month pay arose among the workers on December 1991 he was accused by a certain Dodie La Flores of having posted in the bulletin board at FILSYN an article
attributing to management a secret understanding to block the demand; and, for denying responsibility, his gate pass was unceremoniously cancelled on 6 February 1992 and
he was subsequently dismissed.
The NLRC debunked the claim of FILSYN and affirmed the Labor Arbiter in finding DE LIMA as a labor-only contractor.
Issue: W/N DE LIMA is a labor-only contractor thus creating a E-E relationship betwen FILSYN and LOTERO.
Held: NO!.
We agree that there is sufficient evidence to show that private respondent DE LIMA is an independent job contractor, not a mere labor-only contractor. Under the Labor Code,
two (2) elements must exist for a finding of labor-only contracting: (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 persons are performing activities directly related to the
principal business of such employer.
These two (2) elements do not exist in the instant case. As pointed out by petitioner, private respondent DE LIMA is a going concern duly registered with the Securities and
Exchange Commission with substantial capitalization of P1,600,000.00, P400,000.00 of which is actually subscribed. Hence, it cannot be considered as engaged in labor-only
contracting being a highly capitalized venture. Moreover, while the janitorial services performed by Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA
may be considered directly related to the principal business of FILSYN which is the manufacture of polyester fiber, nevertheless, they are not necessary in its operation.
Consequently, DE LIMA being an independent job contractor, no direct employer-employee relationship exists between petitioner FILSYN and private respondent Felipe
Loterte.
With respect to its liability, however, petitioner cannot totally exculpate itself from the fact that respondent DE LIMA is an independent job contractor. We agree with the Solicitor
General that notwithstanding the lack of a direct employer-employee relationship between FILSYN and Felipe Loterte, theformer is still jointly and severally liable with
respondent DE LIMA for Loterte's monetary claims under Art. 109 of the Labor Code 19 which explicitly provides -The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.

24

COCA COLA BOTTLERS VS. NLRC

Fx: COCA COLA entered into a contract of janitorial services with Bacolod Janitorial Services (BJS). Every year thereafter a service contract was entered into
between the parties under similar terms and conditions until about May 1994.
On 26 October 1989 COCA COLA hired private respondent Ramon Canonicato as a casual employee and assigned him to the bottling crew as a
substitute for absent employees. In April 1990 COCA COLA terminated Canonicato's casual employment. Later that year COCA COLA availed of Canonicato's
services, this time as a painter in contractual projects which lasted from fifteen (15) to thirty (30) days.On 1 April 1991 Canonicato was hired as a janitor by BJS which
assigned him to COCA COLA considering his familiarity with its premises. On 5 and 7 March 1992 Canonicato started painting the facilities of COCA COLA and
continued doing so several months thereafter or so for a few days every time until 6 to 25 June 1993.
Goaded by information that COCA COLA employed previous BJS employees who filed a complaint against the company for regularization pursuant to a
compromise agreement,Canonicato submitted a similar complaint against COCA COLA to the Labor Arbiter on 8 June 1993.
Labor Arbiter ruled that there were no er-ee relationship between Coca Cola and Canonicato as BJS was the latter's real employer. NLRC reversed LA's
ruling and held that the janitorial services of Canonicato were found to be necessary or desirable in the usual business or trade of COCA COLA. The NLRC
accepted Canonicato's proposition that his work with the BJS was the same as what he did while still a casual employee of COCA COLA. In so holding the NLRC
applied Art. 280 of the Labor Code and declared that Canonicato was a regular employee of COCA COLA and entitled to reinstatement and payment of P18,105.10
in back wages.
Issue: W/N there was er-ee relationship
Held: No. The NLRC was wrong to apply Art. 280 in this case.
We perceive at the outset the disposition of the NLRC that janitorial services are necessary and desirable to the trade or business of petitioner COCA COLA. But this
is inconsistent with our pronouncement in Kimberly Independent Labor Union v. Drilon where the Court took judicial notice of the practice adopted in several
government and private institutions and industries of hiring janitorial services on an "independent contractor basis." In this respect, although janitorial services may
be considered directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employer's
principal business.
This judicial notice, of course, rests on the assumption that the independent contractor is a legitimate job contractor so that there can be no doubt as to the existence
of an employer-employee relationship between contractor and the worker. In this situation, the only pertinent question that may arise will no longer deal with whether
there exists an employment bond but whether the employee may be considered regular or casual as to deserve the application of Art. 280 of the Labor Code.
It is an altogether different matter when the very existence of an employment relationship is in question. This was the issue generated by Canonicato's application for
regularization of his employment with COCA COLA and the subsequent denial by the latter of an employer-employee relationship with the applicant. It was error
therefore for the NLRC to apply Art. 280 of the Labor Code in determining the existence of an employment relationship of the parties herein. Article 280 is not the
yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and
casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply
where the existence of an employment relationship is in dispute.
In determining the existence of an employer-employee relationship it is necessary to determine whether the following factors are present: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power to dismiss; and, (d) the power to control the employee's conduct. Notably, these are all found
in the relationship between BJS and Canonicato and not between Canonicato and petitioner COCA COLA. BJS has the power to control the conduct of the janitors.
The supervisors of petitioner, being interested in the result of the work of the janitors, also gives suggestions as to the performance of the janitors, but this does not
mean that BJS has no control over them. The interest of petitioner is only with respect to the result of their work. On the other hand, BJS oversees the totality of
their performance.
BJS has the power to control the conduct of the janitors. The supervisors of petitioner, being interested in the result of the work of the janitors, also gives suggestions
as to the performance of the janitors, but this does not mean that BJS has no control over them. The interest of petitioner is only with repect to the result of their
work. On the other hand, BJS oversees the totality of their performance.
Vallum Security vs. NLRC (compare with Coca Cola case)
Fx: On 1 September 1986, petitioner Baguio Leisure Corporation (Hyatt Terraces Baguio) ("Hyatt Baguio") and petitioner Valium Security Services (Vallum") entered
into a contract for security services under the terms of which Vallum a greed to protect the properties and premises of Hyatt Baguio by providing fifty (50) security
guards, on a 24-hour basis, a day.
On I June 988, Heinrich L. Maulbecker, Hyatt Baguio's General Manager, wrote to Domingo A. Inocentes, President of Valium advising that effective 1 July 1988, the
contract of security services would be terminated.Valium informed Mr. Maulbecker, on 22 June 1988, that it was agreeable to the termination or the contract.
On 30 June 1988, private respondents, who were security guards provided by Valium to Hyatt Bag 'o, were informed by Valium's Personnel Officer that the contract
between the two (2) bad already expired. Private respondents were directed to report to Valium's head office at Sucat Road, in Muntinlupa, Metropolitan Manila, not
later than 15 July 1988 for re-assignment. They were also told that failure to report at Sucat would be taken to mean that they were no longer interested in being reassigned to some other client of Valium.
None of the private respondents reported at Sucat for reassignment, Instead, between July and September, 1988, private respondents filed several complaints
against petitioners in the National Labor Relations Commission's Office ("NLRC") in Baguio City for illegal dismissal and unfair labor practices; for violation of labor
standards relating to underpayment of wager, premium holiday and restday pay, uniform allowances and meal allowances. They prayed for reinstatement with full
backwages.
Labor Arbter dismimissed the petition ruling that Valllum was an independent contractor. NLRC reversed the LA's decision.
Issue: W/N the security guards are employees of Hyatt Baguio / W/N there was labor-only contracting
Held: Yes. Remember four elements:
With respect of the selection and engagement of the employees, the records here show that private respondents filled up Hyatt employment application forms and
submitted the executed forms directly to the Security Department of Hyatt Baguio. Petitionerrs argument that it would have been an inconvenience to let the
applicants submit their forms to Sucat, Makati is untenable due to the fact that the process of selection and engagement of private respondents had been carried out
in Hyatt Baguio and subject to the scrutiny of officers and employees of Hyatt Baguio

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With respect to the mode or manner of payment of wages, the pay slips bore the Hyatt Baguio's logo. These payslips show that it was Hyatt Baguio which paid their
wages directly and that Hyatt Baguio deducted therefrom the necessary amounts for SSS premiums, internal revenue withholding taxes, and medicare contributions.
Anent the power of dismissal: note that the contract provided that upon loss of confidence on the part of Hyatt Baguio vis-a-vis any security guard furnished by
Vallum, such security guard "may be changed immediately upon the request to [Vellum] by [Hyatt Baguio]." Notwithstanding the terms of the formal contract between
petitioners, the NLRC found that, in operative fact, it was Hyatt Baguio's Chief Security Officer who exercised the power of enforcing disciplinary measures over the
security guards.In the matter of termination of services of particular security guards, Hyatt Baguio had merely used Vallum as a channel to implement its decisions,
much as it had done in the process of selection and recruitment of the guards.
Test of control is satisfied by the ff:
a) the assignments of particular security guards was subject to the approval of Hyatt Baguio's Chief Security Officer;"
(b) promotions of the security guards from casual regular employees were approved or ratified by the Chief Security Office of Hyatt Baguio;
(c) Hyatt Baguio's Chief Security Officer decided who among the various security guards should be on duty or on call, as wel as who, in cases of disciplinary
matters, should be suspended or dismissed.
(d) the petitioners themselves admitted that Hyatt Baguio, through its Chief Security Officer, awarded citations to individual security guards for meritorious services.
Most importantly, orders received by private respondent security guards were set forth on paper bearing the letterheads of both Hyatt Baguio and Vallum. negating
petitioners contention that what existed between Vallum and Hyatt' Baguio was simply close coordination and dove-tailing of operations, rather than control and
supervision by one over the operations of the other, and that Hyatt Baguio's Chief Security Officer had acted as the conduit between Hyatt Baguio and Vallum in
respect of the implementation of the contract of security services.
Hence, there was labor only contracting.
Labor-only contracting.-(a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in
which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting " contractor shall be considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
There is job contracting permissible under the Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or principal in all matters connected with the performnance of the work except as to the
results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which
am necessary in the conduct of his business."
In the case at bar, we noted that Vellum did not have a branch office in Baguio City and that Hyatt Baguio provided Vallum with offices at Hyatt's own premises and
allowed Vallum to use its Security Department in the processing of applications. That was the reason too why Vallum had stipulated that Hyatt Baguio was to
distribute the salaries of the security guards directly to them and that Hyatt had used its own corporate forms and pay in the hereby guards were clearly performing
acuations directed related to the business operations of Hyatt Baguio, the undertaking to safeguard the person and belongings of hotel guest one of the obligations
of a hotel vis-a-vis guests and the general public.
Where labor-only contracting exists in a given case, the law itself impose or established an employer-employee relationship between the employer (the owner of the
projector establishment) (here, Hyatt Baguio) and the employees of the labor-only contractor (here, Vallum) to prevent any violation or circumvention of provisions of
the Labor Code.
RELIGIOUS OF THE VIRGIN MARY, petitioner vs. NLRC, Colegio de San Pascual Baylon
Facts:
On July 18, 1983, CDSPB, represented by the Bishop of Malolos, entered into an Agreement with petitioner Religious of the Virgin Mary, a religious congregation, whereby the
latter was designated to "run, administer and operate the [CDSPB] Girls' Department." The Agreement was for a term of 10 years, commencing in the school year 1983-1984.
Pursuant to the terms of the above agreement, petitioner hired teachers and administrative personnel for the Girls' Department under pro forma appointment papers.
This appointment shall be deemed in full force and subsisting unless expressly terminated by either party for a valid cause or causes and after due process, and approved by
the Regional Director.
On April 10, 1987, the Bishop of Malolos pre-terminated the Agreement. As a result, petitioner moved out of the school premises, and CDSPB, through the Bishop of Malolos
and his representatives, took over the administration of the Girls' Department.
Apparently, the teaching and non-teaching personnel hired by petitioner for school year 1986-1987 continued to render services even after the Agreement was terminated, but
they were not paid their salaries for the month of May 1987. Hence, they filed a complaint for unpaid salaries with the NLRC-Regional Arbitration Branch III, naming CDSPB
and petitioner as respondents.
NLRC adopted the findings of the labor arbiter and affirmed his decision holding CDSPB and petitioner jointly and severally liable to complainants for the payment of their
salaries for May 1987. LA held that respondent RVM, may, in the wider spectrum of labor relations, be considered an independent contractor. It exercised greater degree of
autonomy and independence in running the affairs of respondent CDSPB, with whose real owner/operator it had an Agreement. The hiring and paying of salaries of the
complainants primarily rest on it and eventually, the substantial attributes of a direct employer were exercised by it.
Issue:
W/N RVM is the employer of the teachers.
Held: No... it is he CDSBP as represented by its director
The Agreement shows that petitioner entered into the same not as an independent contractor but, as it claims, a manager or administrator of the school. It is true that under the
Agreement, petitioner had the "sole responsibility and expense [over] the administration, management and operation of the Girls' Department," as well as the authority to
employ teachers needed by the school, impose and collect tuition fees, and pay the expenses of operations. However, control and supervision over the school's operations
remained in the hands of the Diocese of Malolos, owner of CDSPB, represented by the Parish Priest of Obando, Bulacan, who acted as school director.
CDSPB, as represented by the director, exercised absolute control and supervision over the school's administration. Under it, the authority to hire, discipline and terminate the
employment of personnel is vested in the director, as academic and administrative head of the school.

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In this case, CDSPB reserved the right to control and supervise the operations of the Girls' Department. As noted by the labor arbiter himself and affirmed by the NLRC,
although CDSPB "actually exercised minimal supervision over petitioner, [it] could exercise substantial supervision and control as it did when [it] preterminated the Agreement."
There was, therefore, no basis in finding that petitioner had a "greater degree of autonomy and independence in running the affairs" of the school. The presence of the school
director, whose vast powers have already been noted, negates any suggestion or semblance of autonomy.
Time and again we have held that "the 'control test' only requires the existence of the right to control the manner of doing the work not necessarily the actual exercise of the
power by him, which he can delegate."
Lapanday vs CA
Commando Security Service Agency, Inc., and defendant Lapanday Agricultural Development Corporation entered into a Guard Service Contract. Plaintiff provided security
guards in defendants banana plantation. The contract called for the payment to a guard of P754.28 on a daily 8-hour basis and an additional P565.72 for a four hour overtime
while the shift-in-charge was to be paid P811.40 on a daily 8-hour basis and P808.60 for the 4-hour overtime.
Wage Orders increasing the minimum wage in 1983 were complied with by the defendant. On June 16, 1984, Wage Order No. 5 was promulgated directing an increase of
P3.00 per day on the minimum wage of workers in the private sector and a P5.00 increase on the ECOLA. This was followed on November 1, 1984 by Wage Order No. 6
which further increased said minimum wage by P3.00 on the ECOLA.
Both Wage Orders contain the following provision:
"In the case of contract for construction projects and for security, janitorial and similar services, the increase in the minimum wage and allowances rates of the workers shall be
borne by the principal or client of the construction/service contractor and the contracts shall be deemed amended accordingly, subject to the provisions of Sec. 3 (b) of this
order
Plaintiff demanded that its Guard Service Contract with defendant be upgraded in compliance with Wage Order Nos. 5 and 6. Defendant refused. Their Contract expired on
June 6, 1986 without the rate adjustment called for Wage Order Nos. 5 and 6 being implemented.
Issue:
W/N petitioner is liable to the private respondent for the wage adjustments provided under Wage Order Nos. 5 and 6 and for attorneys fees.
Held: Yesir...but
Private respondent admits that there is no employer-employee relationship between it and the petitioner. The private respondent is an independent/job contractor
The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees to secure
payment of their wages should the contractor be unable to pay them.
Even in the absence of an employer-employee relationship, the law itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in
order to ensure that the employees are paid the wages due them.
....the liability of the petitioner to reimburse the respondent only arises if and when respondent actually pays its employees the increases granted by Wage Order Nos. 5 and 6.
Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the
solidary debtors to seek reimbursement for the share which corresponds to each of the debtors.

Now the 2nd kind of ee-er relationship imposed by law is what is provided in Art 138 of the Labor Code. It is the
first time that you will find out that these kinds of women are close to the hearts of the law. They are protected b the law.
138. classification if certain women workers. Who are these certain women workers? If you work in a night club, cocktail
lounge, massage clinic, bar or similar establishments under the effective control or supervision of the employer for a
substantial period of time as determined by the Secretary of labor, shall be considered as an employee of such
establishment for purposes of labor and social legislation. It is a comprehensive ee-er relationship. Take note: the
provision does not require the payment of salary by the owner for these women. Now if you are working as an entertainer
in a night club, because this is what these women are, suffered to work with or without compensation. Normally they are
paid on a commission basis. Commission for what? Commission for the drinks that they convince their client. Now
sometimes the client can invite them to go some where else not jut in the night club. So when that happens they are
released from the night clubs if the client pays what is called the bar fine. In other words the share of the night club as to
the earnings of that woman if she lasted the whole time the bar opens. In other words there is an average earning of each
of these workers. Then if the owner will accept that so the client brings her out. That is not really an employee if the client
can just leave. That is a mark that you are not an employee. Following the Manila Polo Club case v NLRC. Manila golf
club with these caddies they are asked by the favorite member to caddy for them to other golf course, so they can go. Sot
he SC said that that is a mark that they are not employees. Here even if that happens, because the law itself creates eeer relationship, then notwithstanding that, they can leave the client to go somewhere else does that not in any way
diminish their status as employees because it is already the law 138 that creates ee-er relationship. Now take note it says
for purposes of labor and social legislation so the night club owner is the employer for the purposes of wages, holiday
pay, etc. and also pag-ibig employees compensation and others. This is a comprehensive ee-er relationship. Now, that is
the 2nd.
There use to be a 3rd. Ramos v CA about nurses in the operating room. But it has been overturned so there is no
longer an automatic ee-er relationship between nurses and surgeon in the operating room so that is no longer operative.
Alright, may a labor union be an employer? In the case of Bautista v Inciong 1988 the SC said that the union
here is an employer because the employee is one who is engaged to perform activities which are usual to the trade or
worker in the union namely organizing. So this is one of the instances where a union becomes an employer and the union
here is convicted of illegal dismissal.
Bautista vs. Inciong
Fx: Bautista was employed by Associated Labor Unions (ALU) as Organizer in 1972 with a starting salary of P250/mo. As such he paid his monthly SSS
contributions, with the respondent as his employer. On March 15, 1979, He was left in the office of ALU while his other coorganizers were in Cainta, Rizal attending a
certification election at Chrysler Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten (10) days. His
SSS sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported back for
work upon expiration of his leave but was informed by ALU's Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this complaint filed on

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March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of
abandonment of work.
The National Capital Region Director ordered the reinstatemet of Baustista with full backwages and to pay him emergency allowance, 13th month pay and to refund
his mutual aid fund deposit. The Ministry of labor reveresed the order and ruled that Bautista was merely accomodated by ALU after he was dismissed by his former
employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in the
premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by the respondent as a favor for all those who
were performing full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee
relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is the
representation of its bona fide organization units where it is certified as such. The issue of whether or not a Union may be an employer was answered in the
affirmative by the SC when it, in favor of Bautista
Held: That htere is nothing in the records which support the Minister's conclusion that Bautista is not an employee of ALU. The mere fact that he respondent is a labor
union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it
espouses as a labor organization.
(Remember the four tests) In the case at bar, the Regional Director correctly found that the petitioner was an employee of the respondent union as reflected in the
latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System (SSS) and the respondent union's share of remittances in
the petitioner's favor. Even more significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista
was selected and hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly
controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal basis for Deputy Minister Inciong's decision.

Now there is ee-er relationship which is beyond the jurisdiction of the court by virtue of the intl law. When
does that happen? That happens when the employer is imbued with international personality by treaties or by
international law. So the cases in question are: USA v Rodrigo as the same was decided by the SC jointly with
USA v Guinto (1990), JUSMAG v NLRC , international catholic migration, seaedec v nlrc). So let me again recall
the principle in the constitutional law that you learned last year. An embassy which is a representative of a foreign
sovereign in our land enjoys the same immunity from suit as the sovereign itself. Now when does the sovereign becomes
liable for that suit? If he impliedly or expressly or impliedly allows himself to be sued. Expressly is by legislation, there is a
tolerance for it and that is explicit. Impliedly as when he enters into a contract so he puts himself in the same level as an
ordinary citizen and therefore he is now open to suit. However, exception to that exception is suppose the contract is
entered into in pursuit of the sovereign function then that is still not shedding of immunity.
So that is the issue here in USA v Rodrigo. Rodrigo here is a cook in camp john hay. He sued the base
commander for illegal dismissal and for damages. Now, the defense is immune from suit? Why is it immune from suit?
Did you not shed immunity by entering into a contract by hiring this person!? They said no because we are hiring him in
pursuit of our sovereign function. What is the sovereign function here? That is maintaining the morale of the morale of the
Armed Forces of the United States because camp john hay is golf course one house is for military personnel coming
from subic and clark. So we did not shed our immunity according to the commander. Then the SC said the court takes
judicial notice and that camp john hay is not sovereign because it allows civilians not just military personnel to make use
of the facilities. Or can go there play golf or go to the club house order steak pay in dollar or in peso in its equivalence and
you will be served. So the SC said you have shed off your immunity because you are engaged not just on a strict
sovereign activities with regard to the armed forces but you engaged in a proprietary activity. So the SC said now we
have jurisdiction of his case but then later the supreme court decided against Rodrigo because this is the instant where
he puts urine in to the soup served to the armies. So the SC says that is a grave misconduct which merits dismissal after
due process.
US vs. Rodrigo
Fx: Genove filed a complaint for damages againts petitioners Lamachia, Belsa, Cartalla and Orascion for his dismissal as cook in the U.S. Air Force Recreation
Center at the John Hay Air Station in Baguio City. It had been ascertained after investigation, from the testimony of Belsa, Cartalla and Orascion, that Genove had
poured urine into the soup stock used in cooking the vegetables served to the club customers. Lamachia, as club manager, suspended him, and thereafter referred
the case to a board of arbitrators conformably to the collective bargaining agreement between the Center and its employees. The board unanimously found him guilty
and recommended his dismissal. This was effected on March 5, 1986, by Col. David C. Kimball, Commander of the 3rd Combat Support Group, PACAF Clark Air
Force Base. Genove's reaction was to file his complaint in the Regional Trial Court of Baguio City against the individual petitioners.
Issue: W/N immunity from suit can be invoked by the US?
Held: While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts
allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative
act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state
itself although it has not been formally impleaded.In such a situation, the state may move to dismiss the complaint on the ground that it has been filed without its
consent.
There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract
in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied
As manager of this complex, petitioner Lamachia is responsible for eleven diversified activities generating an annual income of $2 million. Under his executive
management are three service restaurants, a cafeteria, a bakery, a Clear, VI store, a coffee and pantry shop, a main cashier cage, an administrative office, and a
decentralized warehouse which maintains a stock level of $200,000.00 per month in resale items. He supervises 167 employees, one of whom was Genove, with
whom the United States government has concluded a collective bargaining agreement.
The restaurant services offered at the John Hay Air Station partake of the nature of a business enterprise undertaken by the United States government in its
proprietary capacity. Such services are not extended to the American servicemen for free as a perquisite of membership in the Armed Forces of the United States.
Neither does it appear that they are exclusively offered to these servicemen; on the contrary, it is well known that they are available to the general public as well,
including the tourists in Baguio City, many of whom make it a point to visit John Hay for this reason. All persons availing themselves of this facility pay for the privilege
like all other customers as in ordinary restaurants. Although the prices are concededly reasonable and relatively low, such services are undoubtedly operated for
profit, as a commercial and not a governmental activity.

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The consequence of this finding is that the petitioners cannot invoke the doctrine of state immunity to justify the dismissal of the damage suit against them by
Genove. Such defense will not prosper even if it be established that they were acting as agents of the United States when they investigated and later dismissed
Genove. For that matter, not even the United States government itself can claim such immunity. The reason is that by entering into the employment contract with
Genove in the discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity from suit.
US vs. Guinto
Fx: Roberto Valencia, Emerenciana Tanglao and Pablo del Pilar sued several officers of the US Air Force stationed in Clark Air-Base in connection with the bidding
conducted by them for barbering services in the said base. On Feb. 24, 86, the Western Pacific Contracting Office solicited bids for such contracts through its
contracting officer, James Shaw. The private respondents were one of those who had submitted theri bids. (Valencia had been a concessionare inside Clark for 34
yrs, del Pilar for 12 and Tanglao for 50)
The bidding was won by Ramon Dizon over the objection of the private respondents, who claimed that he had made a bid for four facilities, including the Civil
Engineering Area, which was not included in the invitation to bid.
The private respondents complained to the Philippine Area Exchange (PHAX). The latter, through its representatives, petitioners Yvonne Reeves and Frederic M.
Smouse, explained that the Civil Engineering concession had not been awarded to Dizon as a result of the February 24, 1986 solicitation. Dizon was already
operating this concession, then known as the NCO club concession, and the expiration of the contract had been extended from June 30,1986 to August 31, 1986.
They further explained that the solicitation of the CE barbershop would be available only by the end of June and the private respondents would be notified.
On June 30,1986, the private respondents filed a complaint in the court below to compel PHAX and the individual petitioners to cancel the award to defendant Dizon,
to conduct a rebidding for the barbershop concessions and to allow the private respondents by a writ of preliminary injunction to continue operating the concessions
pending litigation.
US filed a motion to dismiss which was denied by J. Guinto ruling that by virtue of the contract of concession already existing between the petitioner and the private
respondent, there exists a commercial transaction. Furthermore, the RP-US Bases Agreement does not cover such kind of services falling under concessionareship,
such as a barber shop concession. The SC affirmed the ruling of public respondent Judge Guinto when it
Held: that the barbershops subject of the concessions granted by the United States government are commercial enterprises operated by private persons. They are
not agencies of the United States Armed Forces nor are their facilities demandable as a matter of right by the American servicemen. These establishments provide
for the grooming needs of their customers and offer not only the basic haircut and shave (as required in most military organizations) but such other amenities as
shampoo, massage, manicure and other similar indulgences. And all for a fee. Interestingly, one of the concessionaires, private respondent Valencia, was even sent
abroad to improve his tonsorial business, presumably for the benefit of his customers. No less significantly, if not more so, all the barbershop concessionaires are,
under the terms of their contracts, required to remit to the United States government fixed commissions in consideration of the exclusive concessions granted to them
in their respective areas.
This being the case, the petitioners cannot plead any immunity from the complaint filed by the private respondents in the court below. The contracts in question being
decidedly commercial, the conclusion reached in the United States of America v. Ruiz case cannot be applied here
JUSMAG VS. NLRC
FX: JUSMAG was created pursuant to the Military Assistance Agreement between the Phil and US. It consists of Air, Naval and Army group whose primary task is to
advise and assist the Phil on air force, army and naval matters. Originally, the Phil. covered the expenses until 1991 when US manifested its preparedness to provide
funds to cover the salaries of security assistance support personnel and security guards, the rent of bldgs and housing and the cost of utilities.
Florencio Sactramento was one of the seventy-four (74) security assistance support personnel (SASP) working at JUSMAG Philippines., He had been with JUSMAG
from December 18, 1969, until his dismissal an April 27, 1992. He held the position of Illustrator 2 and was the incumbent President of JUSMAG PHILIPPINESFILIPINO CIVILIAN EMPLOYEES ASSOCIATION (JPFCFA), a labor organization duly registered with the Department C Labor and Employment. His services were
terminated allegedly due to the abolition of his position. He was also advised that he was under administrative leave until April 27, 1992, although the same was not
charged against his leave.
He filed a complaint for illegal dismissal with DOLE and asked for reinstatement. USMAG then filed a Motion to Dismiss invoking its immunity from suit as an agency
of the United States. It further alleged lack of employer-employee relationship and that it has no juridical personality to sue and be sued.
Labor Arbiter dismissed the petition for want of jurisdiction. NLRC reversed the LA's decision on the grounds: 1) the principle of estoppel-that JUSMAG failed to
refute the existence of employer-employee relationship under the "control test"; and (2) JUSMAG has waived its right to immunity from suit when it hired the services
of private respondent on December 18, 1969.
Issue: W/N Jusmag enjoys immunity from suit
Held: Yes. From the foregoing, it is apparent that when JUSMAG took the services of private respondent, it was performing a governmental function on behalf of the
United States pursuant to the Military Assistance Agreement dated March 21, 1947. Hence, we agree with petitioner that the suit is, in effect, one against the United
States Government, albeit it was not impleaded in the complaint. Considering that the United States has not waived or consented to the suit, the complaint against
JUSMAG cannot prosper.
Anent the issue of absence of employer-employee relationship, Jusmag is not estopped form denying the existence of such as it consistently contended that the
respondent was an employee of the AFP pursuant to the contract between the Phil and the US.
NB: Remember general rule that a State cannot be suit in the courts of another state without its consent or waiver (express). However, exception to the rule is implied
consent as when the state or any of its government enteres into a contract, through its officers or agents, in furtherance of a legitimate aima dn purpose and pursuant
to constitutuional legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise therefrom, and if the law granting the authority to
enter into such contract does not provide for or name the officer against whom action may be brought in the event of a breach thereof, the state itself may be sued,
even without its consent, because by entering into a contract, the sovereign state has descended to the level of the citizen and its consent to be sued is implied from
the very act of entering into such contract.
The application of the doctrine has been restricted to sovereign or governmental activities. It cannot be made to extend to commercial, private and proprietary acts.
Also, the application of the doctrine depends on the legal nature of the act. If a contract was entered into in the discharge of its governmental fxns, the sovereign
state cannot be deemed to have waived its immunity from suit.

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Alright, suppose an employer that is imbued with personality under the international law allows to be sued in one
case, does he shed immunity for the rest of the cases coming? You allow yourself to be sued and then later on you say
the guarantee which invokes immunity. That is the case of international catholic migration v pura ferrer calleja (1990).
SC says no. what is the reason? In international catholic migration v NLRC , we are talking here of a
probationary teacher who used to teach English. That was when the time when Vietnamese tries to escape from Vietnam
so they landed in Palawan, in Zambales. The UN bodies comes and brings them to their host countries like Germany, US,
Canada, Australia so they hire teachers to teach them English for the cultural adjustments that they have to make in their
host country. That particular teacher was not given the whole 6 months probation. After 3 months she was asked to
leave and so she said that is unjust. I should have given 6 months as a right of a probationary employee. Does she have
the right? That was decided in international catholic migration v NLRC.
In that case the catholic did not raise its
personality under the international law and its immunity from suit. So here comes another case! International catholic
migration v calleja . Now the lawyer of international catholic migration raises its immunity and the answer of the
complaint to the complainant is that you shed it off in the last case! Too late now to invoke immunity. is that correct? A
sovereign is never bound by the mistakes of its officers. Unsay kabuoang sa mga opisyal dha sa gobyerno it does not
bind the government . Mao nay dakong dimalas. Mahapay ang gobyerno ana. So if the particular official forgot to invoke
immunity, that does not bind the intl organization.
INTERNATIONAL CATHOLIC MIGRATION COMMISSION VS. CALLEJA
FX: This is a consolidated case as it involves the same issues re: the validity of the claim of immunity by the Int'l Catholic Migration Commission and the Int'l Rice
Research Institute, Inc from the application of Phil. Labor Laws.
Pursuant to the agreement between the Phil. and the UN, ICMC was established for the processing of Indo-Chinese refugees from the Vietnam war. On July 14,
1986, Trade Unions of the Phil and Allied services (TUPAS) filed with the Ministry of Labore and Employment for certification election among the rank and file
members of ICMC. ICMC opposed the petition on the ground that it enjoys diplomatic immunity. During the pendency of the case, the Phil. Gov't granted ICMC the
status of a specialized agency with corresponding diplomatic privileges and immunities.
In a similar case, the IRRI invokes its immunity from suit. he Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of
Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, nonprofit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production,
management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas
through improvement in quality and quantity of rice."
Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by
virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization.
Kapisanan filed a petition for direct certification of election. IRRI invoked PD 1620.
Issue: W/N the grant of immunity from suit includes exemption form the coverage of our Labor laws.
Held: Yes.
The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective purposes. The objective is to
avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances
would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political
pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions.
The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges and immunities of an
international organization, deprives its employees of the right to self- organization.
The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their immunity," it is inaccurate to
state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an
independent or isolated process. It could trigger off a series of events in the collective bargaining process together with related incidents and/or concerted activities,
which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is
neither remote and from which international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional
immunity are said to be standard provisions in the constitutions of international organizations. ''The immunity covers the organization concerned, its property and its
assets. It is equally applicable to proceedings in personam and proceedings in rem.''
*Anent the issue of whether a state who did not invoke its immunity before be deemed to have waived its immunity to future suits: TUPAS calls attention to the case
entitled "International Catholic Migration Commission v. NLRC, et als., and claims that, having taken cognizance of that dispute (on the issue of payment of salary for
the unexpired portion of a six-month probationary employment), the Court is now estopped from passing upon the question of DOLE jurisdiction over ICMC. The SC
held that such contention is wrong. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of
a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived
it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity.

Alright! So remember ha, here there is ee-el relationship but if immunity can be invoked, there is no legal remedy.
Once I was approached by the employee of the Indonesian consulate here that their pay was reduced so they were
forced to go to the labor arbiter. And they were mentioning 2 or 3 lawyers. Lawyer ray nadato ana cge mog session wa jud
moy maabtan ana. That wil come to naught! Because your employer enjoys immunity from suit! So what is now the
remedy!? Your remedy is diplomatic! You go to the dept of foreign affairs. You convince the DFA secretary so that he will
communicate diplomatically with the consul. There are several kinds of letter depending on the urgency of the letter. And
he should bring out the case in the diplomatic remedy. So that is the solution. No judicial remedy only diplomatic.
That is true with SEAFDEC Ilo-Ilo. That is a UN body. That is true with IRRI (international Rice Research
Institute) in Los Baos Laguna. That is true with UNESCO, etc. all those bodies that are considered persons in
international law and they are protected with immunity from suit.

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SEAFDEC-AQD vs. NLRC

FX: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement entered
into in Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam,, Indonesia and the Philippines with Japan as the
sponsoring country.
On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate on a probationary basis by the SEAFDEC-AQD and was appointed
Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to
the position of Professional III and designated as Head of External Affairs Office with the same pay and benefits.
On May 8,1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private respondent informing him that due to the
financial constraints being experienced by the department, his services shall be terminated at the close of office hours on May 15,1986 arid that he is entitled to
separation benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits.
Upon nonpayment of his separation pay, Lazaga filed a complaint for nonpayment of separation benefits plus moral damages and atty's fees. Petitioners aver that
NLRC has no jurisdiction as SEAFDEC is an international organization nd that private respondent must first secure clearances from the proper departments for
property or money accountability before any claim for separation pay will be paid, and which clearances had not yet been obtained by the private respondent.
NLRC assumed jurisdiction and asked petitioner to pay private respondent. However, upon petition for certiorari with the SC, the SC in reversing the NLRC decision
Held: that SEAFDEC-AQD is immune from suit as it is an international agency. Being an international organization, SEAFDEC including its Departments (AQD)
enjoys functional independence from control of the state in whose territory its office is located.
Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction to a tribunal
that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the
decision of a tribunal not vested with appropriate jurisdiction is null and void.

Then COOPERATIVES in the landmark case of Cooperative Rural Bank of Davao City v NLRC the SC says
that if you are a member the cooperatives and at the same time you are an employee in the coop you are not a true
employee. You are serving the coop because the coop is a special agency that enjoys exemption from taxes and even
from minimum wage. So if you are a member of the coop and at the same time an employee of the coop, can you form a
union? The answer is no. why? Because the assembly of members is the highest body of the coop. so it will put you in a
conflict of interest so you will demand an increase in salary but then on the other hand who will be sitting their in
judgment? It is you also! So ikaw pa mangayo ikaw pa mu hatag. That is conflict of interest. That is the ruling in
Cooperative Rural Bank of Davao City vs. NLRC
Batangas-1 electric coop Labor Union vs Young
Facts:On June 1, 1981, the Batangas-I Electric Cooperative Union filed with the Regional Office No. IV-A, Ministry of Labor and Employment a petition for certification election.
The UNION alleged, inter alia, that it is a legitimate labor organization; that the Batangas-I Electric Cooperative Inc. (BATELEC) has 150 employees, more or less; that the
UNION desires to represent the regular rank and file employees of BATELEC for purposes of collective bargaining; that there is no other union existing in BATELEC except the
UNION; that there is no certified collective bargaining agreement in the said cooperative; and that there has been no certification election conducted in BATELEC during the
last twelve (12) months preceding the filing of the petition.
BATELEC filed a MFR of the Med-Arbitter's decision giving due course to the petition for certification election contending that, there was a legal impediment to the holding of a
certification election considering that the formation of a union in a cooperative is illegal and invalid, the officers and members of the union being the owners thereof.
Young, Officer in Charge, Bureau of Labor Relations, granting the appeal and revoking the Med-Arbiter's order mandating the holding of a certification election.
Issue:
W/N employees of an electric cooperative who are at the same time members of the cooperative, may be allowed to form or join a labor union in the electric cooperative for
purposes of collective bargaining.
Held: No.
There is no E-E relationship to begin with. The applicants being co-owners are barred from forming a union for purposes of collective bargaining. (ingon pa si sir, ikaw na mo
reklamo- ikaw pa gyud mo tyubag sa reklamo ug mangitag pama-agi. ehehehe buot buot ko.)

However, in 1991 case of Central Negros Electric Coop. v Secretary the coop members in question resigned
the coop. After they resigned they joined the union. Can they now join the union? The SC says yes because the
impediment has been removed. Alright, so we are now through with ee-er relationship. Please read those cases because
they will be asked in the exam. Because the exam will be such a kind to determine if you really have read the case. These
are landmark cases.
CENECO vs sec of DoLE, CURE
On August 15, 1987, CENECO entered into a collective bargaining agreement with CURE, a labor union representing its rank-and-file employees, providing for a term of three
years retroactive to April 1, 1987 and extending up to March 31, 1990. On December 28, 1989, CURE wrote CENECO proposing that negotiations be conducted for a new
collective bargaining agreement.
On January 18, 1990, CENECO denied CURE's request on the ground that, under applicable decisions of the Supreme Court, employees who at the same time are members
of an electric cooperative are not entitled to form or join a union.
CURE members, in a general assembly held on December 9, 1989, approved Resolution No. 35 whereby it was agreed that "all union members shall withdraw, retract, or
recall the union members' membership from Central Negros Electric Cooperative, Inc. in order to avail of the full benefits under the existing Collective Bargaining Agreement
entered into by and between CENECO and CURE, and the supposed benefits that our union may avail of under the renewed CBA.
However, the withdrawal from membership was denied by CENECO on February 27, 1990.

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Med-Arbiter Felizardo T. Serapio issued an order, granting the petition for certification election filed by CURE.
CENECO appealed to the Department of Labor and Employment which issued the questioned order modifying the aforestated order of the med-arbiter by directly certifying
CURE as the exclusive bargaining representative of the rank-and-file employees of CURE.
Issue:
W/N the employees of CENECO who withdrew their membership from the cooperative are entitled to form or join CURE for purposes of the negotiations for a collective
bargaining agreement proposed by the latter.
Held: Yesir!!
Membership in the cooperative is on a voluntary basis. Hence, withdrawal therefrom cannot be restricted unnecessarily. The right to join an organization necessarily includes
the equivalent right not to join the same.
The right of the employees to self-organization is a compelling reason why their withdrawal from the cooperative must be allowed. As pointed out by CURE, the resignation of
the member-employees is an expression of their preference for union membership over that of membership in the cooperative.
The avowed policy of the State to afford full protection to labor and to promote the primacy of free collective bargaining mandates that the employees' right to form and join
unions for purposes of collective bargaining be accorded the highest consideration.
We rule, however, that the direct certification ordered by respondent Secretary is not proper. By virtue of Executive Order No. 111, which became effective on March 4, 1987,
the direct certification originally allowed under Article 257 of the Labor Code has apparently been discontinued as a method of selecting the exclusive bargaining agent of the
workers. This amendment affirms the superiority of the certification election over the direct certification which is no longer available now under the change in said provision.
Air Services COOP vs CA, Batican
Facts:
it appears that respondent was allegedly reported to have been illegally draining aviation fuel from the aircraft assigned to him by the cooperative's client Stanfilco (Dole
Philippines, Inc.) for which reason Capt. Sarael issued a memorandum dated January 20, 1993 calling his attention and directing him to cease and desist from said practice.
Apparently, the warning fell on deaf ears, thus, prompting the cooperative's Board of Directors itself to issue a memorandum on February 22, 1993 this time giving a final
warning that respondent's services would be terminated should he be found guilty of illegally draining aviation fuel again. Shortly thereafter, Capt. Sarael required respondent in
a memorandum dated March 1, 1993 to explain within forty-eight hours why no disciplinary action should be taken against him on account of the reported acts of repeated
pilferage despite prior warning. On March 8, 1993, after considering respondent's explanation and conducting a thorough investigation on the matter, the cooperative's Board
of Directors resolved to cancel and revoke respondent's membership in the cooperative. After respondent's expulsion, the cooperative's client Stanfilco likewise filed a formal
criminal complaint for qualified theft against him on March 26, 1993 for which a warrant of arrest had been subsequently issued.
Aggrieved by his expulsion, respondent filed before the National Labor Relations Commission (NLRC) a complaint on May 18, 1993, both against the cooperative and Capt.
Sarael for illegal dismissal, reimbursement of the value of six (6) shares of stock, vacation/sick leave conversion, unpaid commission for the month of February and nonpayment of the 13th month pay.
The Labor Arbiter ruled in favor of respondent thereby awarding the monetary claims.
Petitioners filed a Petition for Certiorari, Prohibition and Annulment of Judgment before the Regional Trial Court and later to the CA wherein both dismissed the petitions for
lack of jurisdiction stating that the former should have appealed to the NLRC first.
Issue: W/N it is procedurally sound to impugn and seek the annulment of the Labor Arbiter's decision over the dispute herein mentioned before the Regional Trial Court.
Held: Indeed, we find it odd that petitioners should entertain the notion that the Labor Arbiter's decision may be assailed in the trial court when the law clearly provides for the
proper manner by which a party may have such decision reviewed. Hence, in Article 223 of Presidential Decree No. 442, as amended, otherwise known as "The Labor Code of
the Philippines," we find that:
"ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders. . ."
Also, in Article 217 (b), the same Code states:
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters."
"ART. 223. Appeal. . . . Such appeal may be entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;"
Abuse of discretion is admittedly within the ambit of certiorari and its grant of review thereof to the NLRC indicates the lawmakers' intention to broaden the meaning of appeal
as that term is used in the Code. For this reason, petitioners cannot argue now that the NLRC is devoid of any corrective power to rectify a supposed erroneous assumption of
jurisdiction by the Labor Arbiter and justify recourse to the trial courts.

Alright, after saying that ee-er relationship is very important, I have a question to ask: must there be ee-er
relationship in order to be covered by the labor code? Must there be ee-er relationship? As a general rule, yes but there
are exceptions. Why do I say that there are exceptions? Take a look at Art. 6, applicability : all rights and benefits
granted to workers under this code shall, except as otherwise may be provided herein, apply alike to all workers,
whether agricultural or non-agricultural. So workers, there must be ee-er relationship for you to be covered and for the
labor code to be applicable to you. However, you take a look at book 1 replacement and recruitment of workers. Art 13
definitions: 1. Worker for this book alone, book 1, worker means any member of the labor force, whether
employed or unemployed. Apil d ay ang walay ee-el relationship in this book one. And then we go to book II. Human
resources development . Art. 44 man power shall mean that portion of the nations population which had actual or
potential capability to contribute directly to the production of goods and services. So is ee-er required in order to
be covered with the Labor CODE book 2? Again no! If you just have the potential to contribute directly to the production
of goods and services then you are already covered by book two. If you are a fetus inside the womb of the mother you
have potential to contribute to the production of services. You are incapable of rendering ee-er relationship yet but you are
already covered by this book. So, there are at least 2 big sections in the labor code that does not require ee-er
relationship to be covered by the labor code.
Now, lets go to book 1. recruitment and placement of workers. Art. 12 up to Art 24 and up to Art 39 that has
now been superseded by RA 8042 . What is RA 8042? It is an act to institute the policies of overseas employment and
establish a higher standard or protection and promotion to the welfare of the migrant workers and (please see the law
nalang)The short title is migrant workers and overseas Filipinos Act of ____. ( di ko ma hear ang year)

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Now, central to this particular law is section 29. why is sec 29 central? Take a look at sec 29. Comprehensive
deregulation plan on the recruitment activities. It says, pursuant to a progressive policy of deregulation whereby the
migration of workers becomes strictly amended between the workers and his foreign employer, the DOLE within one year
from the affectivity of this act is hereby mandated to postulate a five-year deregulation plan on recruitment activities
taking into account the labor market trends, economic condition of the country and the emerging circumstance which may
affect the welfare of the migrant workers . sec 30 (please see the law.). Technically speaking, the law mandated that there
should no longer deregulation with respect to placement or recruitment of workers oversees. Why is that? Because of
the WTO (World Trade Organization) if goods are supposed to be traded so also with the services and so also with
respect to capital. That is why any form of limited conversion of currencies like conversion the currency of China. Again,
WTO. That is why they are pressuring China to make their currency fully convertible and yet China would not do that. So
in the 1997 financial crisis in Asia China was never referred because its currency is isolated. The capital is supposed to
flow freely then labor is also supposed to flow freely. It should go well if it wants to seek better remuneration. Because the
system of licensing is deterrent to free labor. That is why magkatawa ka aning balaora. Tan awa ra gud ni nia and title
taas kaau. Pag abot d ay diri tang tangon d ay ni pag abot ug 5 years. Wla na d ay protection. And yet the law says higher
standards.. nag buwa lang ning baba ani wa d ay, tang tanong d ay after 5 years! The question is why wala pa
mantangtanga? There are many reasons Political, economic. That is why, for example, anti money laundering law took a
long time to take effect. They pass a law but it was not approved by the council of money laundering authorities in the
world. Because we believe that we can protect workers by licensing which is crazy! You do not! You are just making
workers irresponsible! They should take their own responsibility. Kung gusto ka mulangyaw kay taas ug sweldo sa gawas
ikaw maoy mu lantaw sa imong kaugalingon! Ikaw mangita dilikay cge ta ug blame sa gobyerno!
So you will read here in 8042, automatic repatriation in times of war in the workplace. The government
guarantees your repatriation. If you are under age and you are found there undocumented, automatic repatriation ang
govt maoy mu gasto for you. That is provided by 8042. it is no longer debatable if the whether the govt will spend for you
because it is provided in 8042. it is only a question of means. Whether you can charter the boat. So, you have to read this
law on your own.
In the labor code, illegal recruitment is committed only by unlicensed recruitment agency. If you are take charging
recruitment agency, you are required to have a license. If you are not take charging, you have to get a permit. If you do
not have a license, you are committing illegal recruitment. Illegal recruitment is of two kinds. One that constitutes
economic sabotage when it is large scale. When is it large scale? If you recruit more than three. Or you recruit in
conspiracy of three or more. So what is the difference? If you are large scale, life imprisonment. If you are not large scale,
the penalty is 6 years, 1 day to 12 years. Or 200,000 fine to 500, 000. That is the penalty sec. 7 of 8042. Sec 6 is illegal
recruitment. Now if you have a license you can take charge an illegal recruitment . we have a very long list here of illegal
recruitment. What constitutes illegal recruitment? Driver ka lang sa mga gi illegal recruit, illegal recruitment ka na! Your
acts can fall in any of those enumerated in Sec 6 of 8042. Failure to reimburse, to withhold documents, failure to deploy
without valid reason. So you have agencies that will recruit. As a GR direct hiring is prohibited. Foreign principals will
direct contact you, that is illegal. You have to go through an agency, why? So that they agency will be held responsible. It
is the bridge of the law here because our labor laws are municipal law valid within the territorial jurisdiction of the
Philippines, it cannot be enforced outside. Now, if you are a land based worker, you have a recruitment agency. If you are
sea based, then you have a manning agency. All your contract must be registered with the POEA. No contract can be
given effect unless it is registered with the POEA. Advertisements that you read in the newspaper with respect to foreign
deployment they have to be registered with the POEA. That is to protect you from being defrauded. Now, there is a list of
fees that is to be approved. If the manning agency or the recruitment agency collects higher than the approves fees , that
is also a violation and that is a form of illegal recruitment. Tan aw ra ninyo sa sec 6 .
Now, before an OFW leaves, he must open a local account through which he pays his remittance. You can..t
leave without opening an account and it must go through the official remittance channel of the Philippines. Dili mahimo
nga padala padala lang. kanand padala padala pwede na in excess of what you get. You have to remit and there are
different percentages. For example the highest is 50%. If you are a seaman, your employer commits to remit to the
agency at least 50% of your earnings. You can remit higher but the minimum is 50% and that is done through deduction.
Two contracts, both registered with the POEA, what contract then is correct? You as a seaman will receive 500 dollars a
month. But then right before you leave, you are made to sign another contract: oral or written agreement prior to this
agreement notwithstanding, I am going to take home the pay of 300 dollars. Two contacts because there are certain ports
that are controlled by International Union of Sea Farers. They will check the contracts and if it is lower than the ITF rates,
they can boycott the ship. Odessa, Amsterdam, Huston Texas, those are ITF ports. And it is where they catch people.
They will even make the ship line pay. They will not load or unload. So two kinds of contract, which is valid? That is the
trilogy of cases in Virjen Shipping. In Virjen shipping the first division of the SC says that what is valid is the 2nd contract.
3rd division of the Sc still Virjen Shipping says the 1 st contract is what is valid. So the 3rd case they have to raise it to the
SC en banc. There is this argument on the ruling that will uphold the first contract to the negation of the 2 nd contract is
the type of ruling that kills the goose that lays the golden egg. So they uphold the first contract. Is that followed? No that is
not followed.
Now again there is a trilogy of cases I want you to read. Rabago v Eastern Marine Ltd March 14, 2005/ 453 s
361. before that is Millares and Lagda v NLRC/2002, Petroleum Shipping Ltd v NLRC/ June 16, 2006. 20 anyos na, I
year contract, 1 year, one year, naa nay sakit taas cholesterol, so din a pasakyon. babay na. walay benefits. So original is,
the SC says no! Art 13, section 3 of the Consti says the state shall uphold protection to labor local and overseas so
therefore we have to enforce our security and tenure laws. these people are regular employees and they are entitled to
( dili na dayon masabtan) So this is what the decision says, subsequently, the Filipino Association of Mariners
Employment files a motion for reconsideration and filed for the second motion. And the office of the Sol Gen has now
taken the opposite view in the application in sustaining the decision and calls for the examination. What is the ruling now?
The latest ruling says they are not regular but contract employees. Their ee-el relationship lasts for the duration of the
contract because it is the contract that determines and not the law. So tun-ina kay mao na ang suginlanon sa tong

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kinabuhi specially, you are to read penalties for illegal recruitment, mandatory periods, prescriptive period. Ordinary
Illegal recruitment prescribes in 5 years, illegal recruitment that are concerning economic sabotage when 3 or more illegal
recruiters or 3 or more in conspiracy and collaborating with one another to recruit.
Ravago vs ESSO Eastern Marine, ltd., Trans-Global Maritime Agency, Inc.
Facts:
The Esso Eastern Marine Ltd. (EEM), now the Petroleum Shipping Ltd., is a foreign company based in Singapore and engaged in maritime commerce. It is represented in the
Philippines by its manning agent and co-respondent Trans-Global Maritime Agency, Inc. (Trans-Global), a corporation organized under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman on board various Esso vessels. On February 13, 1970, Ravago commenced his duty as S/N wiper on board
the Esso Bataan under a contract that lasted until February 10, 1971. Thereafter, he was assigned to work in different Esso vessels where he was designated diverse tasks,
such as oiler, then assistant engineer. He was employed under a total of 34 separate and unconnected contracts, each for a fixed period, by three different companies,
namely, Esso Tankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd. (EIS), Singapore Branch. Ravago worked with Esso vessels until August 22,
1992, a period spanning more than 22 years.
On the night of October 12, 1992, a stray bullet hit Ravago on the left leg while he was waiting for a bus ride in Cubao, Quezon City. He fractured his left proximal tibia and
was hospitalized at the Philippine Orthopedic Hospital. Ravagos wife, Lolita, informed Trans-Global and EIS of the incident on October 13, 1992 for purposes of availing
medical benefits.
Ravagos left leg had become apparently shorter, making him walk with a limp. For this reason, the company physician, Dr. Virginia G. Manzo, found him to have lost his
dexterity, making him unfit to work once again as a seaman.
Consequently, instead of rehiring Ravago, EIS paid him his Career Employment Incentive Plan as of March 1, 1993 and his final tax refund for 1992. After deducting his Social
Security System and medical contributions from November 1992 to February 1993, EIS remitted the net amount of P162,232.65, following Ravagos execution of a Deed of
Quitclaim and/or Release.
Ravago filed a complaint for illegal dismissal with prayer for reinstatement, backwages, damages and attorneys fees against Trans-Global and EIS with the Philippine
Overseas Employment Administration Adjudication Office.
Respondents denied that Ravago was dismissed without notice and just cause. Rather, his services were no longer engaged in view of the disability he suffered which
rendered him unfit to work as a seafarer. This fact was further validated by the company doctor and Ravagos attending physician. They averred that Ravago was a
contractual employee and was hired under 34 separate contracts by different companies.
Ravago, likewise, asserted that he was not a mere contractual employee because the respondents regularly and continuously rehired him for 23 years and, for his continuous
service, was awarded a CEIP payment upon his termination from employment.
Labor Arbiter Ramon Valentin C. Reyes rendered a decision in favor of Ravago, the complainant. He ruled that Ravago was a regular employee because he was engaged to
perform activities which were usually necessary or desirable in the usual trade or business of the employer. The Labor Arbiter noted that Ravagos services were repeatedly
contracted; he was even given several promotions and was paid a monthly service experience bonus. This was in keeping with the increasing number of long term careers
established with the respondents. Finally, the Labor Arbiter resolved that an employer cannot terminate a workers employment on the ground of disease unless there is a
certification by a competent public health authority that the said disease is of such nature or at such a stage that it cannot be cured within a period of six months even with
proper medical treatment.
NLRC affirmed the decission of Labor arbiter.
CA reversed the NLRC decision. According to the CA, the fact that Ravago was not rehired upon the completion of his contract did not result in his illegal dismissal; hence, he
was not entitled to reinstatement or payment of separation pay.
Issue:
W/N a seafarer is a regular employee.
Held:
The SC declared that a seafarer, not being a regular employee, is not entitled to separation or termination pay.
Furthermore, petitioners contract did not provide for separation benefits. In this connection, it is important to note that neither does the POEA standard employment contract
for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas Employment and the said Rules do not provide for separation or termination
pay. ...
From the foregoing cases, it is clear that seafarers are considered contractual employees. They cannot be considered as regular employees under Article 280 of the Labor
Code. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. Their employment
is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of 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.
The Standard Employment Contract governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C, specifically
provides that the contract of seamen shall be for a fixed period. And in no case should the contract of seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew Contract. Any extension of the Contract period shall
be subject to the mutual consent of the parties.
The continuous re-hiring was dictated by practical considerations that experienced crew members are more preferred. Petitioners were only given priority or preference
because of their experience and qualifications but this does not detract the fact that herein petitioners are contractual employees. They can not be considered regular
employees.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Decision dated August 28, 2002 of the Court of Appeals is hereby AFFIRMED.
Millares vs ESSO
Facts: Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company LTD. (Esso International, for brevity) through its local manning
agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on November 16, 1968 as a machinist. In 1975, he was promoted as Chief Engineer
which position he occupied until he opted to retire in 1989. He was then receiving a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7, 1989. Michael J. Estaniel, President of private respondent Trans-Global,
approved the request for leave of absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon International Co., (now Esso International)
through Michael J. Estaniel, informing him of his intention to avail of the optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he
had already rendered more than twenty (20) years of continuous service.

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On July 13, 1989 respondent Esso International, through W.J. Vrints, Employee Relations Manager, denied Millares request for optional retirement on the following grounds, to
wit: (1) he was employed on a contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the age of sixty (60) years; and (3) he did not comply
with the requirement for claiming benefits under the CEIP, i.e., to submit a written advice to the company of his intention to terminate his employment within thirty (30) days
from his last disembarkation date.
Regenboog, Personnel Administrator, advised petitioner Millares that in view of his absence without leave, which is equivalent to abandonment of his position, he had been
dropped from the roster of crew members effective September 1, 1989.
The same circumstances also happened to Lagda.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as POEA (M) 89-10-9671, for illegal dismissal and non-payment of employee benefits
against private respondents Esso International and Trans-Global, before the POEA.
POEA dismissed the complaint which was affirmed by the NLRC for lack of merit.
They aver that Complainants-appellants, as seamen and overseas contract workers are not covered by the term regular employment as defined under Article 280 of the
Labor Code. The POEA, which is tasked with protecting the rights of the Filipino workers for overseas employment to fair and equitable recruitment and employment practices
and to ensure their welfare, prescribes a standard employment contract for seamen on board ocean-going vessels for a fixed period but in no case to exceed twelve (12)
months.
The SC held in favor of petitioners.
Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a Motion for Leave to Intervene and to Admit a Motion for Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a Second Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the main that the Court reconsider its ruling that Filipino seafarers are considered regular employees
within the context of Article 280 of the Labor Code. They claim that the decision may establish a precedent that will adversely affect the maritime industry.
Issue: W/N petitioners are regular employees pursuant to art 280(1) of the LC.
Held: They can not be considered as regular employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are
rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of
Article 280 whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of 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.
Undeniably, this circumstance of continuous re-hiring was dictated by practical considerations that experienced crew members are more preferred. Petitioners were only given
priority or preference because of their experience and qualifications but this does not detract the fact that herein petitioners are contractual employees. They can not be
considered regular employees.
Petroleum Shipping vs NLRC
Facts:
On 6 March 1978, Esso International Shipping (Bahamas) Co., Ltd., (Esso) through Trans-Global Maritime Agency, Inc. (Trans-Global) hired Florello W. Tanchico
(Tanchico) as First Assistant Engineer. In 1981, Tanchico became Chief Engineer. On 13 October 1992, Tanchico returned to the Philippines for a two-month vacation after
completing his eight-month deployment.
On 8 December 1992, Tanchico underwent the required standard medical examination prior to boarding the vessel. The medical examination revealed that Tanchico was
suffering from Ischemic Heart Disease, Hypertensive Cardio-Muscular Disease and Diabetes Mellitus. Tanchico took medications for two months and a subsequent stress
test showed a negative result. However, Esso no longer deployed Tanchico. Instead, Esso offered to pay him benefits under the Career Employment Incentive Plan. Tanchico
accepted the offer.
On 26 April 1993, Tanchico filed a complaint against Esso, Trans-Global and Malayan Insurance Co., Inc. efore the POEA for illegal dismissal with claims for backwages,
separation pay, disability and medical benefits and 13 th month pay. In view of the enactment of RA 8042 transferring NLRC the jurisdiction over money claims of overseas
workers.
NLRC, on MFR, granted disability benefit of 18 days for every year of credited service of fourteen (14) years less the amount he already received under the Companys
Disability Plan. To pay complainant his monthly pay computed at [sic] the actual month [sic] worked, which is 8 months as 13th month pay. And the cost of suit.
CA:
The Court of Appeals Affirmrd and ruled that Tanchico was a regular employee of Petroleum Shipping. The Court of Appeals held that petitioners are not exempt from the
coverage of Presidential Decree No. 851, as amended (PD 851) which mandates the payment of 13 th month pay to all employees. The Court of Appeals further ruled that
Tanchico is entitled to disability benefits based on his 14 years of tenure with petitioners. The Court of Appeals stated that the employer-employee relationship subsisted even
during the period of Tanchicos vacation. The Court of Appeals noted that petitioners were aware of Tanchicos medical history yet they still deployed him for 14 years. Finally,
the Court of Appeals sustained the award of attorneys fees.
Issue:

1. Whether Tanchico is a regular employee of petitioners; and

2. Whether Tanchico is entitled to 13th month pay

Held: As was held in the case of Millares, seafarers are not regular employees. As they are only considered as contractual employees whose employment are terminated
everytime their contracts expire.
Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of 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.
About the 13th month pay:
The SC held that Tanchicos employment is governed by his Contract of Enlistment (Contract). The Contract has been approved by the POEA in accordance with Title I,
Book One of the Labor Code and the POEA Rules Governing Employment. The coverage of the Contract includes Compensation, Overtime, Sundays and Holidays,
Vacations, Living Allowance, Sickness, Injury and Death, Transportation and Travel Expense, Subsistence and Living Quarters. It does not provide for the payment of 13 th
month pay. The Contract of Employment, which is the standard employment contract of the POEA, likewise does not provide for the payment of 13 th month pay.

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The prescriptive periods is 20 years. What are prohibited, who are prohibited in illegal recruitment? If you are a
travel agency, you are prohibited to engage in illegal recruitment. Only Filipino citizens. Remember in the constitution 60%
owned by a Filipino citizen. The rule is different here. It must be 70%. Then there is free legal assistance for migrant
workers , etc.you read 8042 as you have finished reading Art 13 up to Art 29 of the labor code. What happens when the
law will be passed, who implement the regulation? Remember there are now people who are now in jail and when this
law is passed what will happen? It will decriminalize illegal recruitment which means that the law repealing illegal
recruitment will appreciate in their favor. What is the case that you will file? Habeas corpus using the law that repealed.
8042 and you will ask the court to produce the living body of the client because what used to be criminal in no linger
criminal now. The only problem is if together with illegal recruitment is estafa! Because it is possible. you can be charged
with estafa with illegal recruitment. That is not double jeopardy and that is allowed in court. You can get exonerated with
illegal recruitment but with estafa you will still serve the penalty. That is criminal. There is this case of illegal recruitment
which has been asked in the bar several times so I think you should read it. That is the case of ppl v panis 1986.
People vs Judge Panis, Serapio Abug (recruitment)
Facts:
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo City alleging that Serapio Abug "without first securing a license from
the Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and there wilfully, unlawfully and criminally operate a private fee-charging
employment agency by charging fees and expenses and promising employment in Saudi Arabia" to four separate individuals named therein, in violation of Article 16 in relation
to Article 39 of the Labor Code.
Abug filed a motion to quash on the ground that the informations did not charge an offense because he was accused of illegally recruiting only one person in each of the four
informations. Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner promised or offered any
employment for a fee."
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated June 24 and September 17, 1981.
Issue:
The basic issue in this case is the correct interpretation of Article 13(b) of P. D. 442, otherwise known as the Labor Code, reading as follows:
"(b) 'Recruitment and placement' refers to any act of canvassing, 'enlisting, contracting, transporting, hiring, or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement."

Held:The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation to Article 16 of the Labor Code; hence, Article 13(b) is not
applicable. However, as the first two cited articles penalize acts of recruitment and placement without proper authority, which is the charge embodied in the informations,
application of the definition of recruitment and placement in Article 13(b) is unavoidable.
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b)
will constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in
consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of
recruitment and placement. The words "shall be deemed" create that presumption.
At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which has victimized many Filipino workers
seeking a better life in a foreign land, and investing hard-earned savings or even borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical
deception at the hands of their own countrymen.

Now, one of the obligations of the recruiters to put up security bond. The security bond is supposed to answer for
the liabilities of the contract that may arise out of the contract that he has succeeded in concluding with those whom he
deployed and the agency representing the foreign principal. What is the liability of the bond? For example the agency has
several unpaid accounts in the travel agency for tickets used for these clients deployed. Can they be executed upon pay
for these tickets? The SC said no! This bond is supposed to answer for ee-el relationship liabilities not for any other
liabilities on the surety. Because if you are an OFW and your contract for one year or another is violated. You file an
illegal dismissal of violation of contract and what can u recover? This is what sec 10 of 8042 says: in case of
termination of overseas employment without just valid or cause as defined by law or contract the worker shall be
entitled to the full reimbursement of his placement fee with the interest of 12% per annum. Plus his salary for
the unexpired portion of the employment contract or for 3 months of every year of the unexpired term, whichever
is less (please read the law for clarifications) That is the penalty for illegal termination of contract in OFW. You can ask
repatriation, reimbursement of placement fee with interest or 3-month salary of the year unexpired or what is remaining
to your contract. Which is different from an ordinary contract wherein it does not grant these kinds of remedies. So, who
has jurisdiction over this kinds of violations of OFW contracts? It is the labor arbiter now and no longer the POEA. It is the
labor arbiter who has the jurisdiction over the residence of the OFW or the labor arbiter of the NCR. That is the rule now.
So with that we are through with placement, pre employment, man power. And we just have to look into at residents or
resident aliens. The employment of resident aliens. Title two. Employment permits of non-resident aliens. There are 3 arts
there. Art 14, 41 prohibitions against transfer of employment, art 42 submission. This involves non resident aliens. If you
are a non resident alien, you can work if the DOLE issues you a permit to work. The immigration will issue you a working
visa but that does not entitle you to work because that is the case decided upon in General Milling v NLRC. this involves
the PBA coach Tim Cone. Tim Cone had a working visa and he is made to work with Alaska right away. So they said that
he is illegally working because he has no working permit. The SC said that Under the present law, it is he DOLE that
grants you a right to work and issues a permit before you can work (non-resident aliens) however if our visa is a resident
visa, you are permanent resident here so they are no longer entitled to the labor code. They can stay and work here. You
will be issued a permit if your country of origin also allows you to work. The requirement of reciprocity.

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