supplemental case 1-29

8/12/2019 Supplemental Case 1-29

http://slidepdf.com/reader/full/supplemental-case-1-29 1/29

G.R. No. 81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,

vs.HON. FRANKLIN . !RILON "# Se$%e&"%' o( L")o% "n* E+-o'+en&, "n* TOAS !. ACHACOSO, "#

A*+n#&%"&o% o( &/e P/-ne Oe%#e"# E+-o'+en& A*+n#&%"&on, respondents.

Gutierrez & Alo Law Offices for petitioner.

SARIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally inthe recritment of !ilipino or#ers, male and female, for overseas placement," 1 challenges the $onstittional

validity of %epartment &rder 'o. , Series of **, of the %epartment of +aor and Employment, in the character

of "-I%E+I'ES -&/E0'I'- T1E TE2P&0A03 SSPE'SI&' &! %EP+&32E'T &! !I+IPI'&%&2ESTI$ A'% 1&SE1&+% 4&05E0S," in this petition for certiorari and prohiition. Specifically, the

measre is assailed for "discrimination against males or females6" that it "does not apply to all !ilipino or#ers

t only to domestic helpers and females ith similar s#ills6" 3 and that it is violative of the right to travel. It is heldli#eise to e an invalid exercise of the lama#ing poer, police poer eing legislative, and not exective, in

character.

In its spplement to the petition, PASEI invo#es Section 7, of Article 8III, of the $onstittion, providing for

or#er participation "in policy and decision9ma#ing processes affecting their rights and enefits as may e provided y la." 2 %epartment &rder 'o. , it is contended, as passed in the asence of prior consltations. It is

claimed, finally, to e in violation of the $harter:s non9impairment clase, in addition to the "great and irreparale

in;ry" that PASEI memers face shold the &rder e frther enforced.

&n 2ay <=, **, the Solicitor -eneral, on ehalf of the respondents Secretary of +aor and Administrator of thePhilippine &verseas Employment Administration, filed a $omment informing the $ort that on 2arch *, **, the

respondent +aor Secretary lifted the deployment an in the states of Ira>, ?ordan, @atar, $anada, 1ong#ong,

nited States, Italy, 'oray, Astria, and Siterland. In smitting the validity of the challenged "gidelines,"the Solicitor -eneral invo#es the police poer of the Philippine State.

It is admitted that %epartment &rder 'o. is in the natre of a police poer measre. The only >estion is hether

or not it is valid nder the $onstittion.

The concept of police poer is ell9estalished in this ;risdiction. It has een defined as the "state athority toenact legislation that may interfere ith personal lierty or property in order to promote the general elfare." 5 Asdefined, it consists of () an imposition of restraint pon lierty or property, (<) in order to foster the common good.

It is not capale of an exact definition t has een, prposely, veiled in general terms to nderscore its all9

comprehensive emrace.

"Its scope, ever9expanding to meet the exigencies of the times, even to anticipate the ftre here it cold e done, provides enogh room for an efficient and flexile response to conditions and circmstances ths assring the

greatest enefits." 4

It finds no specific $onstittional grant for the plain reason that it does not oe its origin to the $harter. Along ith

the taxing poer and eminent domain, it is inorn in the very fact of statehood and sovereignty. It is a fndamentalattrite of government that has enaled it to perform the most vital fnctions of governance. 2arshall, to hom

the expression has een credited, refers to it sccinctly as the plenary poer of the State "to govern its citiens." 8

"The police poer of the State ... is a poer coextensive ith self9 protection, and it is not inaptly termed the "laof overhelming necessity." It may e said to e that inherent and plenary poer in the State hich enales it to

prohiit all things hrtfl to the comfort, safety, and elfare of society." 9



It constittes an implied limitation on the Bill of 0ights. According to !ernando, it is "rooted in the conception that

men in organiing the state and imposing pon its government limitations to safegard constittional rights did not

intend therey to enale an individal citien or a grop of citiens to ostrct nreasonaly the enactment of schsaltary measres calclated to ensre commnal peace, safety, good order, and elfare." 10 Significantly, the Bill

of 0ights itself does not prport to e an asolte garanty of individal rights and lierties "Even lierty itself, the

greatest of all rights, is not nrestricted license to act according to one:s ill."11

It is s;ect to the far moreoverriding demands and re>irements of the greater nmer.

'otithstanding its extensive seep, police poer is not ithot its on limitations. !or all its aesome

conse>ences, it may not e exercised aritrarily or nreasonaly. &therise, and in that event, it defeats the

prpose for hich it is exercised, that is, to advance the plic good. Ths, hen the poer is sed to frther private interests at the expense of the citienry, there is a clear misse of the poer. 1

In the light of the foregoing, the petition mst e dismissed.

As a general rle, official acts en;oy a presmed vahdity. 13 In the asence of clear and convincing evidence to the

contrary, the presmption logically stands.

The petitioner has shon no satisfactory reason hy the contested measre shold e nllified. There is no >estionthat %epartment &rder 'o. applies only to "female contract or#ers," 12 t it does not therey ma#e an nde

discrimination eteen the sexes. It is ell9settled that "e>ality efore the la" nder the $onstittion 15 does not

import a perfect Identity of rights among all men and omen. It admits of classifications, provided that () schclassifications rest on sstantial distinctions6 (<) they are germane to the prposes of the la6 (7) they are not

confined to existing conditions6 and (C) they apply e>ally to all memers of the same class. 14

The $ort is satisfied that the classification made9the preference for female or#ers D rests on sstantial

distinctions.

As a matter of ;dicial notice, the $ort is ell aare of the nhappy plight that has efallen or female laor forcearoad, especially domestic servants, amid exploitative or#ing conditions mar#ed y, in not a fe cases, physical

and personal ase. The sordid tales of maltreatment sffered y migrant !ilipina or#ers, even rape and varios

forms of tortre, confirmed y testimonies of retrning or#ers, are compelling motives for rgent -overnmentaction. As precisely the careta#er of $onstittional rights, the $ort is called pon to protect victims of exploitation.

In flfilling that dty, the $ort sstains the -overnment:s efforts.

The same, hoever, cannot e said of or male or#ers. In the first place, there is no evidence that, except perhaps

for isolated instances, or men aroad have een afflicted ith an Identical predicament. The petitioner has proffered no argment that the -overnment shold act similarly ith respect to male or#ers. The $ort, of corse,

is not impressing some male chavinistic notion that men are sperior to omen. 4hat the $ort is saying is that itas largely a matter of evidence (that omen domestic or#ers are eing ill9treated aroad in massive instances)and not pon some fancifl or aritrary yardstic# that the -overnment acted in this case. It is evidence capale

indeed of n>estionale demonstration and evidence this $ort accepts. The $ort cannot, hoever, say the same

thing as far as men are concerned. There is simply no evidence to ;stify sch an inference. Sffice it to state, then,that insofar as classifications are concerned, this $ort is content that distinctions are orne y the evidence.

%iscrimination in this case is ;stified.

As e have frthermore indicated, exective determinations are generally final on the $ort. nder a replican

regime, it is the exective ranch that enforces policy. !or their part, the corts decide, in the proper cases, hetherthat policy, or the manner y hich it is implemented, agrees ith the $onstittion or the las, t it is not for

them to >estion its isdom. As a co9e>al ody, the ;diciary has great respect for determinations of the $hief

Exective or his salterns, especially hen the legislatre itself has specifically given them enogh room on hothe la shold e effectively enforced. In the case at ar, there is no gainsaying the fact, and the $ort ill deal

ith this at greater length shortly, that %epartment &rder 'o. implements the rle9ma#ing poers granted y the

+aor $ode. Bt hat shold e noted is the fact that in spite of sch a fiction of finality, the $ort is on its on

persaded that prevailing conditions indeed call for a deployment an.



There is li#eise no dot that sch a classification is germane to the prpose ehind the measre. n>estionaly,

it is the avoed o;ective of %epartment &rder 'o. to "enhance the protection for !ilipino female overseas

or#ers" 1 this $ort has no >arrel that in the midst of the terrile mistreatment !ilipina or#ers have sfferedaroad, a an on deployment ill e for their on good and elfare.

The &rder does not narroly apply to existing conditions. 0ather, it is intended to apply indefinitely so long asthose conditions exist. This is clear from the &rder itself ("Pending revie of the administrative and legal measres,

in the Philippines and in the host contries . . ." 18), meaning to say that shold the athorities arrive at a meansimpressed ith a greater degree of permanency, the an shall e lifted. As a stop9gap measre, it is possessed of a

necessary malleaility, depending on the circmstances of each case. Accordingly, it provides

. +I!TI'- &! SSPE'SI&'. D The Secretary of +aor and Employment (%&+E) may, pon recommendationof the Philippine &verseas Employment Administration (P&EA), lift the sspension in contries here there are

. Bilateral agreements or nderstanding ith the Philippines, andFor,

<. Existing mechanisms providing for sfficient safegards to ensre the elfare and protection of !ilipinoor#ers. 19

The $ort finds, finally, the impgned gidelines to e applicale to all female domestic overseas or#ers. That itdoes not apply to "all !ilipina or#ers" 0 is not an argment for nconstittionality. 1ad the an een given

niversal applicaility, then it old have een nreasonale and aritrary. !or ovios reasons, not all of them are

similarly circmstanced. 4hat the $onstittion prohiits is the singling ot of a select person or grop of persons

ithin an existing class, to the pre;dice of sch a person or grop or reslting in an nfair advantage to another person or grop of persons. To apply the an, say exclsively to or#ers deployed y A, t not to those recrited

y B, old oviosly clash ith the e>al protection clase of the $harter. It old e a classic case of hat

$hase refers to as a la that "ta#es property from A and gives it to B." 1 It old e an nlafl invasion of

property rights and freedom of contract and needless to state, an invalid act.

(!ernando says "4here theclassification is ased on sch distinctions that ma#e a real difference as infancy, sex, and stage of civiliation of

minority grops, the etter rle, it old seem, is to recognie its validity only if the yong, the omen, and thecltral minorities are singled ot for favorale treatment. There old e an element of nreasonaleness if on the

contrary their stats that calls for the la ministering to their needs is made the asis of discriminatory legislation

against them. If sch e the case, it old e difficlt to refte the assertion of denial of e>al protection." 3 In the

case at ar, the assailed &rder clearly accords protection to certain omen or#ers, and not the contrary.)

It is incorrect to say that %epartment &rder 'o. prescries a total an on overseas deployment. !rom scattered

provisions of the &rder, it is evident that sch a total an has hot een contemplated. 4e >ote

=. AT1&0IGE% %EP+&32E'T9The deployment of domestic helpers and or#ers of similar s#ills definedherein to the folloing Hsic are athoried nder these gidelines and are exempted from the sspension.

=. 1irings y immediate memers of the family of 1eads of State and -overnment6

=.< 1irings y 2inister, %epty 2inister and the other senior government officials6 and

=.7 1irings y senior officials of the diplomatic corps and dly accredited international organiations.

=.C 1irings y employers in contries ith hom the Philippines have Hsic ilateral laor agreements or

nderstanding.

xxx xxx xxx

J. /A$ATI&'I'- %&2ESTI$ 1E+PE0S A'% 4&05E0S &! SI2I+A0 S5I++S99/acationing domestichelpers andFor or#ers of similar s#ills shall e alloed to process ith the P&EA and leave for or#site only if

they are retrning to the same employer to finish an existing or partially served employment contract. Those

or#ers retrning to or#site to serve a ne employer shall e covered y the sspension and the provision ofthese gidelines.



xxx xxx xxx

. +I!TI'- &! SSPE'SI&'9The Secretary of +aor and Employment (%&+E) may, pon recommendation of

the Philippine &verseas Employment Administration (P&EA), lift the sspension in contries here there are

. Bilateral agreements or nderstanding ith the Philippines, andFor,

<. Existing mechanisms providing for sfficient safegards to ensre the elfare and protection of !ilipino

or#ers. 2

xxx xxx xxx

The conse>ence the deployment an has on the right to travel does not impair the right. The right to travel is

s;ect, among other things, to the re>irements of "plic safety," "as may e provided y la." 5 %epartment&rder 'o. is a valid implementation of the +aor $ode, in particlar, its asic policy to "afford protection to

laor," 4 prsant to the respondent %epartment of +aor:s rle9ma#ing athority vested in it y the +aor

$ode.

The petitioner assmes that it is nreasonale simply ecase of its impact on the right to travel, t as ehave stated, the right itself is not asolte. The dispted &rder is a valid >alification thereto.

'either is there merit in the contention that %epartment &rder 'o. constittes an invalid exercise of legislative

poer. It is tre that police poer is the domain of the legislatre, t it does not mean that sch an athority may

not e laflly delegated. As e have mentioned, the +aor $ode itself vests the %epartment of +aor andEmployment ith rlema#ing poers in the enforcement hereof. 8

The petitioners:s reliance on the $onstittional garanty of or#er participation "in policy and decision9ma#ing

processes affecting their rights and enefits" 9 is not ell9ta#en. The right granted y this provision, again, mst

smit to the demands and necessities of the State:s poer of reglation.

The $onstittion declares that

Sec. 7. The State shall afford fll protection to laor, local and overseas, organied and norganied, and promote

fll employment and e>ality of employment opportnities for all. 30

"Protection to laor" does not signify the promotion of employment alone. 4hat concerns the $onstittion more

paramontly is that sch an employment e aove all, decent, ;st, and hmane. It is ad enogh that the contryhas to send its sons and daghters to strange lands ecase it cannot satisfy their employment needs at home. nder

these circmstances, the -overnment is dty9ond to insre that or toiling expatriates have ade>ate protection,

personally and economically, hile aay from home. In this case, the -overnment has evidence, an evidence the

petitioner cannot seriosly dispte, of the lac# or inade>acy of sch protection, and as part of its dty, it has precisely ordered an indefinite an on deployment.

The $ort finds frthermore that the -overnment has not indiscriminately made se of its athority. It is not

contested that it has in fact removed the prohiition ith respect to certain contries as manifested y the Solicitor-eneral.

The non9impairment clase of the $onstittion, invo#ed y the petitioner, mst yield to the loftier prposes

targetted y the -overnment. 31 !reedom of contract and enterprise, li#e all other freedoms, is not free from

restrictions, more so in this ;risdiction, here laissez faire has never een flly accepted as a controlling economicay of life.

This $ort nderstands the grave implications the >estioned &rder has on the siness of recritment. The concern

of the -overnment, hoever, is not necessarily to maintain profits of siness firms. In the ordinary se>ence of

events, it is profits that sffer as a reslt of -overnment reglation. The interest of the State is to provide a decentliving to its citiens. The -overnment has convinced the $ort in this case that this is its intent. 4e do not find the

impgned &rder to e tainted ith a grave ase of discretion to arrant the extraordinary relief prayed for.

41E0E!&0E, the petition is %IS2ISSE%. 'o costs.



S& &0%E0E%.

6RE7 ASTER INTERNATIONAL INC., petitioner, vs. NATIONAL FE!ERATION OF LA6ORNIONS NAFL:, ANTONIO !. ESTRA!A "n* HONORA6LE NATIONAL LA6OR RELATIONSCOISSION T/%* !#on:, respondents.

! E C I S I O N

!AVI!E, JR., J .:

This is a special civil action for certiorari see#ing the reversal of the J &ctoer C decisionH of the 'ational+aor 0elations $ommission ('+0$) in '+0$ $ase 'o. KK9KL9KC7L97 ($A 'o. +9KKJ7JK9C), hich modified

the ?ly C decisionH< of the +aor Ariter y directing the reinstatement of private respondent Antonio %.

Estrada, the complainant, ithot loss of seniority rights and enefits.

Private respondent 'ational !ederation of +aor nions ('A!+), a co9complainant in the laor case, is a laornion of hich complainant is a memer.

The factal and procedral antecedents are smmaried in the decision of the +aor Ariter hich e >ote

veratim

$omplainant as first employed y respondent on L Septemer as rote helper ith the latest daily ageof P.KK. !rom April 7 p to 2ay 7, for a period of one () month, complainant ent on asent

ithot permission (A4&P). &n <K 2ay 7, respondent thr 2r. 0odolfo /alentin, sent a 2emo to

complainant, to it

MPlease explain in riting ithin <C hors of yor receipt of this memo hy no disciplinary action shold e ta#en

against yo for the folloing offense

3o ere asent since April , 7 p to 2ay , 7.

!or yor strict compliance.N

In anser to the aforesaid memo, complainant explained

MSa dahilan po na a#o ay hindi na#apagpaalam sainyo Hsic dahil ini #o ang mga ana# #o sa Samar dahil angasaa #o ay lmayas at alang mag9aalaga sa mga ana# #o. 5aya naman hindi a#o na#a long distance or

telegrama dahil ala a#ong pera at iinili #o ng gamot ay pro tang pa.N

!inding said explanation nsatisfactory, on L ?ne 7, respondent thr its Sales 2anager, 2r. 1enry A.

$hongco issed a 'otice of Termination hich reads

M4e received yor letter of explanation dated 2ay <, 7 t e regret to inform yo that e do not consider it

valid. 3o are aare of the company 0les and 0eglations that asence ithot permission for six (L)

consective or#ing days is considered aandonment of or#.

In vie of the foregoing, the company has decided to terminate yor employment effective ?ne J, 7 foraandonment of or#.N

http://sc.judiciary.gov.ph/jurisprudence/1997/apr1997/119243.htm#_edn1






1ence, this complaint.

$omplainants contend that individal complainantOs dismissal as done ithot ;st case6 that it as not

sfficiently estalished that individal complainantOs asence from April , 7 to ?ne L, 7 are n;stified6that the penalty of dismissal for sch violation is too severe6 that in imposing sch penalty, respondent shold have

ta#en into consideration complainantOs length of service and as a first offender, a penalty less pnitive ill sfficesch as sspension for a definite period, (Position Paper, complainants).

pon the other hand, respondent contends that individal complainant as dismissed for case alloed y thecompany 0les and 0eglations and the +aor $ode6 that the act of complainant in asenting from or# for one ()

month ithot official leave is deleterios to the siness of respondent6 that it ill reslt to stoppage of prodction

hich ill not only destrctive to respondentOs interests t also to the interest of its employees in general6 that thedismissal of complainant from the service is legal, (Position Paper, respondent).H7

The +aor Ariter dismissed the complaint for lac# of merit, citing the principle of managerial control, hich

recognies the employerOs prerogative to prescrie reasonale rles and reglations to govern the condct of his

employees. The principle allos the imposition of disciplinary measres hich are necessary for the efficiency of oth the employer and the employees. In complainant:s case, he persisted in not reporting for or# ntil L ?ne

7 notithstanding his receipt of the memorandm re>iring him to explain his asence ithot approval. The

+aor Ariter, relying on Shoemart, Inc. vs. NLRC,HC ths conclded

/erily, it is crystal clear that individal complainant has indeed aandoned his or#. The filing of the complaint on<= ?ne 7 or almost to (<) months from the date complainant failed to report for or# affirms the findings of

this &ffice and therefore, nder the la and ;risprdence hich pholds the right of an employer to discharge an

employee ho incrs fre>ent, prolonged and nexplained asences as eing grossly remiss in his dties to theemployer and is therefore, dismissed for case, (Shoemart, Inc. vs. '+0$, JL S$0A 7*=). An employee is

deemed to have aandoned his position or to have resigned from the same, henever he has een asent therefrom

ithot previos permission of the employer for three consective days or more. This ;stification is the oviosharm to employerOs interest, reslting from sic! the non9availaility of the or#erOs services ,(Spra). (nderscoring spplied)H=

and rled that complainantOs termination from his employment as Mlegal, the same ith ;st or athoried case

and de process.NHL

$omplainant appealed to the '+0$, alleging that the immediate filing of a complaint for illegal dismissal verilyindicated that he never intended to aandon his or#, then cited "olicarpio v. #icente $% Sun, r.,HJ here the

'+0$ rled that prolonged asence does not, y itself, necessarily mean aandonment. Accordingly, there mst e

a concrrence of intention and overt acts from hich it can e inferred that the employee is no longer interested inor#ing. $omplainant li#eise invo#ed compassion in the application of sanctions, as dismissal from employment

rings ntold hardship and sorros on the dependents of the age earners. In his case, a penalty less pnitive thandismissal cold have sfficed.

In the assailed decisionH* of J &ctoer C, the '+0$ modified the +aor Ariter:s decision and held thatcomplainantOs dismissal as invalid for the folloing reasons

$omplainant9appellantOs prolonged asences, althogh nathoried, may not amont to gross neglect or

aandonment of or# to arrant otright termination of employment. %ismissal is too severe a penalty. !or one,the mere fact that complainant9appellant is a first offender mst e considered in his favor. Besides, it is generally

impossile for an employee to anticipate hen he old e ill or compelled to attend to some family prolems or

emergency li#e in the case at ar.

0eliance on the rling ennciated in the cited case of Shoemart Inc. vs. 'ational +aor 0elations, JL S$0A 7*=,is >ite misplaced ecase of the ovios dissimilarities of the attendant circmstances in the said case vis9a9vis

those otaining in the case at ar. nli#e in the aforecited Shoemart $ase, herein complainant9appellant as not

dismissed for nathoried asences and eventally reinstated anterior to his second dismissal for the same offense

nor as he given a second chance hich he cold have ignored.
















&therise stated, the difference eteen the to cases greatly lies Hin the fact that complainant in the Shoemart

$ase in the langage of the Spreme $ort as Man inveterate asentee ho does not deserve reinstatementN

compared to herein complainant9appellant ho is a first offender NH

The '+0$ then decreed as follos

P0E2ISES $&'SI%E0E%, and H sic the %ecision of the +aor Ariter, dated ?ly C is herey 2&%I!IE%,

y directing the reinstatement of complainant9appellant to his former position ithot loss of seniority rights and

other enefits, t ithot ac#ages. The other findings in the appealed decision stand A!!I02E%.HK

PetitionerOs motion for the reconsiderationH as denied y the '+0$ in its J %ecemer C resoltion.H< Petitioner ths filed this special civil action contending that the '+0$ committed grave ase of discretion in

ordering complainant:s reinstatement, hich in effect contenances the reinstatement of an employee ho is fond

gilty of MexcessiveN asences ithot prior approval. It frther arged that the '+0$ failed to consider therationale ehind petitionerOs 0les and 0eglations6 that it as deprived of its prerogative to enforce them6 and that

complainant:s reinstatement old adversely affect its siness and send the rong signals to its employees.

In its commentH7 for plic respondent '+0$, the &ffice of the Solicitor -eneral maintained that dismissal fromemployment as too severe a penalty for a first time offender li#e complainant. Althogh he violated petitionerOs

rles and reglations, his asences ere ;stified he had to ring his children to Samar, his home province, as his

ife deserted him. 4hile that y itself might not excse the failre to see# permission, the &ffice of the Solicitor

-eneral smitted, hoever, that Mit old e at H sic the height of callosness if one, considering his plight nderthe circmstanceHs, old not give de consideration to HcomplainantOs explanation. There has to e an

exception.NHC

Applying Ito'on(Su%oc )ines, Inc. v. NLRC ,H= the &ffice of the Solicitor -eneral recommended complainantOsreinstatement, hich old e more harmonios to the dictates of social ;stice and e>ity. It frther emphasied

that the reinstatement shold not e considered a condonation of complainantOs irresponsile ehavior, rather, it

mst e vieed as a mitigation of the severity of the penalty of dismissal. Accordingly, it prays that this petition edismissed.

In its reply,HL petitioner dispted the application of Itogon9Syoc ecase () the employee involved therein had

een in the service for tenty9three years hile complainant herein had served petitioner for only to years6 and

(<) the offense in Ito'on(Su%oc as limited to a single act of high grading hile complainant herein committed aseries of nexcsed asences.

4e gave de corse to the petition and dispensed ith complainantOs comment.

The sole isse to e resolved is hether the '+0$ committed grave ase of discretion in modifying the decision

of the +aor Ariter.

The anser mst e in the negative.A scrtiny of the facts discloses that complainantOs asence as precipitated y a grave family prolem as his ife

nexpectedly deserted him and aandoned the family. $onsidering that he had a fll9time ;o, there as no one tohom he cold entrst the children and he as ths compelled to ring them to the province. It old have een

extremely difficlt for him to have een hsand and ifeFfather and mother at the same time to the children in the

metropolis. 1e as then nder emotional, psychological, spirital and physical stress and strain. The reason for his

asence is, nder these circmstances, ;stified.

4hile his failre to inform and see# petitioner:s approval as anomission hich mst e corrected and chastised, he did not merit the severest penalty of dismissal from the service.

PetitionerOs finding that complainant as gilty of aandonment is misplaced. Aandonment as a ;st and valid

grond for dismissal re>ires the delierate, n;stified refsal of the employee to resme his employment. To

elements mst then e satisfied () the failre to report for or# or asence ithot valid or ;stifiale reason6 and(<) a clear intention to sever the employer9employee relationship. The second element is the more determinative

factor and mst e evinced y overt acts.HJ

+i#eise, the rden of proof is on the employer to sho theemployeeOs clear and delierate intent to discontine his employment ithot any intention of retrning, H*

mere

asence is not sfficient.H These elements are not present here. !irst, as held aove, complainant:s asence as

;stified nder the circmstances. As to the second re>isite, e are not convinced that complainant ever intended

to sever the employer9employee relationship. $omplainant immediately complied ith the memo re>iring him to



























explain his asence, and pon #noledge of his termination, immediately sed for illegal dismissal. These plainly

refted any claim that he as no longer interested in retrning to or#.H<K 4ithot dot, the intention is lac#ing.

2oreover, petitioner failed to discharge the rden of proof that complainant as gilty of aandonment. 'oevidence other than complainantOs letter explaining his asence as presented. 'eedless to state, the letter did not

indicate, in the least, that complainant as no longer interested in retrning to or#. &n the contrary, complainant

soght petitionerOs nderstanding. In declaring him gilty of aandonment, petitioner merely relied on its 0lesand 0eglations hich limited its application to a six9day continos asence, contrary to the prpose of the

la.

4hile the employer is not preclded from prescriing rles and reglations to govern the condct of his

employees, these rles and their implementation mst e fair, ;st and reasonale. It mst e nderscored that no

less than or $onstittion loo#s ith compassion on the or#ingman and protects his rights not only nder ageneral statement of a state policy,H<

t nder the Article on Social ?stice and 1man 0ights,H<<

ths placing

laor contracts on a higher plane and ith greater safegards. /erily, relations eteen capital and laor are not

merely contractal. They are impressed ith plic interest and laor contracts mst, perforce, yield to thecommon good.H<7

4e then conclde that complainantOs "prolonged" asence ithot approval does not fall ithin the definition of

aandonment and that his dismissal as n;stified. 4hile e do not decide here the validity of petitioner:s 0lesand 0eglations on continos, nathoried asences, hat is plain is that it as ielded ith nde haste

reslting in a deprivation of de process, ths not alloing for a determination of ;st case or aandonment. In

this light, petitioner:s dismissal as illegal. This is not to say that his asence shold go npnished, as impliedly

noted y the '+0$ in declining to aard ac# ages. In the asence of the appropriate offense hich definescomplainantOs infraction in the companyOs 0les and 0eglations, e>ity dictates that a penalty commensrate to

the infraction e imposed.

7HEREFORE, the petition is herey %IS2ISSE% and the decision of the 'ational +aor 0elations $ommissionin '+0$ $ase 'o. KL9KC7L97 is herey A!!I02E%. 'o prononcement as to costs.

SO OR!ERE!.

ROLAN!O ;. TAN, petitioner, vs. LEOVIGIL!O LAGRAA "n* THE HONORA6LE CORT OFAPPEALS,respondents.

! E C I S I O N

EN!O<A, J.=












This is a petition for revie on certiorari of the decision, H dated 2ay 7, <KK, and the resoltion,H< dated

'ovemer <J, <KK, of the $ort of Appeals in $.A.9-.0. SP. 'o. L7LK, annlling the resoltions of the 'ational

+aor 0elations $ommission ('+0$) and reinstating the rling of the +aor Ariter hich fond petitioner0olando Tan gilty of illegally dismissing private respondent +eovigildo +agrama and ordering him to pay the

latter the amont of P7L,*C. y ay of separation pay, ac#ages, and damages.

The folloing are the facts.

Petitioner 0olando Tan is the president of Spreme Theater $orporation and the general manager of $ron and

Empire Theaters in Btan $ity. Private respondent +eovigildo +agrama is a painter, ma#ing ad illoards and

mrals for the motion pictres shon at the Empress, Spreme, and $ron Theaters for more than K years, from

Septemer , ** to &ctoer J, *.

&n &ctoer J, *, private respondent +agrama as smmoned y Tan and praided M Nan'ihi na naman *a

sulo+ sa imon' +rawin'anan.N (M3o again rinated inside yor or# area.N) 4hen +agrama as#ed hat Tan as

saying, Tan told him, M A%aw +a'han' estor%a. $ili *o 'usto n'a mo(+rawin' *a pa. Gui*an *aron, wala na%+rawin'. Gawas.N (M%onOt say anything frther. I donOt ant yo to dra anymore. !rom no on, no more

draing. -et ot.N)

+agrama denied the charge against him. 1e claimed that he as not the only one ho entered the draing area and

that, even if the charge as tre, it as a minor infraction to arrant his dismissal. 1oever, everytime he spo#e,Tan shoted MGawasN (M-et otN), leaving him ith no other choice t to leave the premises.

+agrama filed a complaint ith the S90egional Aritration Branch 'o. 8 of the 'ational +aor 0elations

$ommission ('+0$) in Btan $ity. 1e alleged that he had een illegally dismissed and soght reinvestigationand payment of 7th month pay, service incentive leave pay, salary differential, and damages.

Petitioner Tan denied that +agrama as his employee. 1e asserted that +agrama as an independent contractor

ho did his or# according to his methods, hile he (petitioner) as only interested in the reslt thereof. 1e cited

the admission of +agrama dring the conferences efore the +aor Ariter that he as paid on a fixed piece9or#

asis, i.e., that he as paid for every painting trned ot as ad illoard or mral for the pictres shon in the threetheaters, on the asis of a Mno mralFilloard dran, no payN policy. 1e smitted the affidavits of other cinema

oners, an amsement par# oner, and those spervising the constrction of a chrch to prove that the services of+agrama ere contracted y them. 1e denied having dismissed +agrama and alleged that it as the latter ho

refsed to paint for him after he as scolded for his haits.

As no amicale settlement had een reached, +aor Ariter 0ogelio P. +egaspi directed the parties to file their position papers. &n ?ne J, , he rendered a decision, the dispositive portion of hich reads

41E0E!&0E, premises considered ;dgment is herey ordered

. %eclaring complainantOs H+agramaOs dismissal illegal and

<. &rdering respondents HTan to pay complainant the folloing

A. Separation Pay 9 P =,KKK.KK

B. Bac#ages 9 CJ,<KK.KK (from J &ctoer * to J ?ne )

$. 7th month pay (7 years) 9 J,JKK.KK

%. Service Incentive +eave Pay (7 years) 9 <, C.

E. %amages 9 K,KKK.KK

T&TA+ HP7L,*C.

$omplainantOs other claims are dismissed for lac# of merit.H7

Petitioner 0olando Tan appealed to the '+0$ !ifth %ivision, $agayan de &ro $ity, hich, on ?ne 7K, <KKK,

rendered a decisionHC finding +agrama to e an independent contractor, and for this reason reversing the decision of

the +aor Ariter.

http://sc.judiciary.gov.ph/jurisprudence/2002/aug2002/151228.htm#_edn1











0espondent +agrama filed a motion for reconsideration, t it as denied for lac# of merit y the '+0$ in a

resoltion of Septemer <, <KKK. 1e then filed a petition for certiorari nder 0le L= efore the $ort of Appeals.

The $ort of Appeals fond that petitioner exercised control over +agramaOs or# y dictating the time hen+agrama shold smit his illoards and mrals and setting rles on the se of the or# area and rest

room. Althogh it fond that +agrama did or# for other cinema oners, the appeals cort held it to e a mere

sideline insfficient to prove that he as not an employee of Tan. The appeals cort also fond no evidence of anyintention on the part of +agrama to leave his ;o or sever his employment relationship ith Tan. Accordingly, on

2ay 7, <KK, the $ort of Appeals rendered a decision, the dispositive portion of hich reads

I' T1E +I-1T &! A++ T1E !&0E-&I'-, the Petition is herey -0A'TE%. The 0esoltions of the Plic

0espondent issed on ?ne 7K, <KKK and Septemer <, <KKK are A''++E%. The %ecision of the 1onorale+aor Ariter 0ogelio P. +egaspi on ?ne J, is herey 0EI'STATE%.

Petitioner moved for a reconsideration, t the $ort of Appeals fond no reason to reverse its decision and so

denied his motion for lac# of merit.H= 1ence, this petition for revie on certiorari ased on the folloing

assignments of errors

I. 4ith all de respect, the decision of respondent $ort of Appeals in $A9-.0. SP '&. L7LK is ereft of any

finding that Plic 0espondent '+0$, =th %ivision, had no ;risdiction or exceeded it or otherise gravely ased

its discretion in its 0esoltion of 7K ?ne <KKK in '+0$ $A9'&. 29KKC=K9.

II. 4ith all de respect, respondent $ort of Appeals, asent any positive finding on its part that the 0esoltion of7K ?ne <KKK of the '+0$ is not spported y sstantial evidence, is ithot athority to sstitte its conclsion

for that of said '+0$.

III. 4ith all de respect, respondent $ort of AppealsO discorse on Mfreelance artists and paintersN in the decision

in >estion is misplaced or has no factal or legal asis in the record.

I/. 4ith all de respect, respondent $ort of AppealsO opening statement in its decision as to Memployment,NMmonthly salary of P,CJ=.KKN and Mor# schedle from 2onday to Satrday, from *KK oOcloc# in the morning p

to =KK oOcloc# in the afternoonN as MfactsN is not spported y the evidence on record.

/. 4ith all de respect, the case of Lamo, et al., v. NLRC, et al., 7J S$0A C<K H-.0. 'o. KC< &ctoer <L,

relied pon y respondent $ort of Appeals is not applicale to the pecliar circmstances of this case. HL

The isses raised oil don to hether or not an employer9employee relationship existed eteen petitioner and

private respondent, and hether petitioner is gilty of illegally dismissing private respondent. 4e find the ansers

to these isses to e in the affirmative.

I.

In determining hether there is an employer9employee relationship, e have applied a

Mfor9fold test,N to it ()

hether the alleged employer has the poer of selection and engagement of employees6 (<) hether he has

control of the employee ith respect to the means and methods y hich or# is to e accomplished6 (7) hetherhe has the poer to dismiss6 and (C) hether the employee as paid ages. HJ

These elements of the employer9

employee relationship are present in this case.

-irst. The existence in this case of the first element is ndispted. It as petitioner ho engaged the services of

+agrama ithot the intervention of a third party. It is the existence of the second element, the poer of control,that re>ires discssion here.

&f the for elements of the employer9employee relationship, the Mcontrol testN is the most important. $ompared toan employee, an independent contractor is one ho carries on a distinct and independent siness and nderta#es to perform the ;o, or#, or service on its on accont and nder its on responsiility according to its on manner

and method, free from the control and direction of the principal in all matters connected ith the performance of the

or# except as to the reslts thereof.H* 1ence, hile an independent contractor en;oys independence and freedomfrom the control and spervision of his principal, an employee is s;ect to the employerOs poer to control the

means and methods y hich the employeeOs or# is to e performed and accomplished.


http://sc.judiciary.gov.ph/jurisprudence/1999/oct99/111042.htm












In the case at ar, aleit petitioner Tan claims that private respondent +agrama as an independent contractor and

never his employee, the evidence shos that the latter performed his or# as painter nder the spervision and

control of petitioner. +agrama or#ed in a designated or# area inside the $ron Theater of petitioner, for the seof hich petitioner prescried rles. The rles inclded the oservance of cleanliness and hygiene and a prohiition

against rinating in the or# area and any place other than the toilet or the rest rooms. H

PetitionerOs control over

+agramaOs or# extended not only to the se of the or# area, t also to the reslt of +agramaOs or#, and themanner and means y hich the or# as to e accomplished.

2oreover, it old appear that petitioner not only provided the or#place, t spplied as ell the materials sed

for the paintings, ecase he admitted that he paid +agrama only for the latterOs services.HK

Private respondent +agrama claimed that he or#ed daily, from * oOcloc# in the morning to = oOcloc# in theafternoon. Petitioner dispted this allegation and maintained that he paid +agrama P,CJ=.KK per ee# for the

mrals for the three theaters hich the latter sally finished in 7 to C days in one ee#.H Even assming this to e

tre, the fact that +agrama or#ed for at least 7 to C days a ee# proves reglarity in his employment y petitioner.

Secon+. That petitioner had the right to hire and fire as admitted y him in his position paper smitted to the

'+0$, the pertinent portions of hich stated

$omplainant did not #no ho to se the availale comfort rooms or toilets in and aot his or# premises. 1e

as rinating right at the place here he as or#ing hen it as so easy for him, as everyody else did and hadhe only anted to, to go to the comfort rooms. Bt no, the complainant had to ma#e a virtal rinal ot of

his or# place The place then stn# to high heavens, natrally, to the consternation of respondents and everyone

ho cold smell the malodor.

. . .

-iven sch circmstances, the respondents had every right, nay all the compelling reason, to fire him from his

painting ;o pon discovery and his admission of sch acts. 'onetheless, thogh thoroghly scolded, he as not

fired. It as he ho stopped to paint for respondents.H<

By stating that he had the right to fire +agrama, petitioner in effect ac#noledged +agrama to e his employee. !orthe right to hire and fire is another important element of the employer9employee relationship. H7 Indeed, the fact

that, as petitioner himself said, he aited for +agrama to report for or# t the latter simply stopped reporting for

or# reinforces the conviction that +agrama as indeed an employee of petitioner. !or only an employee can

nrtre sch an expectancy, the frstration of hich, nless satisfactorily explained, can ring aot somedisciplinary action on the part of the employer.

hir+. Payment of ages is one of the for factors to e considered in determining the existence of employer9

employee relation. 4ages are defined as Mremneration or earnings, hoever designated, capale of eing

expressed in terms of money, hether fixed or ascertained on a time, tas#, piece, or commission asis, or othermethod of calclating the same, hich is payale y an employer to an employee nder a ritten or nritten

contract of employment for or# done or to e done, or for services rendered or to e rendered.N HC That +agramaor#ed for Tan on a fixed piece9or# asis is of no moment. Payment y reslt is a method of compensation and

does not define the essence of the relation. H= It is a method of compting compensation, not a asis for determining

the existence or asence of employer9employee relationship. &ne may e paid on the asis of reslts or time

expended on the or#, and may or may not ac>ire an employment stats, depending on hether the elements of anemployer9employee relationship are present or not.HL

The 0les Implementing the +aor $ode re>ire every employer to pay his employees y means of payroll. HJ The

payroll shold sho among other things, the employeeOs rate of pay, dedctions made, and the amont actally paidto the employee. In the case at ar, petitioner did not present the payroll to spport his claim that +agrama as not

his employee, raising speclations hether his failre to do so proves that its presentation old e adverse to hiscase.H*

The primary standard for determining reglar employment is the reasonale connection eteen the particlaractivity performed y the employee in relation to the sal trade or siness of the employer.H In this case, there is

sch a connection eteen the ;o of +agrama painting illoards and mrals and the siness of petitioner. To let

the people #no hat movie as to e shon in a movie theater re>ires illoards. Petitioner in fact admits thatthe illoards are important to his siness.H<K































The fact that +agrama as not reported as an employee to the SSS is not conclsive on the >estion of hether he

as an employee of petitioner.H< &therise, an employer old e rearded for his failre or even neglect to

perform his oligation.H<<

'either does the fact that +agrama painted for other persons affect or alter his employment relationship ith

petitioner. That he did so only dring ee#ends has not een denied y petitioner. &n the other hand, Samel

/illala, for hom +agrama had rendered service, admitted in a sorn statement that he as told y +agrama thatthe latter or#ed for petitioner.H<7

+agrama had een employed y petitioner since **. nder the la, therefore, he is deemed a reglar employee

and is ths entitled to secrity of tenre, as provided in Art. <J of +aor $ode

A0T. <J. Securit% of enure. D In cases of reglar employment, the employer shall not terminate the services ofan employee except for a ;st case or hen athoried y this Title. An employee ho is n;stly dismissed from

or# shall e entitled to reinstatement ithot loss of seniority rights and other privileges and to his fll

ac#ages, inclsive of alloances, and to his other enefits or their monetary e>ivalent compted from the time

his compensation as ithheld from him p to the time of his actal reinstatement.

This $ort has held that if the employee has een performing the ;o for at least one year, even if not continosly

t intermittently, the repeated and contining need for its performance is sfficient evidence of the necessity, if not

indispensaility, of that activity to the siness of his employer. 1ence, the employment is also considered reglar,althogh ith respect only to sch activity, and hile sch activity exists.H<C

It is claimed that +agrama aandoned his or#. There is no evidence to sho this. Aandonment re>ires to

elements () the failre to report for or# or asence ithot valid or ;stifiale reason, and (<) a clear intention to

sever the employer9employee relationship, ith the second element as the more determinative factor and eingmanifested y some overt acts.H<= 2ere asence is not sfficient. 4hat is more, the rden is on the employer to

sho a delierate and n;stified refsal on the part of the employee to resme his employment ithot any

intention of retrning.H<L In the case at ar, the $ort of Appeals correctly rled

'either do e agree that Petitioner aandoned his ;o. In order for aandonment to e a ;st and valid grond fordismissal, the employer mst sho, y clear proof, the intention of the employee to aandon his ;o. . . .

In the present recorse, the Private 0espondent has not estalished clear proof of the intention of the Petitioner to

aandon his ;o or to sever the employment relationship eteen him and the Private 0espondent. &n the contrary,

it as Private 0espondent ho told Petitioner that he did not ant the latter to dra for him and thereafter refsedto give him or# to do or any mral or illoard to paint or dra on.

2ore, after the repeated refsal of the Private 0espondent to give Petitioner mrals or illoards to or# on, the

Petitioner filed, ith the S90egional Aritration Branch 'o. 8 of the 'ational +aor 0elations $ommission, a

$omplaint for MIllegal %ismissal and 2oney $laims.N Sch act has, as the Spreme $ort declared, negate anyintention to sever employment relationship. . . .H<J

II.

The second isse is hether private respondent +agrama as illegally dismissed. To egin, the employer has the rden of proving the laflness of his employeeOs dismissal.H<* The validity of the charge mst e clearly

estalished in a manner consistent ith de process. The Implementing 0les of the +aor $odeH< provide that no

or#er shall e dismissed except for a ;st or athoried case provided y la and after de process. This

provision has to aspects () the legality of the act of dismissal, that is, dismissal nder the gronds provided fornder Article <*< of the +aor $ode and (<) the legality in the manner of dismissal. The illegality of the act of

dismissal constittes discharge ithot ;st case, hile illegality in the manner of dismissal is dismissal ithotde process.H7K

In this case, y his refsal to give +agrama or# to do and ordering +agrama to get ot of his sight as the latter

tried to explain his side, petitioner made it plain that +agrama as dismissed. rinating in a or# place other than

the one designated for the prpose y the employer constittes violation of reasonale reglations intended to

promote a healthy environment nder Art. <*<() of the +aor $ode for prposes of terminating employment, t



























the same mst e shon y evidence. 1ere there is no evidence that +agrama did rinate in a place other than a

rest room in the premises of his or#.

Instead of ordering his reinstatement as provided in Art. <J of the +aor $ode, the +aor Ariter fond that therelationship eteen the employer and the employee has een so strained that the latterOs reinstatement old no

longer serve any prpose. The parties do not dispte this finding. 1ence, the grant of separation pay in lie of

reinstatement is appropriate. This is of corse in addition to the payment of ac#ages hich, in accordance iththe rling in /ustamante v. NLRC,H7

shold e compted from the time of +agramaOs dismissal p to the time of

the finality of this decision, ithot any dedction or >alification.

The Brea of 4or#ing $onditionsH7< classifies or#ers paid y reslts into to grops, namely6 () those hose

time and performance is spervised y the employer, and (<) those hose time and performance is nspervised ythe employer. The first involves an element of control and spervision over the manner the or# is to e

performed, hile the second does not. If a piece or#er is spervised, there is an employer9employee relationship,

as in this case. 1oever, sch an employee is not entitled to service incentive leave pay since, as pointed otin )a*ati 0aer+asher% v. NLRC H77 and )ar* Roche International v. NLRC ,H7C he is paid a fixed amont for or#

done, regardless of the time he spent in accomplishing sch or#.

7HEREFORE, ased on the foregoing, the petition is %E'IE% for lac# of shoing that the $ort of Appealscommitted any reversile error. The decision of the $ort of Appeals, reversing the decision of the 'ational +aor

0elations $ommission and reinstating the decision of the +aor Ariter, is A!!I02E% ith the 2&%I!I$ATI&'

that the ac#ages and other enefits aarded to private respondent +eovigildo +agrama shold e compted from

the time of his dismissal p to the time of the finality of this decision, ithot any dedction and>alification. 1oever, the service incentive leave pay aarded to him is %E+ETE%.

SO OR!ERE!.

G.R. No. 82282 Noe+)e% 15, 1989




http://sc.judiciary.gov.ph/jurisprudence/1999/aug99/123825.htm











INSLAR LIFE ASSRANCE CO., LT!., petitioner,

vs.NATIONAL LA6OR RELATIONS COISSION "n* ELECIO 6ASIAO, respondents.

irol & irol for petitioner.

1no2as, $efensor & eo+osio Caa+o Law Offices for private respon+ent.

NARVASA, J.:

&n ?ly <, L*, Inslar +ife Assrance $o., +td. (hereinafter simply called the $ompany) and 2elecio T. Basiao

entered into a contract 1 y hich

. Basiao as "athoried to solicit ithin the Philippines applications for insrance policies and annities in

accordance ith the existing rles and reglations" of the $ompany6

<. he old receive "compensation, in the form of commissions ... as provided in the Schedle of $ommissions" of

the contract to "constitte a part of the consideration of ... (said) agreement6" and

7. the "rles in ... (the $ompany:s) 0ate Boo# and its Agent:s 2anal, as ell as all its circlars ... and those hichmay from time to time e promlgated y it, ..." ere made part of said contract.

The contract also contained, among others, provisions governing the relations of the parties, the dties of the Agent,

the acts prohiited to him, and the modes of termination of the agreement, viz .

0E+ATI&' 4IT1 T1E $&2PA'3. The Agent shall e free to exercise his on ;dgment as to time, place andmeans of soliciting insrance. 'othing herein contained shall therefore e constred to create the relationship of

employee and employer eteen the Agent and the $ompany. 1oever, the Agent shall oserve and conform to all

rles and reglations hich the $ompany may from time to time prescrie.

I++E-A+ A'% 'ET1I$A+ P0A$TI$ES. The Agent is prohiited from giving, directly or indirectly, reates inany form, or from ma#ing any misrepresentation or over9selling, and, in general, from doing or committing acts

prohiited in the Agent:s 2anal and in circlars of the &ffice of the Insrance $ommissioner.

TE02I'ATI&'. The $ompany may terminate the contract at ill, ithot any previos notice to the Agent, for or

on accont of ... (explicitly specified cases). ...

Either party may terminate this contract y giving to the other notice in riting to that effect. It shall ecome ipso facto cancelled if the Insrance $ommissioner shold revo#e a $ertificate of Athority previosly issed or shold

the Agent fail to rene his existing $ertificate of Athority pon its expiration. The Agent shall not have any right

to any commission on reneal of premims that may e paid after the termination of this agreement for any casehatsoever, except hen the termination is de to disaility or death in line of service. As to commission

corresponding to any alance of the first year:s premims remaining npaid at the termination of this agreement, the

Agent shall e entitled to it if the alance of the first year premim is paid, less actal cost of collection, nless thetermination is de to a violation of this contract, involving criminal liaility or reach of trst.

ASSI-'2E'T. 'o Assignment of the Agency herein created or of commissions or other compensations shall e

valid ithot the prior consent in riting of the $ompany. ...

Some for years later, in April J<, the parties entered into another contract D an Agency 2anager:s $ontract Dand to implement his end of it Basiao organied an agency or office to hich he gave the name 2. Basiao and

Associates, hile concrrently flfilling his commitments nder the first contract ith the $ompany.



In 2ay, J, the $ompany terminated the Agency 2anager:s $ontract. After vainly see#ing a reconsideration,

Basiao sed the $ompany in a civil action and this, he as later to claim, prompted the latter to terminate also his

engagement nder the first contract and to stop payment of his commissions starting April , *K. 3

Basiao thereafter filed ith the then 2inistry of +aor a complaint 2 against the $ompany and its president.

4ithot contesting the termination of the first contract, the complaint soght to recover commissions allegedlynpaid therender, pls attorney:s fees. The respondents dispted the 2inistry:s ;risdiction over Basiao:s claim,

asserting that he as not the $ompany:s employee, t an independent contractor and that the $ompany had nooligation to him for npaid commissions nder the terms and conditions of his contract. 5

The +aor Ariter to hom the case as assigned fond for Basiao. 1e rled that the nderriting agreement had

estalished an employer9employee relationship eteen him and the $ompany, and this conferred ;risdiction onthe 2inistry of +aor to ad;dicate his claim. Said official:s decision directed payment of his npaid commissions

"... e>ivalent to the alance of the first year:s premim remaining npaid, at the time of his termination, of all the

insrance policies solicited y ... (him) in favor of the respondent company ..." pls KQ attorney:s fees. 4

This decision as, on appeal y the $ompany, affirmed y the 'ational +aor 0elations $ommission.

1ence, the present petition for certiorari and prohiition.

The chief isse here is one of ;risdiction hether, as Basiao asserts, he had ecome the $ompany:s employee y

virte of the contract invo#ed y him, therey placing his claim for npaid commissions ithin the original and

exclsive ;risdiction of the +aor Ariter nder the provisions of Section <J of the +aor $ode, 8 or, contrarily,as the $ompany old have it, that nder said contract Basiao:s stats as that of an independent contractor hose

claim as ths cogniale, not y the +aor Ariter in a laor case, t y the reglar corts in an ordinary civil

action.

The $ompany:s thesis, that no employer9employee relation in the legal and generally accepted sense existed

eteen it and Basiao, is dran from the terms of the contract they had entered into, hich, either expressly or ynecessary implication, made Basiao the master of his on time and selling methods, left to his ;dgment the time,

place and means of soliciting insrance, set no accomplishment >otas and compensated him on the asis of resltsotained. 1e as not ond to oserve any schedle of or#ing hors or report to any reglar station6 he cold

see# and or# on his prospects anyhere and at anytime he chose to, and as free to adopt the selling methods he

deemed most effective.

4ithot denying that the aove ere indeed the expressed implicit conditions of Basiao:s contract ith the$ompany, the respondents contend that they do not constitte the decisive determinant of the natre of his

engagement, invo#ing precedents to the effect that the critical featre distingishing the stats of an employee from

that of an independent contractor is control, that is, hether or not the party ho engages the services of another

has the poer to control the latter:s condct in rendering sch services. Prsing the argment, the respondentsdra attention to the provisions of Basiao:s contract oliging him to "... oserve and conform to all rles and

reglations hich the $ompany may from time to time prescrie ...," as ell as to the fact that the $ompany

prescried the >alifications of applicants for insrance, processed their applications and determined the amonts ofinsrance cover to e issed as indicative of the control, hich made Basiao, in legal contemplation, an employee

of the $ompany. 9

It is tre that the "control test" expressed in the folloing prononcement of the $ort in the =L case of #iana vs.

Ale2o Al(La'a+an 10

... In determining the existence of employer9employee relationship, the folloing elements are generally

considered, namely () the selection and engagement of the employee6 (<) the payment of ages6 (7) the poer of

dismissal6 and (C) the poer to control the employees: condct D althogh the latter is the most important element(7= Am. ?r. CC=). ...

has een folloed and applied in later cases, some fairly recent. 11 Indeed, it is ithot >estion a valid test of the

character of a contract or agreement to render service. It shold, hoever, e ovios that not every form of control

that the hiring party reserves to himself over the condct of the party hired in relation to the services rendered may e accorded the effect of estalishing an employer9employee relationship eteen them in the legal or technical



sense of the term. A line mst e dran somehere, if the recognied distinction eteen an employee and an

individal contractor is not to vanish altogether. 0ealistically, it old e a rare contract of service that gives

ntrammelled freedom to the party hired and esches any intervention hatsoever in his performance of theengagement.

+ogically, the line shold e dran eteen rles that merely serve as gidelines toards the achievement of themtally desired reslt ithot dictating the means or methods to e employed in attaining it, and those that control

or fix the methodology and ind or restrict the party hired to the se of sch means. The first, hich aim only to promote the reslt, create no employer9employee relationship nli#e the second, hich address oth the reslt and

the means sed to achieve it. The distinction ac>ires particlar relevance in the case of an enterprise affected ith

plic interest, as is the siness of insrance, and is on that accont s;ect to reglation y the State ith respect,not only to the relations eteen insrer and insred t also to the internal affairs of the insrance

company. 1 0les and reglations governing the condct of the siness are provided for in the Insrance $ode and

enforced y the Insrance $ommissioner. It is, therefore, sal and expected for an insrance company to promlgate a set of rles to gide its commission agents in selling its policies that they may not rn afol of the la

and hat it re>ires or prohiits. &f sch a character are the rles hich prescrie the >alifications of persons ho

may e insred, s;ect insrance applications to processing and approval y the $ompany, and also reserve to the$ompany the determination of the premims to e paid and the schedles of payment. 'one of these really invades

the agent:s contractal prerogative to adopt his on selling methods or to sell insrance at his on time and

convenience, hence cannot ;stifialy e said to estalish an employer9employee relationship eteen him and the

company.

There is no dearth of athority holding persons similarly placed as respondent Basiao to e independent contractors,

instead of employees of the parties for hom they or#ed. In )afinco ra+in' Corporation vs. Ople,13 the $ort

rled that a person engaged to sell soft drin#s for another, sing a trc# spplied y the latter, t ith the right to

employ his on or#ers, sell according to his on methods s;ect only to prearranged rotes, oserving noor#ing hors fixed y the other party and oliged to secre his on licenses and defray his on selling expenses,

all in consideration of a peddler:s discont given y the other party for at least <=K cases of soft drin#s sold daily,as not an employee t an independent contractor.

In Investment "lannin' Corporation of the "hilippines us. Social Securit% S%stem 12 a case almost on all fors ith

the present one, this $ort held that there as no employer9employee relationship eteen a commission agent and

an investment company, t that the former as an independent contractor here said agent and others similarly

placed ere (a) paid compensation in the form of commissions ased on percentages of their sales, any alance ofcommissions earned eing payale to their legal representatives in the event of death or registration6 () re>ired to

pt p performance onds6 (c) s;ect to a set of rles and reglations governing the performance of their dties

nder the agreement ith the company and termination of their services for certain cases6 (d) not re>ired to reportfor or# at any time, nor to devote their time exclsively to or#ing for the company nor to smit a record of

their activities, and ho, finally, sholdered their on selling and transportation expenses.

2ore recently, in Sara vs. NLRC

, 15 it as held that one ho had een engaged y a rice miller to y and sell rice

and palay ithot compensation except a certain percentage of hat he as ale to y or sell, did or# at his on pleasre ithot any spervision or control on the part of his principal and relied on his on resorces in the

performance of his or#, as a plain commission agent, an independent contractor and not an employee.

The respondents limit themselves to pointing ot that Basiao:s contract ith the $ompany ond him to oserve

and conform to sch rles and reglations as the latter might from time to time prescrie. 'o shoing has eenmade that any sch rles or reglations ere in fact promlgated, mch less that any rles existed or ere issed

hich effectively controlled or restricted his choice of methods D or the methods themselves D of selling

insrance. Asent sch shoing, the $ort ill not speclate that any exceptions or >alifications ere imposed onthe express provision of the contract leaving Basiao "... free to exercise his on ;dgment as to the time, place and

means of soliciting insrance."

The +aor Ariter:s decision ma#es reference to Basiao:s claim of having een connected ith the $ompany for

tenty9five years. 4hatever this is meant to imply, the ovios reply old e that hat is germane here isBasiao:s stats nder the contract of ?ly <, L*, not the length of his relationship ith the $ompany.



The $ort, therefore, rles that nder the contract invo#ed y him, Basiao as not an employee of the petitioner,

t a commission agent, an independent contractor hose claim for npaid commissions shold have een litigated

in an ordinary civil action. The +aor Ariter erred in ta#ing cogniance of, and ad;dicating, said claim, eingithot ;risdiction to do so, as did the respondent '+0$ in affirming the Ariter:s decision. This conclsion

renders it nnecessary and prematre to consider Basiao:s claim for commissions on its merits.

41E0E!&0E, the appealed 0esoltion of the 'ational +aor 0elations $ommission is set aside, and that

complaint of private respondent 2elecio T. Basiao in 0AB $ase 'o. /I9KKK9*7 is dismissed. 'o prononcementas to costs.

S& &0%E0E%.

G.R. No. L>28425 J"nu"%' , 198

?6ROTHERHOO!? LA6OR NIT; OVEENT OF THE PHILIPPINES, ANTONIO CAS6A!ILLO,PROSPERO TA6LA!A, ERNESTO 6ENGSON, PATRICIO SERRANO, ANTONIO 6. 6O6IAS,VIRGILIO ECHAS, !OINGO PARINAS, NOR6ERTO GALANG, JANITO NAVARRO, NESTORIOARCELLANA, TEOFILO 6. CACATIAN, RFO L. EGIA, CARLOS SO;AN, LA6ERTORON@ILLO, ANGELITO AANCIO, !ANILO 6. ATIAR, ET AL., petitioners,

vs.HON. RONAL!O 6. <AORA, PRESI!ENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OFTHE PRESI!ENT, HON. AA!O G. INCIONG, N!ERSECRETAR; OF LA6OR, SAN IGELCORPORATION, GENARO OLIVES, ENRI@E CAAHORT, FE!ERICO OATE, ERNESTO

VILLANEVA, ANTONIO 6OCALING "n* GO!OFRE!O CETO, respondents.

Arman+o #. Ampil for petitioners.

Si'uion Re%na, )ontecillo an+ On'sia*o Law Office for private respon+ents.

GTIERRE<, JR., J.:

The elemental >estion in laor la of hether or not an employer9employee relationship exists eteen

petitioners9memers of the "Brotherhood +aor nit 2ovement of the Philippines" (B+2) and respondent San2igel $orporation, is the main isse in this petition. The dispted decision of plic respondent 0onaldo Gamora,

Presidential Assistant for legal Affairs, contains a rief smmary of the facts involved

. The records disclose that on ?ly , L, B+2 filed a complaint ith the no defnct $ort of Indstrial

0elations, charging San 2igel $orporation, and the folloing officers Enri>e $amahort, !ederico &fiate!eliciano Arceo, 2elencio Egenia ?r., Ernesto /illaneva, Antonio Bocaling and -odofredo $eto of nfair laor



practice as set forth in Section C (a), s9sections () and (C) of 0eplic Act 'o. *J= and of +egal dismissal. It as

alleged that respondents ordered the individal complainants to disaffiliate from the complainant nion6 and that

management dismissed the individal complainants hen they insisted on their nion memership.

&n their part, respondents moved for the dismissal of the complaint on the gronds that the complainants are not

and have never een employees of respondent company t employees of the independent contractor6 thatrespondent company has never had control over the means and methods folloed y the independent contractor

ho en;oyed fll athority to hire and control said employees6 and that the individal complainants are arred yestoppel from asserting that they are employees of respondent company.

4hile pending ith the $ort of Indstrial 0elations $I0 pleadings and testimonial and docmentary evidences

ere dly presented, althogh the actal hearing as delayed y several postponements. The dispte as ta#enover y the 'ational +aor 0elations $ommission ('+0$) ith the decreed aolition of the $I0 and the hearing of

the case intransferaly commenced on Septemer *, J=.

&n !erary , JL, +aor Ariter 'estor $. +im fond for complainants hich as concrred in y the '+0$ in

a decision dated ?ne <*, JL. The amont of ac#ages aarded, hoever, as redced y '+0$ to thee>ivalent of one () year salary.

&n appeal, the Secretary in a decision dated ?ne , JJ, set aside the '+0$ rling, stressing the asence of an

employer9mployee relationship as orne ot y the records of the case. ...

The petitioners strongly arge that there exists an employer9employee relationship eteen them and the

respondent company and that they ere dismissed for nionism, an act constitting nfair laor practice "for hichrespondents mst e made to anser."

nretted evidence and testimony on record estalish that the petitioners are or#ers ho have een employed at

the San 2igel Parola -lass !actory since L, averaging aot seven (J) years of service at the time of theirtermination. They or#ed as "cargadores" or "pahinante" at the S2$ Plant loading, nloading, piling or palletingempty ottles and oosen shells to and from company trc#s and arehoses. At times, they accompanied the

company trc#s on their delivery rotes.

The petitioners first reported for or# to Sperintendent9in9$harge $amahort. They ere issed gate passes signed y $amahort and ere provided y the respondent company ith the tools, e>ipment and paraphernalia sed in

the loading, nloading, piling and haling operation.

?o orders emanated from $amahort. The orders are then transmitted to an assistant9officer9in9charge. In trn, the

assistant informs the arehosemen and chec#ers regarding the same. The latter, thereafter, relays said orders to the

capataes or grop leaders ho then give orders to the or#ers as to here, hen and hat to load, nload, pile, pallet or clean.

4or# in the glass factory as neither reglar nor continos, depending holly on the volme of ottles

manfactred to e loaded and nloaded, as ell as the siness activity of the company. 4or# did not necessarilymean a fll eight (*) hor day for the petitioners. 1oever, or#,at times, exceeded the eight (*) hor day and

necessitated or# on Sndays and holidays. !or this, they ere neither paid overtime nor compensation for or#

on Sndays and holidays.

Petitioners ere paid every ten (K) days on a piece rate asis, that is, according to the nmer of cartons andooden shells they ere ale to load, nload, or pile. The grop leader notes don the nmer or volme of or#

that each individal or#er has accomplished. This is then made the asis of a report or statement hich is

compared ith the notes of the chec#er and arehosemen as to hether or not they tally. !inal approval of reportis y officer9in9charge $amahort. The pay chec# is given to the grop leaders for encashment, distrition, and

payment to the petitioners in accordance ith payrolls prepared y said leaders. !rom the total earnings of the

grop, the grop leader gets a participation or share of ten (KQ) percent pls an additional amont from the

earnings of each individal.



The petitioners or#ed exclsive at the S2$ plant, never having een assigned to other companies or departments

of S2$ plant, even hen the volme of or# as at its minimm. 4hen any of the glass frnaces sffered a

rea#don, ma#ing a shtdon necessary, the petitioners or# as temporarily sspended. Thereafter, the petitioners old retrn to or# at the glass plant.

Sometime in ?anary, L, the petitioner or#ers D nmering one hndred and forty (CK) organied andaffiliated themselves ith the petitioner nion and engaged in nion activities. Believing themselves entitled to

overtime and holiday pay, the petitioners pressed management, airing other grievances sch as eing paid elo theminimm age la, inhman treatment, eing forced to orro at srios rates of interest and to y raffle

tic#ets, coerced y ithholding their salaries, and salary dedctions made ithot their consent. 1oever, their

gripes and grievances ere not heeded y the respondents.

&n !erary L, L, the petitioner nion filed a notice of stri#e ith the Brea of +aor 0elations in connection

ith the dismissal of some of its memers ho ere allegedly castigated for their nion memership and arned

that shold they persist in contining ith their nion activities they old e dismissed from their ;os. Several

conciliation conferences ere schedled in order to thresh ot their differences, &n !erary <, L, nion

memer 0ogelio %ipad as dismissed from or#. At the schedled conference on !erary , L, thecomplainant nion throgh its officers headed y 'ational President Artemio Portgal Sr., presented a letter to the

respondent company containing proposals andFor laor demands together ith a re>est for recognition andcollective argaining.

San 2igel refsed to argain ith the petitioner nion alleging that the or#ers are not their employees.

&n !erary <K, L, all the petitioners ere dismissed from their ;os and, thereafter, denied entrance to

respondent company:s glass factory despite their reglarly reporting for or#. A complaint for illegal dismissal andnfair laor practice as filed y the petitioners.

The case reaches s no ith the same isses to e resolved as hen it had egn.

The >estion of hether an employer9employee relationship exists in a certain sitation contines to edevil the

corts. Some sinessmen try to avoid the ringing aot of an employer9employee relationship in their enterprises

ecase that ;dicial relation spans oligations connected ith or#men:s compensation, social secrity,medicare, minimm age, termination pay, and nionism. (2afinco Trading $orporation v. &ple, JK S$0A 7).

In determining the existence of an employer9employee relationship, the elements that are generally considered are

the folloing (a) the selection and engagement of the employee6 () the payment of ages6 (c) the poer of

dismissal6 and (d) the employer:s poer to control the employee ith respect to the means and methods y hichthe or# is to e accomplished. It. is the called "control test" that is the most important element (Investment

Planning $orp. of the Phils. v. The Social Secrity System, < S$0A <C6 2afinco Trading $orp. v.&ple, supra,and 0osario Brothers, Inc. v. &ple, 7 S$0A J<).

Applying the aove criteria, the evidence strongly indicates the existence of an employer9employee relationship eteen petitioner or#ers and respondent San 2igel $orporation. The respondent asserts that the petitioners are

employees of the -aranteed +aor $ontractor, an independent laor contracting firm.

The facts and evidence on record negate respondent S2$:s claim.

The existence of an independent contractor relationship is generally estalished y the folloing criteria "hetheror not the contractor is carrying on an independent siness6 the natre and extent of the or#6 the s#ill re>ired6

the term and dration of the relationship6 the right to assign the performance of a specified piece of or#6 the

control and spervision of the or# to another6 the employer:s poer ith respect to the hiring, firing and paymentof the contractor:s or#ers6 the control of the premises6 the dty to spply the premises tools, appliances, materials

and laor6 and the mode, manner and terms of payment" (=L $?S 2aster and Servant, Sec. 7(<), CL6 See also <J

A2. ?r. Independent $ontractor, Sec. =, C*= and Annex J= A+0 J<LKJ<J)

'one of the aove criteria exists in the case at ar.



1ighly nsal and sspect is the asence of a ritten contract to specify the performance of a specified piece of

or#, the natre and extent of the or# and the term and dration of the relationship. The records fail to sho that a

large commercial otfit, sch as the San 2igel $orporation, entered into mere oral agreements of employment orlaor contracting here the same old involve considerale expenses and dealings ith a large nmer of

or#ers over a long period of time. %espite respondent company:s allegations not an iota of evidence as offered to

prove the same or its particlars. Sch failre ma#es respondent S2$:s stand s;ect to serios dots.

ncontroverted is the fact that for an average of seven (J) years, each of the petitioners had or#ed continoslyand exclsively for the respondent company:s shipping and arehosing department. $onsidering the length of time

that the petitioners have or#ed ith the respondent company, there is ;stification to conclde that they ere

engaged to perform activities necessary or desirale in the sal siness or trade of the respondent, and the petitioners are, therefore reglar employees (Phil. !ishing Boat &fficers and Engineers nion v. $ort of Indstrial

0elations, < S$0A = and 0?+ 2artine !ishing $orporation v. 'ational +aor 0elations $ommission, <J

S$0A C=C).

As e have fond in RL )artinez -ishin' Corporation v. National Laor Relations Commission 3supra45

... HThe employer9employee relationship eteen the parties herein is not coterminos ith each loading and

nloading ;o. As earlier shon, respondents are engaged in the siness of fishing. !or this prpose, they have a

fleet of fishing vessels. nder this sitation, respondents: activity of catching fish is a continos process and cold

hardly e considered as seasonal in natre. So that the activities performed y herein complainants, i.e. nloadingthe catch of tna fish from respondents: vessels and then loading the same to refrigerated vans, are necessary or

desirale in the siness of respondents. This circmstance ma#es the employment of complainants a reglar one,

in the sense that it does not depend on any specific pro;ect or seasonale activity. ('+0$ %ecision, p. C,0ollo).lwphl6it7

so as it ith petitioners in the case at ar. In fact, despite past shtdons of the glass plant for repairs, the

petitioners, thereafter, promptly retrned to their ;os, never having een replaced, or assigned elsehere ntil the present controversy arose. The term of the petitioners: employment appears indefinite. The continity andhaitality of petitioners: or# olsters their claim of employee stats vis9a9vis respondent company,

Even nder the assmption that a contract of employment had indeed een exected eteen respondent S2$ and

the alleged laor contractor, respondent:s case ill, nevertheless, fail.

Section *, 0le /III, Boo# III of the Implementing 0les of the +aor $ode provides

?o contracting. D There is ;o contracting permissile nder the $ode if the folloing conditions are met

() The contractor carries on an independent siness and nderta#es the contract or# on his on accont nderhis on responsiility according to his on manner and method, free from the control and direction of his employer

or principal in all matters connected ith the performance of the or# except as to the reslts thereof6 and

(<) The contractor has sstantial capital or investment in the form of tools, e>ipment, machineries, or# premises, and other materials hich are necessary in the condct of his siness.

4e find that -aranteed and 0eliale +aor contractors have neither sstantial capital nor investment to >alify as

an independent contractor nder the la. The premises, tools, e>ipment and paraphernalia sed y the petitioners

in their ;os are admittedly all spplied y respondent company. It is only the manpoer or laor force hich thealleged contractors spply, sggesting the existence of a "laor only" contracting scheme prohiited y la (Article

KL, K of the +aor $ode6 Section (), 0le /III, Boo# III, Implementing 0les and 0eglations of the +aor

$ode). In fact, even the alleged contractor:s office, hich consists of a space at respondent company:s arehose,tale, chair, typeriter and cainet, are provided for y respondent S2$. It is therefore clear that the alleged

contractors have no capital otlay involved in the condct of its siness, in the maintenance thereof or in the

payment of its or#ers: salaries.

The payment of the or#ers: ages is a critical factor in determining the actality of an employer9employeerelationship hether eteen respondent company and petitioners or eteen the alleged independent contractor



and petitioners. It is important to emphasie that in a trly independent contractor9contractee relationship, the fees

are paid directly to the manpoer agency in lmp sm ithot indicating or implying that the asis of sch lmp

sm is the salary per or#er mltiplied y the nmer of or#ers assigned to the company. This is the rle inSocialSecurit% S%stem v. Court of Appeals (7 S$0A L<, L7=).

The alleged independent contractors in the case at ar ere paid a lmp sm representing only the salaries theor#ers ere entitled to, arrived at y adding the salaries of each or#er hich depend on the volme of or#

they. had accomplished individally. These are ased on payrolls, reports or statements prepared y the or#ers:grop leader, arehosemen and chec#ers, here they note don the nmer of cartons, ooden shells and ottles

each or#er as ale to load, nload, pile or pallet and see hether they tally. The amont paid y respondent

company to the alleged independent contractor considers no siness expenses or capital otlay of the latter. 'or isthe profit or gain of the alleged contractor in the condct of its siness provided for as an amont over and aove

the or#ers: ages. Instead, the alleged contractor receives a percentage from the total earnings of all the or#ers

pls an additional amont corresponding to a percentage of the earnings of each individal or#er, hich, perhaps,acconts for the petitioners: charge of nathoried dedctions from their salaries y the respondents.

Anent the argment that the petitioners are not employees as they or#ed on piece asis, e merely have to cite orrlings in $% 8eh /en' v. International Laor an+ )arine 9nion of the "hilippines (K S$0A L), as follos

"H$ircmstances mst e constred to determine indeed if payment y the piece is ;st a method of compensation

and does not define the essence of the relation. nits of time . . . and nits of or# are in estalishments li#erespondent (sic) ;st yardstic#s herey to determine rate of compensation, to e applied henever agreed pon.

4e cannot constre payment y the piece here or# is done in sch an estalishment so as to pt the or#er

completely at lierty to trn him ot and ta#e in another at pleasre."

Article KL of the +aor $ode provides the legal effect of a laor only contracting scheme, to it

... the person or intermediary shall e considered merely as an agent of the employer ho shall e responsile to theor#ers in the same manner and extent as if the latter ere directly employed y him.

!irmly estalishing respondent S2$:s role as employer is the control exercised y it over the petitioners that is,

control in the means and methodsFmanner y hich petitioners are to go aot their or#, as ell as in disciplinarymeasres imposed y it.

Becase of the natre of the petitioners: or# as cargadores or pahinantes, spervision as to the means and manner

of performing the same is practically nil. !or, ho many ays are there to load and nload ottles and ooden

shellsR The mere concern of oth respondent S2$ and the alleged contractor is that the ;o of having the ottlesand ooden shells roght to and from the arehose e done. 2ore evident and prononced is respondent

company:s right to control in the discipline of petitioners. %ocmentary evidence presented y the petitionersestalish respondent S2$:s right to impose disciplinary measres for violations or infractions of its rles andreglations as ell as its right to recommend transfers and dismissals of the piece or#ers. The inter9office

memoranda smitted in evidence prove the company:s control over the petitioners. That respondent S2$ has the

poer to recommend penalties or dismissal of the piece or#ers, even as to Aner Bngay ho is alleged y S2$to e a representative of the alleged laor contractor, is the strongest indication of respondent company:s right of

control over the petitioners as direct employer. There is no evidence to sho that the alleged laor contractor had

sch right of control or mch less had een there to spervise or deal ith the petitioners.

The petitioners ere dismissed allegedly ecase of the shtdon of the glass manfactring plant. 0espondentcompany old have s elieve that this as a case of retrenchment de to the closre or cessation of operations of

the estalishment or nderta#ing. Bt sch is not the case here. The respondent:s shtdon as merely temporary,

one of its frnaces needing repair. &perations contined after sch repairs, t the petitioners had already eenrefsed entry to the premises and dismissed from respondent:s service. 'e or#ers manned their positions. It is

apparent that the closre of respondent:s arehose as merely a ploy to get rid of the petitioners, ho ere then

agitating the respondent company for enefits, reforms and collective argaining as a nion. There is no shoing

that petitioners had een remiss in their oligations and inefficient in their ;os to arrant their separation.



As to the charge of nfair laor practice ecase of S2$:s refsal to argain ith the petitioners, it is clear that the

respondent company had an existing collective argaining agreement ith the IB2 nion hich is the recognied

collective argaining representative at the respondent:s glass plant.

There eing a recognied argaining representative of all employees at the company:s glass plant, the petitioners

cannot merely form a nion and demand argaining. The +aor $ode provides the proper procedre for therecognition of nions as sole argaining representatives. This mst e folloed.

41E0E!&0E, I' /IE4 &! T1E !&0E-&I'-, the petition is -0A'TE%. The San 2igel $orporation isherey ordered to 0EI'STATE petitioners, ith three (7) years ac#ages. 1oever, here reinstatement is no

longer possile, the respondent S2$ is ordered to pay the petitioners separation pay e>ivalent to one () month

pay for every year of service.

S& &0%E0E%.

S"n Bue- Co%o%"&on, petitioner, vs. AERC In&eB%"&e* Se%$e#, In$. "n* E+e%)e%&o O%Due,ROGELIO PRA!O, JR., E!!IE SELLE, ALEJAN!RO ANNA6IE<A, ANNIAS JAO>AS,CONSORCIO ANLOLO;O, ANANIAS ALCONTIN, RE; GESTOPA, E!GAR!O NE<,

JNEL CA6ATINGAN, PAL !A@ETA, FELION ECHAVE<, VITO SEALANA,!ENECIA PALAO, RO6ERTO LAPI<, 6ALTA<AR LA6IO, LEONAR!O 6ONGO, EL CI!ICALINA, JOSE !IOCAPO, A!ELO CANTILLAS, ISAIAS 6RAN<ELA, RAON ROSALES,GA!ENCIO PESON, HECTOR CA6AOG, E!GAR!O !AGA;AN, ROGELIO CR<,ROLAN!O ESPINA, 6ERNAR!INO REGI!OR, ARNELIO SALINOG, GERSIN!OALCONTIN, LORETO NE<, JOE6E 6O; !A;ON, CONRA!O ESAN@E, ARCELOPESCA!OR, ARCELINO JA6AGAT, VICENTE !EVILLERES, VICENTE ALIN, RO!OLFO



PAHGOT, REL NAVARES, !ANILO ANA6IE<A, ALEX JEN, JANITO GARCES,SILVINO LI6AGA, ARELIO JRPACIO, JOVITO LOON, VICTOR TENE!ERO, SASINGORENO, 7ILFRE!O HORTE<ELA, JOSELITO ELEN!E<, ALFRE!O GESTOPA,REGINO GA6;A, JORGE GA<ARNO, LOLITO COCI!O, EFRAI ;6AL,VENERAN!O ROAAR, GERAR!O 6TALI!, HIPOLITO VI!AS, VENGELITO FRIAS,

VICENTE CELACIO, CORLITO PESTAAS, ERVIN H;ROSA, ROEL GERERO,RO!RIGO ENERLAS, FRANCISCO CAR6ONILLA, NICANOR CI<ON, PE!RO 6RIONES,RO!OLFO CA6ALHG, TEOFILO RICAR!O, !ANILO R. !I<ON, AL6ERTO E6ONG,ALFONSO ECHAVE<, GON<ALO RORACEA, ARCELO CARACINA, RAL 6ORRES,LINO TONGALAOS, ARTEIO 6ONGO, JR., RO; AVILA, ELCHOR FREGLO, RALCA6ILLA!A, E!!IE CATA6, ELENCIO !RANO, ALLAN RAGO, !OINA!ORCAPARI!A, JOVITO CATA6, AL6ERT LASPIAS, ALEX ANA6IE<A, NESTOR RE;NANTE,ELOGIO GESTOPA, ARIO 6OLO, E!ERLITO A. 6ALOCANO, JOEL PEPITO, RE;NAL!OL!IA, ANEL CINCO, ALLAN AGSTIN, PA6LITO POLEGRATES, CL;!E PRA!O,!IN!O ISA, ROGER SASING, RAON ARCALLANA, GA6RIEL SALAS, E!7IN SASAN,!IOS!A!O 6ARRIGA, OISES SASAN, SINFORIANO CANTAGO, LEONAR!O

ARTRILLAS, ARIO RANIS, ALEJAN!RO RANI!O, JEROE PRA!O, RAL O;AO,VICTOR CELACIO, GERAL!O RO@E, <OSIO CARARATON, VIRGILIO <ANORIA, JOSE<ANORIA, ALLAN <ANORIA, VICTORINO SENO, TEO!LO JAO>AS, ALEXAN!ERHERA, ANTHON; ARANETA, AL!RIN SSON, VICTOR VERANO, REL SFRERENCIA,ALFRE! NAPARATE, 7ENCESLAO 6ACLOHON, E!AR!O LANGITA, FELIX OR!ENE<A,ARSENIO LOGARTA, E!AR!O !ELA VEGA, JOVENTINO CANOOG, ROGELIO A6APO,RICAR!O RAAS, JOSE 6AN!IALAN, ANTONIO 6ASALAN, L;N!ON 6ASALAN,7ILFRE!O ALIVIANO, 6IENVENI!O ROSARIO, JESS CAPANGPANGAN, RENATOEN!O<A, ALEJAN!RO CATAN!EJAN, R6EN TALA6A, FILEON ECHAVE<,ARCELINO CARACENA, IGNACIO ISA, FELICIANO AG6A;, VICTOR AGLASANG,ARTRO HE;ROSA, ALIPIO TIROL, ROSEN!O ON!ARES, ANICETO L!IA, RE;NAL!OLAVAN!ERO, RE;AN HERCLANO, TEO!LO NI@E, EER6ERTO OR@E, <OSIO6AO6AO, E!AR!O SINGSON, ANTONIO PATALINGHG, ERNESTO SINGSON, RO6ERTOTORRES, CESAR ESCARIO, LEO!EGARIO !OLLECIN, AL6ERTO ANO6A, RO!RIGO6ISNAR, <OSIO 6INGAS, ROSALIO !RAN, SR., ROSALIO !RAN, JR., ROEO !RAN,ANTONIO A6ELLA, ARIANO REPOLLO, POLEGARPO !EGAO, ARIO CERE<A,ANTONIO LAOROILLA, PROCTSO AGALLANES, ELA!IO TORRES, 7ARLITO!EANA, HENR; GE!ARO, !OISE!ERIO GEPERAO, ANICETO GEPERAO, JERR;CAPAROSO, SERLITO NO;NA;, LCIANO RECOPELACION, JANITO GARCES,FELICIANO TORRES, RANILO VILLAREAL, FERIN ALIVIANO, JNJIE LAVISTE,TOACITO !E CASTRO, JOSELITO CAPILINA, SAEL CAS@EJO, LEONAR!O NATA!,6ENJAIN SA;SON, PE!RO INOC, E!7AR! FLORES, E!7IN SASAN, JOSE RE; INOT,E!GAR CORTES, ROEO LO6OG, NICOLAS RI6O, JAIE R6IN, ORLAN!O REGIS,RICK; ALCON<A, R!; TAGALOG, VICTORINO TAGALOG, E!7AR! COLINA, RONIEGON<AGA, PAL CA6ILLA!A, 7ILFRE!O AGALONA, JOEL PEPITO, PROSPEROAGLASANG, ALLAN AGSTIN, FASTO 6ARGA;O, NOER SANCHE<, JOLITO ALIN,6IRNING REGI!OR, GARR; !IGNOS, E!7IN !IGNOS, !ARIO !IGNOS, ROGELIO!IGNOS, JI; CA6IGAS, FERNAN!O ANAJAO, ALEX FLORES, FERNAN!O REE!IO,TOTO OS@I!A, AL6ERTO ;AGONIA, VICTOR 6ARI@IT, IGNACIO ISA, ELISEOVILLARENO, ANEL LAVAN!ERO, VIRCE!E, ARIO RANIS, JAIE RESPONSO,ARIANITO AGIRRE, ARCIAL HERELA, GO!OFRE!O TACAO, PERFECTOREGIS, ROEL !EANA, ELER CASTILLO, 7INEFRE!O CALAOHO;, R!;LCERNAS, ANTONIO CAETE, EFRAI ;6AL, JESS CAPANGPANGAN, !AIANCAPANGPANGAN, TEOFILO CAPANGPANGAN, NILO CAPANGPANGAN, CORORENOCAPANGPANGAN, EILIO ON!ARES, PONCIANO AGANA, VICENTE !EVILLERES,ARIO ALIPAN, ROANITO ALIPAN, AL!EON RO6INSON, FORTNATO SOCO, CELSOCOPESTO, 7ILLIA ITORAL!E, ANTONIO PESCA!OR, JEREIAS RON!ERO,ESTROPIO PNA;, LEOVIJIL!O PNA;, ROEO @ILONG@ILONG, 7ILFRE!OGESTOPA, ELISEO SANTOS, HENR; ORIO, JOSE ;AP, NICANOR ANA;AGA, TEO!OROSALINAS, ANICETO ONTERO, RAFAELITO VER<OSA, ALEJAN!RO RANI!O, HENR;TALA6A, ROLO TALA6A, !IOS!A!O 6ESA6ELA, S;LVESTRE TORING, E!IL6ERTO



PA!ILLA, ALLAN HEROSA, ERNESTO SALINOG, ARISTON VELASCO, JR., FERNAN!OLOPE<, ALFONSO ECHAVE<, NICANOR CI<ON, !OINA!OR CAPARI!A, <OSIOCORORATION, ARTEIO LOVERANES, !IONISIO ;AGONIA, VICTOR CELOCIA,HIPOLITO VI!AS, TEO!ORO ARCILLAS, ARCELINO HA6AGAT, GA!IOSO LA6ASAN,LEOPOL!O REGIS, A@ILLO !AOLE, 7ILL; RO6LE "n* NIEL <ANORIA, respondents.

! E C I S I O N

6ELLOSILLO , J .=

T4& 1'%0E% 'I'ET39&'E (<) or#ers filed their complaints (nine H complaints in all) against San

2igel $orporation (petitioner herein) and 2aerc Integrated Services, Inc. (respondent herein), for illegal

dismissal, nderpayment of ages, non9payment of service incentive leave pays and other laor standards enefits,and for separation pays from <= ?ne to <C &ctoer . The complainants alleged that they ere hired y San

2igel $orporation (S2$) throgh its agent or intermediary 2aerc Integrated Services, Inc. (2AE0$) to or# in

to (<) designated or#places in 2andae $ity one, inside the S2$ premises at the 2andae $ontainer Services,

and another, in the Philphos 4arehose oned y 2AE0$. They ashed and segregated varios #inds of empty

ottles sed y S2$ to sell and distrite its eer everages to the consming plic. They ere paid on a per piece or pa*iao asis except for a fe ho or#ed as chec#ers and ere paid on daily age asis.

$omplainants alleged that long efore S2$ contracted the services of 2AE0$ a ma;ority of them had already een or#ing for S2$ nder the gise of eing employees of another contractor, ?opard Services, ntil the services

of the latter ere terminated on 7 ?anary **.

S2$ denied liaility for the claims and averred that the complainants ere not its employees t of 2AE0$,

an independent contractor hose primary corporate prpose as to engage in the siness of cleaning, receiving,sorting, classifying, etc., glass and metal containers.

It appears that S2$ entered into a $ontract of Services ith 2AE0$ engaging its services on a non9exclsive

asis for one () year eginning !erary **. The contract as reneed for to (<) more years in 2arch*. It also provided for its atomatic reneal on a month9to9month asis after the to (<)9year period and

re>ired that a ritten notice to the other party e given thirty (7K) days prior to the intended date of termination,

shold a party decide to discontine ith the contract.

In a letter dated = 2ay , S2$ informed 2AE0$ of the termination of their service contract y the endof ?ne . S2$ cited its plans to phase ot its segregation activities starting ?ne de to the installation

of laor and cost9saving devices.

4hen the service contract as terminated, complainants claimed that S2$ stopped them from performingtheir ;os6 that this as tantamont to their eing illegally dismissed y S2$ ho as their real employer as their

activities ere directly related, necessary and desirale to the main siness of S2$6 and, that 2AE0$ as merely

made a tool or a shield y S2$ to avoid its liaility nder the +aor $ode.2AE0$ for its part admitted that it recrited the complainants and placed them in the ottle segregation

pro;ect of S2$ t maintained that it as only conveniently sed y S2$ as an intermediary in operating the

pro;ect or or# directly related to the primary siness concern of the latter ith the end in vie of avoiding its

oligations and responsiilities toards the complaining or#ers.

The nine () casesH ere consolidated. &n 7 ?anary = the +aor Ariter rendered a decision holding that

2AE0$ as an independent contractor.H< 1e dismissed the complaints for illegal dismissal t ordered 2AE0$ to

pay complainants: separation enefits in the total amont of P<,77C,=K.KK. 2AE0$ and S2$ ere also orderedto ;ointly and severally pay complainants their age differentials in the amont of P*C=,J.KK and to pay

attorney:s fees in the amont of P7J,<L.JK.

The complainants appealed the +aor Ariter:s finding that 2AE0$ as an independent contractor and solelyliale to pay the amont representing the separation enefits to the exclsion of S2$, as ell as the +aor Ariter:sfailre to grant the Temporary +iving Alloance of the complainants. S2$ appealed the aard of attorney:s fees.

The 'ational +aor 0elations $ommission ('+0$) rled in its J ?anary J decision that 2AE0$ as a

laor9only contractor and that complainants ere employees of S2$. H7 The '+0$ also held that hether 2AE0$as a ;o contractor or a laor9only contractor, S2$ as still solidarily liale ith 2AE0$ for the latter:s npaid

oligations, citing Art. KHC of the +aor $ode. Ths, the '+0$ modified the ;dgment of the +aor Ariter and

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held S2$ ;ointly and severally liale ith 2AE0$ for complainants: separation enefits. In addition, oth

respondents ere ordered to pay ;ointly and severally an indemnity fee of P<,KKK.KK to each complainant.

S2$ moved for a reconsideration hich reslted in the redction of the aard of attorney:s feesfrom P7J,<L.JK to P*C,=.JK. The rest of the assailed decision as nchanged.H=

&n < 2arch *, S2$ filed a petition for certiorari ith prayer for the issance of a temporary restrainingorder andFor in;nction ith this $ort hich then referred the petition to the $ort of Appeals.

&n <* April <KKK the $ort of Appeals denied the petition and affirmed the decision of the '+0$. HL Theappellate cort also denied S2$:s motion for reconsideration in a resoltionHJ dated <L ?ly <KKK. 1ence,

petitioner see#s a revie of the $ort of AppealsO ;dgment efore this $ort.

Petitioner poses the same isses roght p in the appeals cort and the pivotal >estion is hether thecomplainants are employees of petitioner S2$ or of respondent 2AE0$.

0elying heavily on the factal findings of the +aor Ariter, petitioner maintained that 2AE0$ as a

legitimate ;o contractor. It directed this $ort:s attention to the ndispted evidence it claimed to estalish this

assertion 2AE0$ is a dly organied stoc# corporation hose primary prpose is to engage in the siness of

cleaning, receiving, sorting, classifying, groping, sanitiing, pac#ing, delivering, arehosing, trc#ing andshipping any glass andFor metal containers and that it had listed in its general information sheet to hndred

seventy9eight (<J*) or#ers, tenty9to (<<) spervisors, seven (J) managersFofficers and a oard of directors6 italso volntarily entered into a service contract on a non9exclsive asis ith petitioner from hich it earned a gross

income of PC<,K,=L*.<C from J &ctoer ** to <J 'ovemer 6 the service contract specified that 2AE0$

had the selection, engagement and discharge of its personnel, employees or agents or otherise in the direction andcontrol thereof6 2AE0$ admitted that it had machinery, e>ipment and fixed assets sed in its siness valed

at P

C,LK*,K*K.KK6 and, it failed to appeal the +aor Ariter:s decision hich declared it to e an independent

contractor and ordered it to solely pay the separation enefits of the complaining or#ers.

4e find no asis to overtrn the $ort of Appeals and the '+0$. 4ell9estalished is the principle that

findings of fact of >asi9;dicial odies, li#e the '+0$, are accorded ith respect, even finality, if spported ysstantial evidence.H* Particlarly hen passed pon and pheld y the $ort of Appeals, they are inding and

conclsive pon the Spreme $ort and ill not normally e distred.H

This $ort has invarialy held that in ascertaining an employer9employee relationship, the folloing factors

are considered (a) the selection and engagement of employee6 () the payment of ages6 (c) the poer of

dismissal6 and, (d) the poer to control an employee:s condct, the last eing the most important. HK Application ofthe aforesaid criteria clearly indicates an employer9employee relationship eteen petitioner and the complainants.

Evidence discloses that petitioner played a large and indispensale part in the hiring of 2AE0$:s or#ers. It

also appears that ma;ority of the complainants had already een or#ing for S2$ long efore the signing of the

service contract eteen S2$ and 2AE0$ in **.

The incorporators of 2AE0$ admitted having spplied and recrited or#ers for S2$ even efore 2AE0$as created.H The '+0$ also fond that hen 2AE0$ as organied into a corporation in !erary **, the

complainants ho ere then already or#ing for S2$ ere made to go throgh the motion of applying for or#ith 2s. &lga &ano, President and -eneral 2anager of 2AE0$, pon the instrction of S2$ throgh its

spervisors to ma#e it appear that complainants ere hired y 2AE0$. This as testified to y to (<) of the

or#ers ho ere segregator and for#lift operator assigned to the Beer 2ar#eting %ivision at the S2$ compond

and ho had een or#ing ith S2$ nder a prported contractor ?opard Services since 2arch J and 2arch*, respectively. Both itnesses also testified that together ith other complainants they contined or#ing for

S2$ ithot rea# from ?opard Services to 2AE0$.

As for the payment of or#ers: ages, it is conceded that 2AE0$ as paid in lmp sm t records sggest

that the remneration as not compted merely according to the reslt or the volme of or# performed. Thememoranda of the laor rates earing the signatre of a /ice9President and -eneral 2anager for the /ismin Beer

&perationsH< as ell as a director of S2$ H7 appended to the contract of service reveal that S2$ assmed theresponsiility of paying for the mandated overtime, holiday and rest day pays of the 2AE0$ or#ers. HC S2$ also

paid the employer:s share of the SSS and 2edicare contritions, the 7th month pay, incentive leave pay and

maternity enefits.H= In the lmp sm received, 2AE0$ earned a marginal amont representing the contractorOs

share. These lend credence to the complaining or#ers: assertion that hile 2AE0$ paid the ages of thecomplainants, it merely acted as an agent of S2$.




























Petitioner insists that the most significant determinant of an employer9employee relationship, i.e., the right to

control, is asent. The contract of services eteen 2AE0$ and S2$ provided that 2AE0$ as an independent

contractor and that the or#ers hired y it "shall not, in any manner and nder any circmstances, e consideredemployees of the $ompany, and that the $ompany has no control or spervision hatsoever over the condct of the

$ontractor or any of its or#ers in respect to ho they accomplish their or# or perform the $ontractor:s

oligations nder the $ontract."HL

In deciding the >estion of control, the langage of the contract is not determinative of the parties: relationship6

rather, it is the totality of the facts and srronding circmstances of each case. HJ

%espite S2$Os disclaimer, there are indicia that it actively spervised the complainants. S2$ maintained a

constant presence in the or#place throgh its on chec#ers. Its asseveration that the chec#ers ere there only tochec# the end reslt as elied y the testimony of $arlito 0. Singson, head of the 2andae $ontainer Service of

S2$, that the chec#ers ere also tas#ed to report on the identity of the or#ers hose performance or >ality of

or# as not according to the rles and standards set y S2$. According to Singson, "it (as) necessary toidentify the names of those concerned so that the management Hreferring to 2AE0$ cold call the attention to

ma#e these people improve the >ality of or#."H*

/ieed alongside the findings of the +aor Ariter that the 2AE0$ organiational set9p in the ottlesegregation pro;ect as sch that the segregatorsFcleaners ere spervised y chec#ers and each chec#er as also

nder a spervisor ho as in trn nder a field spervisor, the responsiility of atching over the 2AE0$

or#ers y 2AE0$ personnel ecame sperflos ith the presence of additional chec#ers from S2$.

0einforcing the elief that the S2$ exerted control over the or# performed y the segregators or cleaners,aleit throgh the instrmentality of 2AE0$, ere letters y S2$ to the 2AE0$ management. These ere

lettersH ritten y a certain 2r. 4. Padin H<K addressed to the President and -eneral 2anager of 2AE0$ as

ell as to its head of operations,H< and a third letter H<< from $arlito 0. Singson also addressed to the President and-eneral 2anager of 2AE0$. 2ore than ;st a mere ritten report of the nmer of ottles improperly cleaned

andFor segregated, the letters named three (7) or#ers ho ere responsile for the re;ection of several ottles,

specified the infraction committed in the segregation and cleaning, then recommended the penalty to eimposed. Evidently, these or#ers ere reported y the S2$ chec#ers to the S2$ inspector.

4hile the +aor Ariter dismissed these letters as merely indicative of the concern in the end9reslt of the ;o

contracted y 2AE0$, e find more credile the contention of the complainants that these ere manifestations of

the right of petitioner to recommend disciplinary measres over 2AE0$ employees. Althogh calling theattention of its contractors as to the >ality of their services may reasonaly e done y S2$, there appears to e

no need to instrct 2AE0$ as to hat disciplinary measres shold e imposed on the specific or#ers ho ere

responsile for re;ections of ottles. This condct y S2$ representatives ent eyond a mere reminder ithrespect to the improperly cleanedFsegregated ottles or a genine concern in the otcome of the ;o contracted y

2AE0$.

$ontrol of the premises in hich the contractor:s or# as performed as also vieed as another phase ofcontrol over the or#, and this strongly tended to disprove the independence of the contractor. H<7 In the case at ar,the l# of the 2AE0$ segregation activities as accomplished at the 2AE0$9oned P1I+P1&S arehose t

the ilding along ith the machinery and e>ipment in the facility as actally eing rented y S2$. This is

evident from the memoranda of laor rates hich inclded rates for the se of for#lifts and the arehose at theP1I+P1&S area, hence, the '+0$Os conclsion that the payment for the rent as cleverly disgised since 2AE0$

as not in the siness of renting arehoses and for#lifts.H<C

&ther instances attesting to S2$Os spervision of the or#ers are fond in the mintes of the meeting held y

the S2$ officers on = %ecemer **. Among those matters discssed ere the calling of S2$ contractors tohave or#ers assigned to segregation to ndergo and pass eye examination to e done y S2$ EE'T company

doctor and a revie of compensationFincentive system for segregators to improve the segregation activities.H<=

Bt the most telling evidence is a letter y 2r. Antonio &ano, /ice9President of 2AE0$ dated <J 2ay addressed to !rancisco Eimendi, S2$ President and $hief Exective &fficer, as#ing the latter to reconsider the

phasing ot of S2$Os segregation activities in 2andae $ity. The letter as not denied t in fact sed y S2$ to

advance its on argments. H<L

Briefly, the letter exposed the actal state of affairs nder hich 2AE0$ as formed and engaged to handlethe segregation pro;ect of S2$. It provided an accont of ho in *J Eimendi approached the old9e


























incorporators of 2AE0$ and offered them the siness of servicing the S2$ ottle9ashing and segregation

department in order to avert an impending laor stri#e. After initial reservations, 2AE0$ incorporators accepted

the offer and efore long trial segregation as condcted y S2$ at the P1I+P1&S arehose. H<J

The letter also set ot the circmstances nder hich 2AE0$ entered into the $ontract of Services in **

ith the assrances of the S2$ President and $E& that the employment of 2AE0$:s services old e long term

to enale it to recover its investments. It as ith this nderstanding that 2AE0$ ndertoo# orroings from an#ing instittions and from affiliate corporations so that it cold comply ith the demands of S2$ to invest in

machinery and facilities.

In sm, the letter attested to an arrangement entered into y the to (<) parties hich as not reflected in the

$ontract of Services. A pecliar relationship mtally eneficial for a time t nonetheless ended in dispte henS2$ decided to prematrely end the contract leaving 2AE0$ to sholder all the oligations to the or#ers.

Petitioner also ascries as error the failre of the $ort of Appeals to apply the rling in Neri v. NLRC .H<* In

that case, it as held that the la did not re>ire one to possess oth sstantial capital and investment in the formof tools, e>ipment, machinery, or# premises, among others, to e considered a ;o contractor. The second

condition to estalish permissile ;o contractingH< as sfficiently met if one possessed either attrite.

Accordingly, petitioner alleged that the appellate cort and the '+0$ erred hen they declared 2AE0$ a

laor9only contractor despite the finding that 2AE0$ had investments amonting to P

C,LK*,K*K.KK consisting of ildings, machinery and e>ipment.

1oever, in #ino%a v. NLRC ,H7K e clarified that it as not enogh to sho sstantial capitaliation or

investment in the form of tools, e>ipment, machinery and or# premises, etc., to e considered an independentcontractor. In fact, ;risprdential holdings ere to the effect that in determining the existence of an independent

contractor relationship, several factors may e considered, sch as, t not necessarily confined to, hether the

contractor as carrying on an independent siness6 the natre and extent of the or#6 the s#ill re>ired6 the termand dration of the relationship6 the right to assign the performance of specified pieces of or#6 the control and

spervision of the or#ers6 the poer of the employer ith respect to the hiring, firing and payment of the or#ers

of the contractor6 the control of the premises6 the dty to spply premises, tools, appliances, materials and laor6and the mode, manner and terms of payment.H7

In Neri, the $ort considered not only the fact that respondent Bilding $are $orporation (BB$) had

sstantial capitaliation t noted that B$$ carried on an independent siness and performed its contract

according to its on manner and method, free from the control and spervision of its principal in all matters exceptas to the reslts thereof .H7< The $ort li#eise mentioned that the employees of B$$ ere engaged to perform

specific special services for their principal. H77 The stats of B$$ had also een passed pon y the $ort in a

previos case here it as fond to e a >alified ;o contractor ecase it as "a ig firm hich services among

others, a niversity, an international an#, a ig local an#, a hospital center, government agencies,etc." !rthermore, there ere only to (<) complainants in that case ho ere not only selected and hired y the

contractor efore eing assigned to or# in the $agayan de &ro ranch of !EBT$ t the $ort also fond that thecontractor maintained effective spervision and control over them.

In comparison, 2AE0$, as earlier discssed, displayed the characteristics of a laor9only

contractor. 2oreover, hile 2AE0$Os investments in the form of ildings, tools and e>ipment amonted to

more than P

C 2illion, e cannot disregard the fact that it as the S2$ hich re>ired 2AE0$ to nderta#e schinvestments nder the nderstanding that the siness relationship eteen petitioner and 2AE0$ old e on a

long term asis. 'or do e elieve 2AE0$ to have an independent siness. 'ot only as it set p to

specifically meet the pressing needs of S2$ hich as then having laor prolems in its segregation division,

none of its or#ers as also ever assigned to any other estalishment, ths convincing s that it as created solelyto service the needs of S2$. 'atrally, ith the severance of relationship eteen 2AE0$ and S2$ folloed

2AE0$Os cessation of operations, the loss of ;os for the hole 2AE0$ or#force and the reslting actions

institted y the or#ers.

Petitioner also alleged that the $ort of Appeals erred in rling that "hether 2AE0$ is an independent

contractor or a laor9only contractor, S2$ is liale ith 2AE0$ for the latter:s npaid oligations to 2AE0$:s

or#ers."

&n this point, e agree ith petitioner as distinctions mst e made. In legitimate ;o contracting, the lacreates an employer9employee relationship for a limited prpose, i.e., to ensre that the employees are paid their




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ages.H7C The principal employer ecomes ;ointly and severally liale ith the ;o contractor only for the payment

of the employees: ages henever the contractor fails to pay the same. &ther than that, the principal employer is

not responsile for any claim made y the employees.

&n the other hand, in laor9only contracting, the statte creates an employer9employee relationship for a

comprehensive prpose to prevent a circmvention of laor las. The contractor is considered merely an agent of

the principal employer and the latter is responsile to the employees of the laor9only contractor as if schemployees had een directly employed y the principal employer. The principal employer therefore ecomes

solidarily liale ith the laor9only contractor for all the rightfl claims of the employees.

This distinction eteen ;o contractor and laor9only contractor, hoever, ill not discharge S2$ from

paying the separation enefits of the or#ers, inasmch as 2AE0$ as shon to e a laor9only contractor6 inhich case, petitioner:s liaility is that of a direct employer and ths solidarily liale ith 2AE0$.

S2$ also failed to comply ith the re>irement of ritten notice to oth the employees concerned and the

%epartment of +aor and Employment (%&+E) hich mst e given at least one () month efore the intendeddate of retrenchment.H7= The fines imposed for violations of the notice re>irement have varied. H7L The measre of

this aard depends on the facts of each case and the gravity of the omission committed y the employer. H7J !or its

failre, petitioner as ;stly ordered to indemnify each displaced or#er P<,KKK.KK.

The '+0$ and the $ort of Appeals affirmed the +aor AriterOs aard of separation pay to the complainantsin the total amont ofP<,77C,=K.KK and of age differentials in the total amont of P*C=,J.KK. These amonts

are the aggregate of the aards de the to hndred ninety9one (<) complainants as compted y the +aor

Ariter. The folloing is a smmary of the comptation of the enefits de the complainants hich is part of the%ecision of the +aor Ariter.

S 2 2 A 0 3

NAE SALAR; SEPARATION TOTAL !IFFERENTIAL PA;

C"#e No. O4>1145>91 . 0ogelio Prado, ?r P7,K=L.KK P*,K.KK P,<CL.KK

xxxx9 xxxx9xxxxx9xxxxx9xxxx9xxxx

TOTAL P391,22.00 P1,138,210.00 P1,59,832.00

0 E $ A P

CASE NO. SALAR; SEPARATION TOTAL !IFFERENTIAL PA;KL9L=9 P77K,L<.KK P

**C,=<K.KK P,<=,C.KK

KJ9JJ9 7,K=L.KK =,CLK.KK *,=L.KK

KL9JL9 7,K=L.KK *,K.KK ,<CL.KKKJ9<9 7,J<*.KK JL,CCK.KK L,L*.KK

KJ9<*79 ,*C.KK 7<,JLK.KK CC,JCC.KKK9=*C9 7,K=L.KK *,K.KK ,<CL.KK

K*97<9 7,K=L.KK *,K.KK ,<CL.KK

K9=KJ9 =,7L.KK J,K.KK <7,<L.KK

KL9C=9 7,C<C.KK ,7*,CK.KK ,=<,*7C.KKGRAN! TOTAL P825,11.00 P,332,150.00 P3,19,4.00

1oever, certain matters have cropped p hich re>ire a revie of the aards to some complainants and a

recomptation y the +aor Ariter of the total amonts.

A scrtiny of the enmeration of all the complainants shos that some names7* appear tice y virte of their eing inclded in to (<) of the nine () consolidated cases. A chec# of the +aor AriterOs comptation discloses

that most of these names ere aarded different amonts of separation pay or age differential in each separate

case here they ere impleaded as parties ecase the allegations of the length and period of their employment forthe separate cases, thogh overlapping, ere also different. The records efore s are incomplete and do not aid in

verifying hether these names elong to the same persons t at least three (7) of those names ere fond to have

identical signatres in the complaint forms they filed in the separate cases. It is li#ely therefore that the +aor












Ariter erroneosly granted some complainants separation enefits and age differentials tice. Apart from this,

e also discovered some names that are almost identical. 7 It is possile that the minor variance in the spelling of

some names may have een a typographical error and refer to the same persons althogh the records seem to einconclsive.

!rthermore, one of the original complainantsCK as inadvertently omitted y the +aor Ariter from his

comptations.C The consel for the complainants promptly filed a motion for inclsionFcorrection C< hich motionas treated as an appeal of the %ecision as the +aor Ariter as prohiited y the rles of the '+0$ from

entertaining any motion at that stage of the proceedings. C7 The '+0$ for its part ac#noledged the omission CC t

oth the $ommission and sse>ently the $ort of Appeals failed to rectify the oversight in their decisions.

!inally, the '+0$ ordered oth 2AE0$ and S2$ to pay P

*C,=.JK in attorneys fees hich is ten percent(KQ) of the salary differentials aarded to the complainants in accordance ith Art. of the +aor $ode. The

$ort of Appeals also affirmed the aard. $onse>ently, ith the recomptation of the salary differentials, the

aard of attorneyOs fees mst also e modified.

7HEREFORE, the petition is %E'IE%. The assailed %ecision of the $ort of Appeals dated <* April <KKK

and the 0esoltion dated <L ?ly <KKK are A!!I02E% ith 2&%I!I$ATI&'. 0espondent 2aerc Integrated

Services, Inc. is declared to e a laor9only contractor. Accordingly, oth petitioner San 2igel $orporation andrespondent 2aerc Integrated Services, Inc., are ordered to ;ointly and severally pay complainants (private

respondents herein) separation enefits and age differentials as may e finally recompted y the +aor Ariter as

herein directed, pls attorneyOs fees to e compted on the asis of ten percent (KQ) of the amonts hich

complainants may recover prsant to Art. of the +aor $ode, as ell as an indemnity fee of P<,KKK.KK to eachcomplainant.

The +aor Ariter is directed to revie and recompte the aard of separation pays and age differentials de

complainants hose names appear tice or are notaly similar, compte the monetary aard de to complainant 'iel Ganoria hose name as omitted in the +aor AriterOs %ecision and immediately execte the monetary

aards as fond in the +aor AriterOs comptations insofar as those complainants hose entitlement to separation

pay and age differentials and the amonts thereof are no longer in >estion. $osts against petitioner.SO OR!ERE!.












supplemental case 1-29

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