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1. OROZCO VS.

COURT OF APPEALS
APRIL 29, 2005
G.R. NO. 155207

Wilhelmina Orozco was hired as a writer by the Philippine Daily Inquirer (PDI) in 1990.
She was the columnist of Feminist Reflections under the Lifestyle section of the
publication. She writes on a weekly basis and on a per article basis (P250-300/article).
In 1991, Magsanoc as the editor-in-chief sought to improve the Lifestyle section of the
paper. She said there were too many Lifestyle writers and that it was time to reduce the
number of writers. Orozcos column was eventually dropped.
Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc. Orozco won in
the Labor Arbiter. The LA ruled that there exists an employer-employee relationship
between PDI and Orozco hence Orozco is entitled to receive backwages, reinstatement,
and 13th month pay.
PDI appealed to the National Labor Relations Commission. The NLRC denied the
appeal because of the failure of PDI to post a surety bond as required by Article 223 of
the Labor Code. The Court of Appeals reversed the NLRC.
ISSUE: Whether or not there exists an employer-employee relationship between PDI
and Orozco. Whether or not PDIs appeal will prosper.
HELD: Under Article 223 of the Labor Code:
ART. 223. Appeal. Decisions, awards or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders.
In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from.
The requirement that the employer post a cash or surety bond to perfect its/his appeal is
apparently intended to assure the workers that if they prevail in the case, they will
receive the money judgment in their favor upon the dismissal of the employers appeal. It
was intended to discourage employers from using an appeal to delay, or even evade,
their obligation to satisfy their employees just and lawful claims.
But in this case, this principle is relaxed by the Supreme Court considering the fact that
the Labor Arbiter, in ruling that the Orozco is entitled to backwages, did not provide any
computation.

The case is then remanded to the Labor Arbiter for the computation. This necessarily
pended the resolution of the other issue of whether or not there exists an employeremployee relationship between PDI and Orozco.

2. CHAVEZ VS. NLRC


JANUARY 17, 2005
G.R. NO. 146530

FACTS:
The respondent company, Supreme Packaging, Inc. engaged the services
of the petitioner, Pedro Chavez, as truck driver. The respondent company
furnished the petitioner with a truck. The petitioner expressed to respondent
Alvin Lee, respondent companys plant manager, his desire to avail himself of the
benefits that the regular employees were receiving such as overtime pay,
nightshift differential pay, and 13th month pay, among others. Although he
promised to extend these benefits to the petitioner, respondent Lee failed to
actually do so. Petitioner filed a complaint for regularization with the Regional
Arbitration Branch. Before the case could be heard, respondent company
terminated the services of the petitioner. Consequently, the petitioner filed an
amended complaint against the respondents for illegal dismissal, unfair labor
practice and non-payment of overtime pay, nightshift differential pay, and 13th
month pay, among others. The respondents, for their part, denied the existence
of an employer-employee relationship between the respondent company and the
petitioner. They averred that the petitioner was an independent contractor as
evidenced by the contract of service which he and the respondent company
entered into. The relationship of the respondent company and the petitioner was
allegedly governed by this contract of service.
The respondents insisted that the petitioner had the sole control over the
means and methods by which his work was accomplished. He paid the wages of
his helpers and exercised control over them. As such, the petitioner was not
entitled to regularization because he was not an employee of the respondent
company. The respondents, likewise, maintained that they did not dismiss the
petitioner. Rather, the severance of his contractual relation with the respondent
company was due to his violation of the terms and conditions of their contract.
ISSUE:
whether or not there existed an employer-employee relationship between
the respondent company and the petitioner.
RULING:
Yes. There was an employer-employee relationship in the case at bar.
The elements to determine the existence of an employment relationship
are: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the employers power to control the
employees conduct. All the four elements are present in this case.
Of the four elements of the employer-employee relationship, the control
test is the most important. Although the respondents denied that they exercised
control over the manner and methods by which the petitioner accomplished his
work, a careful review of the records shows that the latter performed his work as

truck driver under the respondents supervision and control. Their right of control
was manifested by the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent company;
2. There was an express instruction from the respondents that the truck
shall be used exclusively to deliver respondent companys goods;
3. Respondents directed the petitioner, after completion of each delivery,
to park the truck in either of two specific places only, to wit: at its office in Metro
Manila at 2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan; and
4. Respondents determined how, where and when the petitioner would
perform his task by issuing to him gate passes and routing slips.
These circumstances, to the Courts mind, prove that the respondents exercised
control over the means and methods by which the petitioner accomplished his
work as truck driver of the respondent company. The contract of service
indubitably established the existence of an employer-employee relationship
between the respondent company and the petitioner. It bears stressing that
the existence of an employer-employee relationship cannot be negated
by expressly repudiating it in a contract and providing therein that the
employee is an independent contractor when, as in this case, the facts
clearly show otherwise. Indeed, the employment status of a person is
defined and prescribed by law and not by what the parties say it should
be.

3. CONSULTA VS. COURT OF APPEALS


MARCH 18, 2005
G.R. NO. 145443

FACTS: Consulta was Managing Associate of Pamana. On 1987 she was issued a certification
authorizing her to negotiate for and in behalf of PAMANA with the Federation of Filipino Civilian
Employees Association. Consulta was able to secure an account with FFCEA in behalf of
PAMANA. However, Consulta claimed that PAMANA did not pay her commission for the PPCEA
account and filed a complaint for unpaid wages or commission.
ISSUE: Whether or not Consulta was an employee of PAMANA.
HELD: The SC held that Pamana was an independent agent and not an employee.
The power of control in the four fold test is missing. The manner in which Consulta was to pursue
her

tasked

activities

was

not

subject

to

the

control

of PAMANA. Consulta failed to show that she worked definite hours. The amount of time, the
methods and means, the management and maintenance of her sales division were left to her
sound judgment.
Finally, Pamana paid Consulta not for labor she performed but only for the results of her labor.
Without results, Consultas labor was her own burden and loss. Her right to compensation, or to

commission, depended on the tangible results of her work whether she brought in paying
recruits.
The fact that the appointment required Consulta to solicit business exclusively for Pamana did
not mean Pamana exercised control over the means and methods of Consultas work as the term
control is understood in labor jurisprudence. Neither did it make Consulta an employee of
Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being
connected with any other company, for as long as the business or company did not compete with
Pamanas business.
The exclusivity clause was a reasonable restriction to prevent similar acts prejudicial to
Pamanas business interest. Article 1306 of the Civil Code provides that [t]he contracting parties
may establish such stipulation, clauses, terms and conditions as they may deem convenient,
provided that they are not contrary to law, morals, good customs, public order, or public policy.
There being no employer-employee relationship between Pamana and Consulta, the Labor
Arbiter and the NLRC had no jurisdiction to entertain and rule on Consultas money claim.
Consultas remedy is to file an ordinary civil action to litigate her claim
Petition is dismissed.

4. PHILIPPINE GLOBAL COMMUNICATIONS INC. VS. DE VERA


JUNE 7, 2005
G.R. NO. 157214

FACTS
De Vera and petitioner company entered into a contract where respondent was
to attend to the medical needs of petitioners employees while being paid a
retainer fee of P4,000 per month. Later, De Vera was informed y petitioner that
the retainership will be discontinued. Respondent filed a case for illegal
dismissal.
ISSUE
Whether or not de Vera is an employee of PhilComm or an independent
contractor.
HELD
Applying the four fold test, de Vera is not an employee. There are several
indicators apart from the fact that the power to terminate the arrangement lay
on both parties:

from the time he started to work with petitioner, he never was included
in its payroll; was never deducted any contribution for remittance to the Social
Security System (SSS);

he was subjected by petitioner to the ten (10%) percent withholding

tax for his professional fee, in accordance with the National Internal Revenue
Code, matters which are simply inconsistent with an employer-employee
relationship;

the records are replete with evidence showing that respondent had to
bill petitioner for his monthly professional fees. It simply runs against the grain of
common experience to imagine that an ordinary employee has yet to bill his
employer to receive his salary.
Finally, the element of control s absent.
Petition granted.

5. COCA-COLA BOTTLERS VS. CLIMACO


FEBRUARY 5, 2007
G.R. NO. 146881

FACTS
Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola
by virtue of a Retainer Agreement. The compensation to be paid is fixed at
P3,000.00 per month. He may charge professional fee for hospital services
rendered in line with his specialization. He is to observe clinic hours at the
company premises from Monday to Saturday at least two (2) hours each day
unless such schedule is otherwise changed by the company as the situation so
warrants, subject to the labor Code provisions on Occupational Safety and Health
Standards as the Company may determine. It was also expressly stated in the
contract that no employer-employee relationship shall exist between the retainer
and the company. The doctor also agrees to perform the duties and obligations
enumerated in the Comprehensive Medical Plan. After the expiration of the 1year retainer agreement, respondent continued to perform his functions as a
company doctor to Coca-Cola until he received a letter from the latter concluding
their retainership agreement effective 30 days from receipt thereof.
Respondent then filed a complaint before the NLRC, seeking recognition as a
regular employee of petitioner company and prayed for the payment of all
benefits of a regular employee, including 13th Month Pay, Cost of Living
Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. This
was later amended to include illegal dismissal.
ISSUE
W/n there existed an employee-employer relationship between Climaco and Coca
Cola.
HELD
The SC held that there is no employer-employee relationship between petitioner
and respondent company. The Court, in determining the existence of an
employer-employee relationship, has invariably adhered to the four-fold test: (1)
the selection and engagement of the employee; (2) the payment of wages; (3)

the power of dismissal; and (4) the power to control the employees conduct, or
the so-called control test, considered to be the most important element.
The circumstances of this case show that no employer-employee relationship
exists between the parties because the company lacked the power of control
over the performance by respondent of his duties. The company in providing a
Comprehensive Medical Plan, merely issued guidelines in order to ensue that the
end result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks. The company lacks the power of
control that the contract provides that the respondent shall be directly
responsible to the employee concerned and their dependents for any injury,
harm or damage caused through professional negligence, incompetence, or
other valid causes of action. The Court also finds that the schedule of work and
the requirement to be on call for emergency cases do not amount to such
control, but are necessary incidents to the Retainership Agreement. The Court
also notes that the Retainership Agreement granted to both parties the power to
terminate their relationship upon giving a 30-day notice. Hence, petitioner
company did not wield the sole power of dismissal or termination. There is
nothing wrong with the employment of respondent as a retained physician of
petitioner company and upholds the validity of the retainership agreement which
clearly states that no employer-employee relationship existed between the
parties.
Petition is granted.

6. NERI VS. NLRC


JULY 23, 1993

Facts:
Respondents are sued by two employees of Building Care Corporation, which provides janitorial and other specific services to
various firms, to compel Far Bast Bank and Trust Company to recognize them as its regular employees and be paid the same wages which
its employees receive.
Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had substantial capitalization of P1
Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC was only job contracting and that consequently its
employees were not employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual finding was affirmed by
respondent National Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist before us that BCC is engaged in
"labor-only" contracting hence, they conclude, they are employees of respondent FEBTC.
On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the
Department of Labor and Employment to compel the bank to accept them as regular employees and for it to pay the differential between the
wages being paid them by BCC and those received by FEBTC employees with similar length of service.
Issue:
Whether or not BCC is only a job contracting company, hence petitioners are not regular employees of FEBTC.
SC Ruling:
We cannot sustain the petition.
Respondent BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among
others, because it has established that it has sufficient capitalization. The Labor Arbiter and the NLRC both determined that BCC had a
capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in
"labor-only" contracting.
It is well-settled that there is "labor-only" contracting where: (a) the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed
by such person are performing activities which are directly related to the principal business of the employer.
Article 106 of the Labor Code defines "labor-only" contracting thus
Art. 106. Contractor or subcontractor. . . . . There is "labor-only" contracting where the person supplying workers
to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited by such persons are performing activities which are directly related
to the principal business of such employer . . . . (emphasis supplied).
Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may
be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has

substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both
substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the
intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have
been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that
it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities
they perform are directly related to the principal business of respondent bank.
Even assuming ex argumenti that petitioners were performing activities directly related to the principal business of the bank,
under the "right of control" test they must still be considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC
issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that
what was sought to be controlled by FEBTC was actually the end-result of the task, e.g., that the daily incoming and outgoing telegraphic
transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure
that the desired end-result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated.
More importantly, under the terms and conditions of the contract, it was BCC alone which had the power to reassign petitioners.
Their deployment to FEBTC was not subject to the bank's acceptance. Cabelin was promoted to messenger because the FEBTC branch
manager promised BCC that two (2) additional janitors would be hired from the company if the promotion was to be effected. Furthermore,
BCC was to be paid in lump sum unlike in the situation in Philippine Bank of Communications where the contractor, CESI, was to be paid at
a daily rate on a per person basis. And, the contract therein stipulated that the CESI was merely to provide manpower that would render
temporary services. In the case at bar, Neri and Cabelin were to perform specific special services. Consequently, petitioners cannot be held
to be employees of FEBTC as BCC "carries an independent business" and undertaken the performance of its contract with various clients
according to its "own manner and method, free from the control and supervision" of its principals in all matters "except as to the results
thereof."
The Petition for Certiorari is dismissed.

7. GABRIEL VS. BILON


FEBRUARY 7, 2007
G.R. NO. 146989

Nelson Bilon, Angel Brazil and Ernesto Pagaygay were jeepney drivers of jeepneys
owned by Melencio Gabriel. They are paying P400/day for their boundary. Later, the
drivers were required to pay an additional P50.00 to cover police protection, car wash,
deposit fee, and garage fees.
The three drivers refused to pay the additional P50.00. On April 30, 1995, when the
drivers reported to work, they were not given any jeepney to drive. Eventually, they were
dismissed. The three drivers sued Gabriel for illegal dismissal.
The Labor Arbiter ruled in favor of the drivers and ordered Gabriel to pay the drivers their
backwages and their separation pay amounting to about a total of P1.03M.
On April 18, 1997, the LA promulgated its decision and on the same day sent a copy
thereof to Gabriel but Flordeliza (wife of Gabriel) refused to receive the copy. Apparently,
Gabriel died on April 4, 1997. The copy was re-sent via registered mail on May 28, 1997.
Flordeliza appealed to the LA on June 5, 1997.
The LA dismissed the appeal; it ruled that the appeal was not on time because the
promulgation was made on April 18, 1997 and that the appeal on June 5, 1997 was
already beyond the ten day period required for appeal.
The National Labor Relations Commission reversed the LA. It ruled that there was no
employee-employer relationship between the drivers and Gabriel. The Court of Appeals
reversed the NLRC but it ruled that the separation pay should not be awarded but rather,
the employees should be reinstated.
ISSUES:

1. Whether or not the appeal before the LA was made on time.


2. Whether or not there was an employer-employee relationship between the drivers and
Gabriel.
3. Whether or not there was a strained relation between Gabriel and the drivers.
HELD:
1. Yes. The appeal was made on time because when the promulgation was made
Gabriel is already dead. The ten day requirement to make an appeal is not applicable in
this situation because Gabriel was not yet properly substituted by the wife. The counting
of the period should be made starting from the date when the copy was sent via
registered mail. Therefore, the appeal filed on June 5 was made on time.
2. Yes. There exists an employer-employee relationship between the drivers and
Gabriel. The fact that the drivers do not receive fixed wages but get only whatever
exceeds the so-called boundary [that] they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee.
3. No. The award of the separation pay is not proper. It was not shown that there was a
strained relationship between Gabriel and the drivers so as to cause animosity if they
are reinstated. The Strained Relations Principle is only applied if it is shown that
reinstatement would only cause antagonism between the employer and the employee;
and that the only solution is separation and the payment of separation pay.

8. PAGUIO TRANSPORT VS. NLRC


AUGUST 28, 1998
G.R. NO. 119500

FACTS:
Complainant Melchor was hired by PTC as a taxi driver under the
boundary system. He was advised to stop working and have a rest after a car
accident involving the taxi unit he was driving. He was told by the PTC that his
service was no longer needed. Then the complaint for illegal dismissal was
raised. The petitioner concludes that he had no control over the number of
hours private respondent had to work and the routes he had to take; therefore
no employer-employee relationship exists.

ISSUE:
Whether or not employer-employee relationship exists.

FACTS:

Boundary system is that of employer-employee and not of lessor-lessee.


Under the boundary system the drivers do not receive fixed wages; all the
excess in the amount of boundary was considered his income but it is not
sufficient to withdraw the relationship between them from that of employer and
employee. Private respondents were employees because they had been engaged
to perform activities which were usually necessary or desirable in the usual trade
or business of the employer.
The petition was dismissed, the private respondent was entitled for the
claim of damages and illegal dismissal.

9. CITIZENS LEAGUE OF FREE WORKERS VS. ABBAS


SEPTEMBER 23, 1966
G.R. NO. L-21212

Facts:

On March 11, 1963 the respondents filed a complaint to restrain the Citizens' League of Freeworkers,
a legitimate labor organization (referred to as union) from interfering in with the respondents autocalesas business in Davao and to recover damages from committing certain acts complained of in
connection therewith. The union members who were drivers of the said business, alleges that the
defendants named therein used to lease the auto-calesas of the spouses on a daily rental basis and
that the same does not recognize the union as their employees rather the petitioners were treated as
lessees and refuses to bargain with them. The union declared a strike on February 20, 1963, to which
paralyzed plaintiffs' business operations through threats, intimidation and violence. The writ was
granted.

On March 18, 1963, petitioners filed a motion to declare the writ of preliminary injunction void on the
ground that the same had expired by virtue of Section 9 (d) of Republic Act 875. In his order of March
21, 1963, however, the respondent judge denied said motion on the ground that there was no
employer-employee relationship between respondents-spouses and the individual petitioners herein
and that, consequently, the Rules of Court and not Republic Act No. 875 applied to the matter of
injunction. Thereupon the petition under consideration was filed.

Issue:

Whether or not there is an employer-employee relationship existing from a daily rental basis
company?

Held:

In the case of Isabelo Doce vs. Workmen's Compensation Commission, et al. (G.R. No. L-9417,
December 22, 1958), upon a similar if not an altogether identical set of facts, We held:

"The only features that would make the relationship of lessor and lessee between the respondent,
owner of the jeeps, and the drivers, members of the petitioner union, are the fact that he does not pay
them any fixed wage but their compensation is the excess of the total amount of fares earned or
collected by them over and above the amount of P7.50 which they agreed to pay to the respondent,
and the fact that the gasoline burned by the jeeps is for the account of the drivers. These two features
are not, however, sufficient to withdraw the relationship, between them from that of employeremployee, because the estimated earnings for fares must be over and above the amount they agreed
to pay to the respondent for a ten-hour shift or ten-hour a day operation of the jeeps. Not having any
interest in the business because they did not invest anything in the acquisition of the jeeps and did not
participate in the management thereof, their service as drivers of the jeeps being their only
contribution to the business, the relationship of lessor and lessee cannot be sustained."

Wherefore, judgment is hereby rendered setting aside the writ of preliminary injunction issued
by the respondent judge in Civil Case No. 3966 of the Court of First Instance of Davao, with costs.

10.

JARDIN VS. NLRC

FEBRUARY 23, 2000


G.R. NO. 119268

Facts
Petitioners were drivers of private respondent, Philjama International Inc., a domestic
corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private
respondent's taxicabs every other day on a 24-hour work schedule under the boundary
system. Under this arrangement, the petitioners earned an average of P400.00 daily.
Nevertheless, private respondent admittedly regularly deducts from petitioners, daily
earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing
that the deduction is illegal, petitioners decided to form a labor union to protect their
rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners
drive their taxicabs when they reported for work on August 6, 1991, and on succeeding

days. Petitioners suspected that they were singled out because they were the leaders
and active members of the proposed union. Aggrieved, petitioners filed with the labor
arbiter a complaint against private respondent for unfair labor practice, illegal dismissal
and illegal deduction of washing fees. In a decision dated August 31, 1992, the labor
arbiter dismissed said complaint for lack of merit.
On appeal, the NLRC, in a decision dated April 28, 1994, reversed and set aside the
judgment of the labor arbiter. Private respondent's first motion for reconsideration was
denied. Remaining hopeful, private respondent filed another motion for reconsideration.
This time, public respondent, in its decision dated October 28, 1994, granted aforesaid
second motion for reconsideration. It ruled that it lacks jurisdiction over the case as
petitioners and private respondent have no employer-employee relationship. It held that
the relationship of the parties is leasehold which is covered by the Civil Code rather than
the Labor Code.
Issue
Whether or not the second motion for reconsideration was properly entertained.
Whether or not there is an existence of employee-employer relationship.
Whether or not the deduction of car wash is valid.
Decision
I.
NO, IT WAS NOT.
The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has
settled meaning in the jurisprudence of procedure. It means such capricious and
whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power
as to amount to lack of power. In labor cases, this Court has declared in several instances
that disregarding rules it is bound to observe constitutes grave abuse of discretion on the
part of labor tribunal.
In this case before us, private respondent exhausted administrative remedy available to
it by seeking reconsideration of public respondent's decision dated April 28, 1994, which
public respondent denied. With this motion for reconsideration, the labor tribunal had
ample opportunity to rectify errors or mistakes it may have committed before resort to
courts of justice can be had. Thus, when private respondent filed a second motion for
reconsideration, public respondent should have forthwith denied it in accordance with
Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for
reconsideration from the same party.
The rationale for allowing only one motion for reconsideration from the same party is to
assist the parties in obtaining an expeditious and inexpensive settlement of labor cases.
For obvious reasons, delays cannot be countenanced in the resolution of labor disputes.
The dispute may involve no less than the livelihood of an employee and that of his loved
ones who are dependent upon him for food, shelter, clothing, medicine, and education. It
may as well involve the survival of a business or an industry.
The second motion for reconsideration filed by private respondent is indubitably a
prohibited pleading which should have not been entertained at all. Public respondent
cannot just disregard its own rules on the pretext of "satisfying the ends of justice",
especially when its disposition of a legal controversy ran afoul with a clear and long
standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion.
Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of
rectifying an error or mistake. In our view, public respondent gravely abused its
discretion in taking cognizance and granting private respondent's second motion for
reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases.
II.
YES, THERE IS.
The relationship between taxiowners/operators on one hand and taxi drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee. In the
lease of chattels, the lessor loses complete control over the chattel leased although the
lessee cannot be reckless in the use thereof, otherwise he would be responsible for the

damages to the lessor. In the case of taxi owners/operators and taxi drivers, the former
exercise supervision and control over the latter. The management of the business is in
the owner's hands. The owner as holder of the certificate of public convenience must see
to it that the driver follows the route prescribed by the franchising authority and the rules
promulgated as regards its operation. Now, the fact that the drivers do not receive fixed
wages but get only that in excess of the so-called "boundary" they pay to the
owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee. Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities which are usually necessary or
desirable in the usual business or trade of their employer.
III.
YES, IT IS.
After a tour of duty, it is incumbent upon the driver to restore the unit he has driven to
the same clean condition when he took it out. Car washing after a tour of duty is indeed a
practice in the taxi industry and is in fact dictated by fair play. Hence, the drivers are not
entitled to reimbursement of washing charges.

11.

R TRANSPORT CORPORATION VS. EJANDRA

MAY 20, 2004


G.R. NO. 148508

FACTS:
Private respondent Rogelio Ejandra worked as a bus driver of petitioner bus
corporation got almost six years. One day, he was apprehended by an LTO officer
for obstruction of traffic for which his license was confiscated. Ejendra
immediately reported the incident to his manager, Mr. Oscar Pasquin, who gave
him P500 to redeem his license but was able to retrieve his license only after a
week. Later on, when Ejandra informed his manager that he was ready to report
for work, he was told that the company was still studying whether to allow him to
drive again. Private respondent was likewise accused of causing damage to the
bus he used to drive. Petitioner claimed that private respondent, a habitual
absentee, abandoned his job. Petitioner further argued that private respondent
was not an employee because theirs was a contract of lease and not of
employment, with petitioner being paid on commission basis.
ISSUES:
1.) WON respondent abandoned his work; WON petitioner was the lessor of
private respondent; that, as such, the termination of the contract of lease
of services did not require petitioner to respect private respondents rights
to notice and hearing.
HELD:
Under Section 1, Rule 45 of the 1997 Rules of Civil Procedure, a petition for
review shall only raise questions of law considering that the findings of fact of

the Court of Appeals are, as a general rule, conclusive upon and binding on this
Court. This doctrine applies with greater force in labor cases where the factual
findings of the labor tribunals are affirmed by the Court of Appeals. The reason is
because labor officials are deemed to have acquired expertise in matters within
their jurisdiction and therefore, their factual findings are generally accorded not
only respect but also finality, and are binding on this Court.
In the case at bar, the labor arbiter,the NLRC and the Court of Appeals were
unanimous in finding that private respondent worked as a driver of one of the
buses of petitioner and was paid on a 10% commission basis. After he was
apprehended for a traffic violation, his license was confiscated. When he
informed petitioners general manager of such fact, the latter gave him money to
redeem his license. He went to the LTO office everyday but it was only after a
week that he was able to get back his license. When he reported back to work,
petitioners manager told him to wait until his services were needed again.
Considering himself dismissed, private respondent filed a complaint for illegal
dismissal against petitioner.
We have no reason to disturb all these factual findings because they are amply
supported by substantial evidence.
Denying the existence of an employer-employee relationship, petitioner insists
that the parties agreement was for a contract of lease of services. We disagree.
Petitioner is barred

to negate

the

existence

of

an

employer-employee

relationship. In its petition filed before this Court, petitioner invoked our rulings
on the right of an employer to dismiss an employee for just cause. Petitioner
maintained

that

private

respondent

was

justifiably

dismissed

due

to

abandonment of work. By adopting said rulings, petitioner impliedly admitted


that it was in fact the employer of private respondent. According to the control
test, the power to dismiss an employee is one of the indications of an employeremployee relationship. Petitioners claim that private respondent was legally
dismissed

for

abandonment

was

in

fact

negative

pregnant:

an

acknowledgement that there was no mutual termination of the alleged contract


of lease and that private respondent was its employee. The fact that petitioner
paid private respondent on commission basis did not rule out the presence of an
employee-employer relationship. Article 97(f) of the Labor Code clearly provides
that an employees wages can be in the form of commissions.
2.) WON respondent was dismissed with just cause.
HELD: NO. According to petitioner, private respondent abandoned his job and
lied about the confiscation of his license. To constitute abandonment, two
elements must concur: (1) the failure to report for work or absence without valid
or justifiable reason and (2) a clear intention to sever the employer-employee

relationship. Of the two, the second element is the more determinative factor
and should be manifested by some overt acts. Mere absence is not sufficient. It is
the employer who has the burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment without any intention of
returning.[15
In the instant case, petitioner fell short of proving the requisites. To begin with,
petitioners absence was justified because the LTO, Guadalupe Branch, did not
release his license until after a week. This was the unanimous factual finding of
the labor tribunals and the Court of Appeals.
In addition to the fact that petitioner had no valid cause to terminate private
respondent from work, it violated the latters right to procedural due process by
not giving him the required notice and hearing. Section 2, Rule XXIII, Book V of
Department Order No. 9 provides for the procedure for dismissal for just or
authorized cause:
SEC. 2. Standards of due process; requirement of notice. In all cases of
termination of employment, the following standards of due process shall be
substantially observed: I. For termination of employment based on just causes as
defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side;
(b) A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented
against him; and kapisanan ng mga kargador sa pier 14
(c ) A written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been established
to justify his termination. In case of termination, the foregoing notices shall be
served on the employees last known address.
II. For termination of employment as based on authorized causes defined
in Article 283 of the Code, the requirements of due process shall be deemed
complied with upon service of a written notice to the employee and the
appropriate Regional Office of the Department at least thirty days before the
effectivity of the termination, specifying the ground or grounds for termination.
III. If termination is brought about by the completion of the contract or
phase thereof, no prior notice is required. If the termination is brought about by
the failure of an employee to meet the standards of the employer in case of
probationary employment, it shall be sufficient that a written notice is served the

employee within a reasonable time from the effective date of termination.


(FAITH)

12.

RUGA VS. NLRC

JANUARY 22, 1990


G.R. L-72654

FACTS:
Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several
fishing vessels owned and operated by private respondent De Guzman Fishing
Enterprises which is primarily engaged in the fishing business with port and
office at Camaligan, Camarines Sur. Petitioners rendered service aboard said
fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma
patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer;
Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip
Cervantes and Eleuterio Barbin, fishermen.
For services rendered in the conduct of private respondent's regular business of
"trawl" fishing, petitioners were paid on percentage commission basis in cash by
one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they
received thirteen percent (13%) of the proceeds of the sale of the fish-catch if
the total proceeds exceeded the cost of crude oil consumed during the fishing
trip, otherwise, they received ten percent (10%) of the total proceeds of the sale.
The patron/pilot, chief engineer and master fisherman received a minimum
income of P350.00 per week while the assistant engineer, second fisherman, and
fisherman-winchman received a minimum income of P260.00 per week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by
Jorge de Guzman, president of private respondent, to proceed to the police
station at Camaligan, Camarines Sur, for investigation on the report that they
sold some of their fish-catch at midsea to the prejudice of private respondent.
Petitioners denied the charge claiming that the same was a countermove to their
having formed a labor union and becoming members of Defender of Industrial
Agricultural Labor Organizations and General Workers Union (DIALOGWU) on
September 3, 1983.
During the investigation, no witnesses were presented to prove the charge
against petitioners, and no criminal charges were formally filed against them.
Notwithstanding, private respondent refused to allow petitioners to return to the
fishing vessel to resume their work on the same day, September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for illegal
dismissal and non-payment of 13th month pay, emergency cost of living
allowance and service incentive pay, with the then Ministry (now Department) of
Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay.
They uniformly contended that they were arbitrarily dismissed without being
given ample time to look for a new job.

ISSUE/S:
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B
Sandyman II are employees of its owner-operator, De Guzman Fishing
Enterprises, and if so, whether or not they were illegally dismissed from their
employment.
HELD:
YES
We have consistently ruled that in determining the existence of an employeremployee relationship, the elements that are generally considered are the
following (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employers power to control the
employee with respect to the means and methods by which the work is to be
accomplished. The employment relation arises from contract of hire, express or
implied. In the absence of hiring, no actual employer-employee relation could
exist.
From the four (4) elements mentioned, We have generally relied on the so-called
right-of-control test where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to
be used in reaching such end. The test calls merely for the existence of the right
to control the manner of doing the work, not the actual exercise of the right.
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as
authority for the ruling that a joint fishing venture existed between private
respondent and petitioners is not applicable in the instant case. There is neither
right of control nor actual exercise of such right on the part of the boat-owners in
the Pajarillo case, where the Court found that the pilots therein are not under the
orders of the boat-owners as regards their employment; that they go out to sea
not upon directions of the boat-owners, but upon their own volition as to when,
how long and where to go fishing; that the boat-owners do not in any way control
the crew-members with whom the former have no relationship whatsoever; that
they simply join every trip for which the pilots allow them, without any reference
to the owners of the vessel; and that they only share in their own catch produced
by their own efforts.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned
resolution of the National Labor Relations Commission dated May 30, 1985 is
hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate
petitioners to their former positions or any equivalent positions with 3-year
backwages and other monetary benefits under the law. No pronouncement as
to costs.

13.

VISAYAN STEVEDORE TRANSPORTATION COMPANY VS. CIR

FEBRUARY 25, 1967


G.R. NO. L-21696

Appeal by certiorari, taken by the Visayan Stevedoring Transportation Co.


hereinafter referred to as the Company and Rafael Xaudaro from an order of
the Court of Industrial Relations, the dispositive part of which
reads:jgc:chanrobles.com.ph
"The Court, finding respondents guilty of unfair labor practice as charged, directs
them to cease and desist from such unfair labor practice and to reinstate the
complainants, with back wages from the date they were laid off until
reinstated."cralaw
virtua1aw
library
The Company is engaged in the loading and unloading of vessels, with a branch
office in Hinigaran, Negros Occidental under the management of said Rafael
Xaudaro. Its workers are supplied by the United Workers and Farmers
Association, a labor organization hereinafter referred to as UWFA whose
men (affiliated to various labor unions) have regularly worked as laborers of the
Company during every milling season since immediately after World War II up to
the milling season immediately preceding November 11, 1955, when the
Company refused to engage the services of Venancio Dano-og, Buenaventura
Agarcio and 137 other persons named in the complaint filed in case No. 62-ULPCebu of the Court of Industrial Relations and hereinafter referred to as the
Complainants owing, they claim, to their union activities. At the behest of the
UWFA and the Complainants, a complaint for unfair labor practice was,
accordingly, filed against the Company and Xaudaro with the Court of Industrial
Relations hereinafter referred to as the CIR in which it was docketed as Case
No. 62-ULP-Cebu. In due course, its Presiding Judge issued the order appealed
from, which was affirmed by the CIR sitting en banc. Hence this petition for
review
by certiorari.
The issues raised in this appeal, are (1) whether there is employer-employee
relationship between the Company and the Complainants; (2) whether the
Company has been guilty of unfair labor practice; and (3) whether the order of
reinstatement of Complainants, with backpay, is a reversible error.
With respect to the first question, the Company maintains that it had never had
an employer-employee relationship with the Complainants, the latters services
having allegedly been engaged by the UWFA, not by the Company, and that, in
any event, whatever contractual relation there may have been between the
Company and the Complainants had ceased at the end of each milling season, so
that the Company can not be guilty of unfair labor practice in refusing to renew
said relation at the beginning of the milling season in November, 1955.
This pretense is untenable. Although Complainants, through the labor union to
which they belong, form part of UWFA, there was no independent contract
between the latter, as an organization, and the Company. After the first milling
season subsequently to the liberation of the Philippines, Complainants merely
reported for work, at the beginning of each succeeding milling season, and their
services were invariably availed of by the Company, although an officer of the
UWFA or union concerned determined the laborers who would work at a given
time,
following
a
rotation
system
arranged
therefor.

In the performance of their duties, Complainants worked, however, under the


direction and control of the officers of the Company, whose paymaster, or
disbursing officer paid the corresponding compensation directly to said
Complainants, who, in turn, acknowledged receipt in payrolls of the company. We
have already held that laborers working under these conditions are employees of
the Company, 1 in the same manner as watchmen or security guards furnished,
under similar circumstances, by watchmen or security agencies, 2 inasmuch as
the agencies and/or labor organizations involved therein merely performed the
role of a representative or agent of the employer in the recruitment of men
needed
for
the
operation
of
the
latters
business.
3
As regards the alleged termination of employer-employee relationship between
the Company and the Complainants at the conclusion of each milling season, it
is, likewise, settled that the workers concerned are considered, not separated
from the service, but, merely on leave of absence, without pay, during the offseason, their employer-employee relationship being merely deemed suspended,
not
severed,
in
the
meanwhile.
4
Referring to the unfair labor practice charge against the Company, we find, with
the CIR, that said charge is substantially borne out by the evidence of record, it
appearing that the workers not admitted to work beginning from November,
1955, were precisely those belonging to the UWFA, and that Xaudaro, the
Company branch Manager, had told them point bank that severance of their
connection with the UWFA was the remedy, if they wanted to continue working
with
the
Company.
As to the payment of back wages, the law 5 explicitly vests in the CIR discretion
to order the reinstatement with back pay of laborers dismissed due to union
activities, and the record does not disclose any cogent reason to warrant
interference with the action taken by said Court. 6 Wherefore, the order and
resolution appealed from are hereby affirmed, with costs against petitioners
herein.
It
is
so
ordered.
Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Ruiz
Castro, JJ., concur.
14.

AIR MATERAL WING SAVINGS AND LOAN ASSOCIATIONS, INC.

VS. NLRC
JUNE 30, 1994
G.R. NO. 111870

CRUZ, J.:
Private respondent Luis S. Salas was appointed "notarial and legal counsel" for
petitioner Air Material Wings Savings and Loan Association (AMWSLAI) in 1980.
The appointment was renewed for three years in an implementing order dated
January 23, 1987, reading as follows:
SUBJECT: Implementing Order on the Reappointment of the Legal Officer

TO: ATTY. LUIS S. SALAS


Per approval of the Board en banc in a regular meeting held on January 21, 1987,
you are hereby reappointed as Notarial and Legal Counsel of this association for
a term of three (3) years effective March 1, 1987, unless sooner terminated from
office for cause or as may be deemed necessary by the Board for the interest
and protection of the association.
Aside from notarization of loan & other legal documents, your duties and
responsibilities are hereby enumerated in the attached sheet, per Articles IX,
Section 1-d of the by-laws and those approved by the Board en banc.
Your monthly compensation/retainer's fee remains the same.
This shall form part of your 201 file.
BY AUTHORITY OF THE BOARD:
LUVIN
President & Chief of the Board

S.

MANAY

On January 9, 1990, the petitioner issued another order reminding Salas of the
approaching termination of his legal services under their contract. This prompted
Salas to lodge a complaint against AMWSLAI for separation pay, vacation and
sick leave benefits, cost of living allowances, refund of SSS premiums, moral and
exemplary damages, payment of notarial services rendered from February 1,
1980 to March 2, 1990, and attorney's fees.
Instead of filing an answer, AMWSLAI moved to dismiss for lack of jurisdiction. It
averred that there was no employer-employee relationship between it and Salas
and that his monetary claims properly fell within the jurisdiction of the regular
courts. Salas opposed the motion and presented documentary evidence to show
that he was indeed an employee of AMWSLAI.
The motion was denied and both parties were required to submit their position
papers. AMWSLAI filed a motion for reconsideration ad cautelam, which was also
denied. The parties were again ordered to submit their position papers but
AMWSLAI did not comply. Nevertheless, most of Salas' claims were dismissed by
the labor arbiter in his decision dated November 21, 1991. 1
It was there held that Salas was not illegally dismissed and so not entitled to
collect separation benefits. His claims for vacation leave, sick leave, medical and
dental allowances and refund of SSS premiums were rejected on the ground that
he was a managerial employee. He was also denied moral and exemplary
damages for lack of evidence of bad faith on the part of AMWSLAI. Neither was
he allowed to collect his notarial fees from 1980 up to 1986 because the claim
therefor had already prescribed. However, the petitioner was ordered to pay
Salas his notarial fees from 1987 up to March 2, 1990, and attorney's fee
equivalent to 10% of the judgment award.
On appeal, the decision was affirmed in toto by the respondent Commission,
prompting the petitioner to seek relief in this Court. 2
The threshold issue in this case is whether or not Salas can be considered an
employee of the petitioner company.

We have held in a long line of decisions that the elements of an employeremployee relationship are: (1) selection and engagement of the employee; (2)
payment of wages; (3) power of dismissal; and (4) employer's own power to
control employee's conduct. 3
The existence of such a relationship is essentially a factual question. The findings
of the NLRC on this matter are accorded great respect and even finality when the
same are supported by substantial evidence. 4
The terms and conditions set out in the letter-contract entered into by the parties
on January 23, 1987, clearly show that Salas was an employee of the petitioner.
His selection as the company counsel was done by the board of directors in one
of
its
regular
meetings.
The
petitioner
paid
him
a
monthly
compensation/retainer's fee for his services. Though his appointment was for a
fixed term of three years, the petitioner reserved its power of dismissal for cause
or as it might deem necessary for its interest and protection. No less importantly,
AMWSLAI also exercised its power of control over Salas by defining his duties and
functions as its legal counsel, to wit:
1. To act on all legal matters pertinent to his Office.
2. To seek remedies to effect collection of overdue accounts of members without
prejudice to initiating court action to protect the interest of the association.
3. To defend by all means all suit against the interest of the Association. 5
In
the
earlier
case
of Hydro
Pagalilauan, 6 this Court observed that:

Resources

Contractors

Corp.

v.

A lawyer, like any other professional, may very well be an employee of a private
corporation or even of the government. It is not unusual for a big corporation to
hire a staff of lawyers as its in-house counsel, pay them regular salaries, rank
them in its table of organization, and otherwise treat them like its other officers
and employees. At the same time, it may also contract with a law firm to act as
outside counsel on a retainer basis. The two classes of lawyers often work closely
together but one group is made up of employees while the other is not. A similar
arrangement may exist as to doctors, nurses, dentists, public relations
practitioners and other professionals.
We hold, therefore, that the public respondent committed no grave abuse of
discretion in ruling that an employer-employee relationship existed between the
petitioner and the private respondent.
We must disagree with the NLRC, however, on Salas' claims for notarial fees.
The petitioner contends that the public respondents are not empowered to
adjudicate claims for notarial fees. On the other hand, the Solicitor General
believes that the NLRC acted correctly when it took cognizance of the claim
because it arose out of Salas' employment contract with the petitioner which
assigned him the duty to notarize loan agreements and other legal documents.
Moreover, Section 9 of Rule 141 of the Rules of Court does not restrict or prevent
the labor arbiter and the NLRC from determining claims for notarial fees.
Labor arbiters have the original and exclusive jurisdiction over money claims of
workers when such claims have some reasonable connection with the employer-

employee relationship. The money claims of workers referred to in paragraph 3


of Article 217 of the Labor Code are those arising out of or in connection with the
employer-employee relationship or some aspect or incident of such relationship.
Salas' claim for notarial fees is based on his employment as a notarial officer of
the petitioner and thus comes under the jurisdiction of the labor arbiter.
The public respondents agreed that Salas was entitled to collect notarial fees
from 1987 to 1990 by virtue of his having been assigned as notarial officer. We
feel, however, that there is no substantial evidence to support this finding.
The letter-contract of January 23, 1987, does not contain any stipulation for the
separate payment of notarial fees to Salas in addition to his basic salary. On the
contrary, it would appear that his notarial services were part of his regular
functions and were thus already covered by his monthly compensation. It is true
that the notarial fees were paid by members-borrowers of the petitioner for its
own account and not of Salas. However, this is not a sufficient basis for his claim
to such fees in the absence of any agreement to that effect.
ACCORDINGLY, the appealed judgment of the NLRC is AFFIRMED, with the
modification that the award of notarial fees and attorney's fees is disallowed. It is
so ordered.
Davide, Jr., Bellosillo, Quiason and Kapunan, JJ., concur .

15.

FELIX VS. BUENASEDA

JANUARY 17, 1995


G.R. NO. 109704

Nature of the Case: A direct appeal seeking to annul the Resolution issued by
the Civil Service Commission (CSC) which Felix claims to be in violation of his
constitutional right to security of tenure.
Facts:
Felix worked as Medical Specialist I for the government [National Center of
Mental Health (NCMH)]. He started as a Resident Physician with an annual salary.
Later he got promoted to Senior Resident Physician [permanent], which he held
for some time, and thereafter accepted the appointment as Medical Specialist I
[temporary] which Felix held for three years without remonstrations. Pursuant
to an Executive Order [EO No. 119] a general reorganization in the government
ensued. In view of this, DoH effected a reorganization, and one of the guidelines
[DoH DO No. 478] made Felix unfit for the position [he was not yet accredited by
the Psychiatry Specilaty Board]. His appointment was extended pending review
of the Medical Committee [of NCMH], which eventually recommended nonrenewal of Felixs appointment and informed him of the same. Nevertheless,

Felix was still allowed to continue his service even after he was informed of his
termination. The Chief of Service [of NCMH] conducted an emergency to discuss,
inter alia, Felixs performance. The overall consensus expressed nonrenewal of
Felixs contract [due to poor performance, frequent tardiness and inflexibility].
The matter was referred to CSC which ruled that appointment of Felix can be
terminated at any time and that renewal was within the discretion of the
appointing authority [NCMH] by virtue of the incidental power of the power to
appoint [the power to renew a temporary appointment] and further. The removal
of Felix has thus been affirmed by CSC. Felixs appeal was dismissed and his
subsequent motion for reconsideration has been denied by CSC. Petitioner now
questions the validity of such removal. Hence, this direct appeal.
Issue(s):
(1). Is the position held by Felix as Resident Physician a permanent one?
(2). Is an employee, after not challenging his appointment from a permanent to a
temporary position within a reasonable period, deemed to have accepted his
appointment?
Held:
(1). No. Residency is never meant to be a permanent position. It is a step taken
by a physician right after post-graduate internship (and after hurdling the
Medical Licensure Examinations) prior to his recognition as a specialist or subspecialist in a given field. To specialize on a medical field [be it Psychiatry or
Cardiology], one has to go through a stringent process. This process is to
guarantee the specialists minimum standards and skills which is an assurance
to the community that a specialist is not set loose without the basic knowledge
and skills of his specialty as lives are ultimately at stake. The purpose is thus
geared towards training the resident physician.
(2). Yes. Felixs acceptance as temporary Medical Specialist I for three years was
subject to peer and superior evaluation, for which Felix fell short. Regardless,
Felix never questioned his temporary assignment [for three years] until DoH, as a
result of his performance evaluation, ordered non-renewal of his temporary
position. In view of his silence to question his appointment from permanent to
temporary, warrants the presumption that Felix has either given up his claim or
that he has already settled into the new position, which is the concept of laches,
which therefore estops him from questioning the same [three years later]. Stated
otherwise, Felix has abandoned his right to claim to question his conversion from
permanent employee to temporary employee through laches, and henceforth, is
deemed to have accepted his appointment from permanent to temporary
position.

16.

PERPETUAL HELP CREDIT COOPERATIVE VS. FABURADA

OCTOBER 8, 2001
G.R. NO. 121948

FACTS:
Private respondents Faburada et. al. filed a complaint against
PHCCI for illegal dismissal, premium pay, separation pay, wage differential, moral
damages and attorneys fees.
PHCCI filed a motion to dismiss on the ground that noemployeremployee relationship exists since privaterespondents are all members and coowners of thecooperative. Also, private respondents have not exhausted the
remedies provided in the coop by laws.
PHCCI also filed a supplemental motion to dismiss
alledging that RA 6939, the Cooperative Development Authority Law, requires
conciliation or mediation within the cooperative before a resort to judicial
proceeding.
3.The Labor Arbiter ruled in favor of the private respondents, holding that the
case is impressed with employer-employee relationship and that the laws on
cooperatives is subservient to the Labor Code. The NLRC affirmed.

ISSUE: WON there is an employer-employee relationship


between the parties and WON private respondents were regular employees

HELD: YES.
RATIO:

Elements in determining existence of employer-employee relationship:


1) Selection and engagement of the worker or the power to hire
2) The power to dismiss
3) Payment of wages by whatever means
4) Power to control the workers conduct The above elements are present
here. PHCCI through its Manager Mr. Edilberto Lantaca, Jr. hired respondents as
Computer programmer and clerks. They worked regular working
hours, were assigned specific duties, were paid regular wages, and made to
accomplish regular time records, and worked under the supervision of the
manager.

Art. 280, Labor Code comprehends 3 kinds of employees:


1)REGULAR EMPLOYEES or those whose work is necessary or desirable to the
usual business of the employer
2)PROJECT EMPLOYEES or those whoseemployment has been fixed for a specificp
roject or undertaking the completion ortermination of which has been
determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the
duration of the season
3)CASUAL EMPLOYEES or those who are neither regular nor project employees
There are 2 separate instances whereby it can be determined that an
employment is regular:
1)If the particular activity performed by the employee is necessary or desirable
in the usual business or trade of the employer
2)If the employee has been performing the job for at least a year
Private respondents were rendering services necessary to the day-to-day
operations of PHCCI. This alone qualified them as regular employees. Moreover,
all of them except one worked with PHCCI for more than 1 year.
That Faburada worked only on a part-time basis does not mean that he is not a
regular employee .Regularity of employment is not determined by the number of
hours one works but by the nature and length of time one has been in that
particular job.

17.

INVESTMENT PLANNING CORPORATION VS. SSS

NOVEMBER 18, 1967


G.R. NO. L-19124

Doctrine: The logic of the situation indeed dictates that where the element of control is
absent; where a person who works for another does so more or less at his own pleasure and is
not subject to definite hours or conditions of work, and in turn is compensated according to
the result of his efforts and not the amount thereof, we should not find that the relationship of
employer and employee exists.
Facts: Investment Planning Corporation is a domestic corporation engaged in business
management and the sale of securities. It has two classes of agents who sell its investment
plans: (1) salaried employees who keep definite hours and work under the control and
supervision of the company; and (2) registered representatives who work on commission
basis.
Investment Planning Corp. applied to Social Security Commission for exemption of its socalled registered representatives from the compulsory coverage of the Social Security Act.
The application was denied in a letter signed by the Secretary to the Commission. A motion

to reconsider was filed and also denied, after hearing, by the Commission itself in its
resolution. The matter was thereafter elevated to this Court for review.
Issue: Whether IPCs registered representatives are employees within the meaning of the
Social Security Act which is defined as "any person who performs services for an 'employer'
in which either or both mental and physical efforts are used and who receives compensation
for such services, where there is, employer-employee relationship."
Ruling: The Commission found that the agents "are not required to report (for work) at any
time; they do not have to devote their time exclusively to or work solely for petitioner; the
time and the effort they spend in their work depend entirely upon their own will and
initiative; they are not required to account for their time nor submit a record of their
activities; they shoulder their own selling expenses as well as transportation; and they are
paid their commission based on a certain percentage of their sales." The record also reveals
that the commission earned by an agent on his sales is directly deducted by him from the
amount he receives from the investor and turns over to the company the amount invested
after such deduction is made.
They exert both mental and physical efforts in the performance of their services. The
compensation they receive, however, is not necessarily for those efforts but rather for the
results thereof, that is, for actual sales that they make. This point is relevant in the
determination of whether or not the third requisite is also present, namely, the existence of
employer-employee relationship.
Even if an agent of petitioner should devote all of his time and effort trying to sell its
investment plans would not necessarily be entitled to compensation therefor. His right to
compensation depends upon and is measured by the tangible results he produces.
The specific question of when there is "employer-employee relationship" for purposes of the
Social Security Act has not yet been settled in this jurisdiction by any decision of this Court.
But in other connections wherein the term is used the test that has been generally applied is
the so-called control test, that is, whether the "employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished.
The significant factor in determining the relationship of the parties is the presence or absence
of a supervisory power to control the method and detail of performance of the service, and
the degree to which the principal may intervene to exercise such control, the presence of such
power of control being indicative of an employment relationship and the absence of such
power being indicative of the relationship of independent contractor. In other words, the test
of existence of the relationship of independent contractor, which relationship is not taxable
under the Social Security Act and related provisions, is whether the one who is claimed to be
an independent contractor has contracted to do the work according to his own methods and
without being subject to the control of the employer except as to the result of the work.
We have examined the contract form between petitioner and its registered representatives and
found nothing therein which would indicate that the latter are under the control of the former
in respect of the means and methods they employ in the performance of their work. The fact

that for certain specified causes the relationship may be terminated (e.g., failure to meet the
annual quota of sales, inability to make any sales production during a six-month period,
conduct detrimental to petitioner, etc.) does not mean that such control exists, for the causes
of termination thus specified have no relation to the means and methods of work that are
ordinarily required of or imposed upon employees.

18.GREPALIFE

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